[IMGCAP(2)]Marty Burger, president and CEO of locally based Artisan Real Estate Ventures, says the pressure came not from condos, but from single-family homes. "It seemed like there was a condo boom here, but there really wasn't," he maintains. "It was just eight or 10 buildings comprising 7,000 or 8,000 units. For Las Vegas, that's not a lot of absorption." Plus, he adds, those units were on the high end of the quality spectrum and didn't necessarily target casino workers.

"Where there was a huge boom was in the single-family home market, but now that market has obviously slowed," he continues. "The homebuilders aren't building on spec anymore." So the huge inventory of homes in the market 18 months ago is becoming depleted. Burger anticipates the local apartment market to pick up in the near future.However the for-sale market works out its issues, Bentley agrees it will present "an opportunity because a lot of these shadow rentals will come out of the pool. The competition will dissipate" as tenants in shadow space, faced with the possibility of eviction if the homeowner is foreclosed upon, opt to return to the safety of professionally managed rental apartments. "It used to be that landlords did a credit check of a tenant. Now it's the other way around. You have to make sure the landlord's making its payments, and in Nevada, there is a 30-day notice on foreclosures and the papers are always reporting on this. That has boded well for apartments, and we think that's the main reason our occupancy has grown."

While Bentley expects this year to be flat, he says 2009 will be a year of stabilization as concessions are burned off and rent grows slightly. The market is expected to see substantial growth beginning in 2010, since most of the casinos currently under way are slated to open in late 2009.

Indeed, the city's global tourism and gaming industry is a major employment driver for the market. According to Bentley Group's data, there are 7.1 jobs--two direct and 5.1 indirect--created with every new hotel room addition. By year's end, 9,119 rooms will be added to the market. Next year will see a whopping 17,223 keys in such projects as CityCenter, Grand Hyatt and Fontainebleau Las Vegas, among others.

Historically, apartment occupancy has risen as jobs were added to the market, since the workers in these casino projects typically rent units. Burger, for one, is banking on that. Artisan is on its way to acquiring 3,500 units by year's end. Its most recent buy--the 670-unit Canyon Pointe Apartments, located just off the Las Vegas Strip--marked the sixth property in its portfolio, which now includes 1,975 units worth more than $200 million. The company buys both core and value-add properties, and--despite the tight lending conditions--it was able to find financing for its last two deals in the form of a Fannie Mae loan through Wachovia and mezzanine debt with RCG Longview. "We've been getting to just about 80% financing, and we and our equity partners put in the rest," adds Burger.

Las Vegas continues to be one of the fastest-growing markets in terms of both population and employment, says Burger, and that is creating a supply-demand imbalance. "There's a fixed number of units here and because of construction costs, it's more difficult to build, so there's less product being developed," he relates. Further, all the casino projects "are going to have huge demands on the employment sector."

Statistics seem to support Burger's claim. With 250,000 new jobs additions slated for the next five years, Bentley is going so far as to forecast a housing shortage as soon as 2010. In 2007, the city had the largest oversupply of housing ever, at 29,027 extra units. By 2010, the housing supply is expected to fall short by 1,032 units, and then be in the red by 9,167 units in 2011. For apartments only, the inventory will fall short 9,620 units in 2010 and 13,054 units in 2011. That, maintains Bentley, will create an environment where landlords can enjoy rising occupancies and rents, with no need to offer tenants concessions.

"Las Vegas has growth drivers you're not going to find in other markets such as Phoenix or Los Angeles," says Burger. "Based on those drivers, I believe there's going to be a spike in rents some time in the near future, and we're buying now to take advantage of those spikes."