Las Vegas High Rise Winter 2015

Page 1

WINTER 2015


Las Vegas Valley

HIGH-RISES 215

I-15

95

Juhl

The Ogden Newport Lofts

One Queensridge Place

Allure Sky Las Vegas

Soho Lofts Turnberry Towers

Trump

Metropolis

Park Towers

The Martin Palms Place

Platinum Panorama I & II

215

Regency Tower

Signature (Turnberry MGM)

CityCenter -Mandarin Oriental -Veer Towers -Vdara

One Las Vegas Boca Raton

I-15

515/95

CONDOMINIUM CONDO-HOTEL

Coldwell Banker Premier has facilitated a multitude of high-rise transactions in Las Vegas. We draw on this experience and information obtained from local government and the Greater Las Vegas multiple listing service. The information is deemed reliable but is not guaranteed.


Las Vegas Valley

HIGH-RISE TIMELINE

Approximate Dates Closings Began

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Update on the

LAS VEGAS HIGH-RISE

Condominium Market

While we see each high-rise project as a market unto itself, for brevity, we occasionally refer to the “market� for high-rises. The high-rise market is a very nuanced story to tell due to the very specific nature of each project and because of the shifting ownerships over the past couple of years. The most recent wave of development saw the delivery of many new buildings at exactly the worst time, amidst a national recession. This was followed by a market characterized by free-falling prices, loan defaults increasing and whole builder portfolios becoming distressed. Today, the market is much stronger, however it is not always reflected in sales trends because supply is much more patient, with far less distressed owners.

Year-Over-Year Comparison - MLS

Sales velocities are at a much more metered pace, a parallel to what we are observing in the single family home market as well. This pertains more to a market-wide sense because some developer held projects continue to achieve respectable sales velocities, while others are more concerned with price maximization. In the resale market, a wide mix of ownership implies a broad set of reasons to sell and now that financial distress largely removed, the market is moved more by traditional reasons such as job transfers, settling of estates or lifestyle changes. High-rise prices are ticking up gradually, corresponding with a generally improving labor market and additionally some major Las Vegas Strip projects on the horizon or under construction are buoying confidence in the sector. The re-emergence of some financing products should also help demand for high-rise homes. Single family homes have already seen a solid run-up in values over the

Note that much of the builder inventory is not posted on the multiple listing service so this serves as a sample and not the full universe of properties. Further, average sale

past couple of years and high-rise homes have largely lagged that cycle but do

prices must be viewed with caution due to the vast difference in the size of homes sold

appear to be gathering some more organic interest by owner occupants, some

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between the two periods.


Relative Sale Prices - Q3 2015

of which are making these homes their primary residence. As the single family market has become more fully priced, opportunities to buy high-rise residences with likely upside appear to be present in today’s market. Additionally, you could not build most of these buildings for what units trade for today, a possible signal of a longer-run upside. What remains relevant is the relative value play between Las Vegas and major markets like coastal California, which reflects a major disparity in prices for comparable product, with the exception of valuing an ocean view and having access to large job markets. While Las Vegas does not have an ocean view, a sea of lights at night and daytime territorial views continue to resonate with buyers. Additionally, tax considerations remain a primary, non-lifestyle reason to own a residence in Nevada.

Actively Marketed Projects 2015 has seen a few major shifts in either ownership of bulk unit holdings or in marketing activities surrounding current sponsor sales. Recently, Pathfinder Partners purchased the remaining 64 homes at Sky Las Vegas from the original sponsor so this project may be added to the actively marketed list at some point. Conversely, The Residences at Mandarin Oriental within the CityCenter campus can essentially be considered to have a completed sales cycle and will be coming off of the


actively marketed list. Although delivered during a challenging economic period, the project has preserved value better than many of the other Las Vegas projects of the same era and prices have been on an uptrend for the past several years. Similarly, One Queensridge Place, which consists of two towers located in the Summerlin area of west Las Vegas is also a completed sale project. Taken together, both The Residences at Mandarin Oriental and One Queensridge Place signal that Las Vegas has become a true luxury living destination with vertical living options. Another CityCenter project, Veer Towers, originally sponsored by CityCenter Residential and later sold in bulk to Ladder Capital in 2012, remains an actively marketed project by Pordes Residential. Veer’s highest post recession sale occurred in September which was a larger west building home on the twentyfirst floor. The sale was $2 million or $886 per-square foot, a high water mark figure for 2015 so far. Turnberry Towers, an adjacent strip option, also continues it sales program and recent offerings have started from the high $200,000’s for one bedroom and $530,000 for two bedrooms and $827,000 for three bedrooms. In the third quarter, closings have averaged about four per-month. The newcomer to the actively marketed list is One Las Vegas on the South Strip. Homes are being marketed from the low $200,000’s for one bedroom homes, the high $200,000’s for two bedrooms and the low $400,000’s for three bedrooms. Recent closings have been between approximately $230 and $250 per-square foot. Downtown, The Ogden remains the only actively marketed for-sale project, closing about four per-month on average in the recent quarter and ranging from about $260 to $323 per-square foot. Projects like these are not always a perfect guide as to what sales rates may be since there has been a longstanding rental component that have to be cycled through before certain units become available. This may be a similar consideration at Sky Las Vegas or One Las Vegas. For condo-hotels, Palms Place and Trump continue to reduce their inventories. Trump had some good sales velocities over the summer, selling a handful in July but selling fourteen homes during August and September, some of which appear to be investment buyers picking up multiple units. Similarly, Palms Place continued to have some traction. Occupancies in the hotel sector have been quite good, so the lodging component of these investments has pushed some owners into positive cash flow.

Source: mlxchange.

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High-Rise Closings and Sale Prices Per-Square Foot - Q3 2015

Source: Clark County, Coldwell Banker Premier Realty.

One important aspect of current marketing to note are the high commission rates being offered to brokers, nearly all of which are above 4% with many at 5% with occasional additional bonuses. Over the summer, several projects ran additional promotions where buyers would have one or two years of HOA paid, resulting in a material difference between the offered price and the net price the seller receives. Some of these specials persist into the fall and winter. Additionally, some projects have run occasional promotions on specific units.

Reflecting on the market While the market has certainly improved in recent years, not every project can be called a winner and one really needs to think about the market as close to the project level as possible. The market still bears the scars of the financial crisis and Las Vegas’ building craze, however this has translated into opportunities for others and the market continues to cure itself with more solid borrowers and stronger equity positions. The capital groups that have purchased bulk units in the recent years have been professional and well capitalized, moving the market out of the distressed rut and back onto firmer ground. The region’s improving job market, strong hotel occupancies and visitor volumes also bode well for the sector. The Strip properties in particular are likely to be beneficiaries of both under construction and realistically planned projects, such as the nearly complete MGM-AEG arena and although starting out slow, Genting Group’s Resorts World Las Vegas is likely to help move the center of gravity of the Strip further north. The Las Vegas Convention and Visitors Authority’s plans for the former Riviera Hotel and Casino are likely to build more connectivity between the Strip Corridor and the Convention Center area. Additionally, Crown Resorts Alon plans a project on the New Frontier site. Carl Icahn has recently started seeking a buyer for the partially built Fontainebleau site so it will be interesting to see who purchases the property and what the ultimate plans may be.


Historical Sales Activity in the High-Rise Sector - Includes Builder Sales and Resales

Many of the spikes within the two trends below are due to delivieries of new product or a repositioned project.

Source: Clark County, Coldwell Banker Premier Realty.

Supply Additions and Cumulative Supply

Source: Clark County, Coldwell Banker Premier Realty.

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Inventories UNITS

TOTAL CLOSED

FOR SALE MLS*

DEVELOPER OWNED**

LENDER OWNED

Boca Raton

378

176

5

202

1

One Las Vegas

359

70

20

289

-

TOTAL

737

246

25

491

1

SUBMARKET/PROPERTY SOUTH STRIP

RESORT CORRIDOR Allure

428

428

31

2

Sky Las Vegas

409

345

19

64

3

CityCenter Mandarin Oriental

225

223

18

2

CityCenter Veer Towers

669

530

68

139

TOTAL

1,731

1526

136

205

5

ADJACENT STRIP Metropolis

71

71

8

-

Park Towers

84

84

11

Regency Tower

274

274

23

Turnberry Place

777

777

66

1

Turnberry Towers

635

489

29

146

1

Panorama Towers I & II

650

650

61

2

The Martin

372

372

29

7

TOTAL

2,863

2,717

227

146

6

One Queensridge

218

218

28

-

1

TOTAL

218

218

28

-

1

SURBURBAN

DOWNTOWN Juhl

341

34

2

305

Newport Lofts

168

168

15

Soho Lofts

120

120

8

-

The Ogden

275

74

12

201

TOTAL

904

365

37

506

GRAND TOTAL

6,453

5,103

453

1,348

13

CityCenter Vdara

1,495

147

14

1,348

Palms Place

599

481

75

118

4

Trump

1,282

823

62

459

-

The Platinum

255

239

26

16

3

Turnberry MGM (Signature)

1,728

1,640

55

88

3

GRAND TOTAL

5,359

3,330

232

2,124

10

CONDO-HOTEL

* Active inventory, not under contract. ** Either owned by the developer or a new owner of multiple homes such as Dune or CIM. Further, the bulk sale of Veer is still considered in the developer owned category. Total Closed refers to all closings that occurred from project start date to the end of the current quarter that traded on a retail or resale basis.

Note: Much of the supply of developer owned homes are in the rental stock. Examples include One Las Vegas, The Ogden, Sky Las Vegas and Juhl.


SALES & PRICING

Beginning at 2005 when several condominiums became active

Strip Corridor

Adjacent Strip

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Adjacent Strip

Note: Prices can vary substantially between sample periods. Prices reflect view and floor premiums and may also vary by finish level. Does not include recent bulk transactions.


Adjacent Strip

South Strip

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Surburban

Downtown

Note: Prices can vary substantially between sample periods. Prices reflect view and floor premiums and may also vary by finish level. Does not include recent bulk transactions.


Condo–Hotel

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Note: Prices can vary substantially between sample periods. Prices reflect view and floor premiums and may also vary by finish level. Does not include recent bulk transactions. Trump has sold units in bulk and those are not reflected here. The above exhibit corresponds to traditional arms-length (retail or resale) transactions.


RESORT CORRIDOR

Note: Still being marketed by the original sponsor. Sale price per square foot icludes grey shell.

ADJACENT STRIP

Closed

Developer ow ne d (m ay be rental )

On M LS

Le nder o wned


ADJACENT STRIP -Cont

SUBURBAN

Closed

Developer ow ne d (m ay be rental )

lasvegashomes.com

On M LS

Le nder o wned


DOWNTOWN

SOUTH STRIP

Closed

Developer ow ne d (m ay be rental )

On M LS

Le nder o wned


CONDO-HOTEL

Closed

Developer ow ne d (m ay be rental )

On M LS

Le nder o wned


Coldwell Banker Premier Realty Strategic Services John McClelland – Vice President of Research 702.938.1375 • john.mcclelland@cbvegas.com lasvegashomes.com 8290 West Sahara Avenue, Suite 200 Las Vegas, Nevada 89117 Coldwell Banker Premier has facilitated a multitude of high-rise transactions in Las Vegas. We draw on this experience and information obtained from local government and the Greater Las Vegas multiple listing service. The information is deemed reliable but is not guaranteed.


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