Sin City's Apartment Market May Be Heaven for Investors

[IMGCAP(1)]LAS VEGAS-While the Las Vegas market is known for its casinos and hotels, it also emerged as one of the hottest for-sale markets during the residential boom. And like many other markets, the area saw a flood of new development of both condos and single-family residences. And like many other markets, the purchasing activity cooled as the housing market slumped, leaving an overhang on inventory.

Yet as the market continues to work out those kinks, there are promising signs for Sin City’s multifamily sector. Locally based brokerage firm Bentley Group Real Estate Advisors reports performance figures for the local apartment market for the second quarter trended toward the positive, albeit slightly. Occupancy rose 20 basis points, following a 40-basis-point increase in the first quarter. At 92.9%, the midyear occupancy just shy of the 93.7% reported in the second quarter of 2007. Rents, meanwhile, rose by 1% over the quarter to $889 per month.

However, small, the gains are still good news, says Christopher D. Bentley, president and broker of record for the firm’s multifamily/hospitality division. “Since 2006, the shadow market of single-family homes has really affected apartment performance. It’s affected occupancy growth significantly. But if you take rent growth, then performance was flat,” he explains, adding that value-add buyers that upgraded C and D-quality product have helped push overall rents up. “So things have remained flat throughout 2006, though they haven’t decreased. And 2007 was a bad year for us. We ended up with employment growth of just 9,000, compared to the 40,000 we’re used to. This year isn’t going to be much different.”