Las Vegas Multifamily Lags Behind Prior Peak
While multifamily is growing in Las Vegas, it is not growing at the same level it was a decade ago.
Multifamily is growing again, but not at the level that we had seen a decade ago. We are definitely seeing people struggling to afford a home, and that has driven them towards multifamily. As a result, we have seen a tremendous amount of multifamily been built,” John Stater, research and GIS manager at Colliers International, tells GlobeSt.com. “The real story is that people like to live apartments in their 20s and they like to live in single-family homes in their 30s. People like to live separately or have their own space when they can.”
Multifamily rents have increased substantially, particularly in the class-B apartment space. Average rents increased from $732 per month to $895 per month last year, according to the report. The rent increase in this apartment segment has hampered affordability and could have a negative impact on the local economy. “We have seen the asking rents in multifamily go up quite a bit, but they haven’t gone up dramatically,” says Stater. “They are primarily developing for a more upscale market, and most of the weakness that we have seen has been in the older properties.”
In addition, there is a shadow market impacting apartment rentals, single-family housing rentals. This market is difficult to track, but Stater says is worth tracking. “It may not have a major impact, but it might,” he says. “When we seen things vacillate in the multifamily market, we often see that the single-family market is pulling people away.”
Las Vegas apartment demand has also shifted from the eastside of the city to the westside. “There has been a demographic shift that has happened over the last 30 to 40 years. In the 1970s and 1980s, the population was on the eastside of town,” says Stater. “In the last few decades, we have seen master planned communities that have been pulling the middleclass West. As folks have moved to the west side, we have gone through a transition where older properties on the Eastside have been left vacant.”