Las Vegas Business Press :: News : Luxury condo demand softens

Luxury condo demand softens

Demise of W Las Vegas adds to uncertainty in market

BY TONY ILLIA

Demand for Vegas' pricey high-rise, high life is starting to fizzle out. Buyers for the valley's luxury condos were scarce in the first quarter as new projects flattened out, reports Applied Analysis, a Las Vegas-based economic advisory firm.

There was a potential inventory of 97,776 units during the first three months of the year, yet 11,814 were canceled and another 2,491 suspended.

The project R.I.P. list includes such casualties as the 3,000-unit W Las Vegas, at the northwest corner of Harmon Avenue and Koval Lane, which was officially pronounced dead on May 11. Also fallen by the wayside are the 50-story/888-unit Vegas 888, 60-story/900-unit Club Renaissance and the 35-story/398-unit Sandhurst tower.

COURTESY IMAGEWORDS PUBLICITY
The $12 million, 22,800-square-foot Rhodes Ranch Plaza recently opened at 8785 & 8795 W. Warm Springs Rd.

COURTESY IMAGEWORDS PUBLICITY
Omni Group Development's $25 million, 48,000-square-foot Windmill Lane Plaza is scheduled to open in open in early 2008.

COURTESY IMPRESS COMMUNICATIONS
One Las Vegas was one of 1,014 units worth of luxury condominium projects under construction on the South Strip in the first quarter.

"While it would have been an unreasonable expectation to believe that all of the projects in the development pipeline would enter the market as planned, it would be equally questionable to conclude that resort and residential condominiums are a passing fad," commented Brian Gordon, principal of Applied Analysis. "The luxury condominium market continues to evolve and respond to the latest market conditions."

The bulk of the market is still speculative, with 56,302 units accounting for 57.6 percent of the valley's total inventory. Only 13,409 units -- or 13.7 percent -- were under construction in the first quarter, including the 1,282-unit Trump Las Vegas, 2,700-unit CityCenter, 3,000-unit Cosmopolitan, 632-unit Turnberry Towers and the 1,000-unit One Las Vegas.

Roughly 55.5 percent of those under construction in the first quarter, totaling 7,444 units worth, were located on the Strip, not including another 1,014 units on the South Strip. Also, 47.2 percent of all units under construction have some form of rental program.

Meanwhile, 4,214 units of the valley's total inventory were pre-existing in the first quarter, including the 800-unit Turnberry Place, 405-unit Sky Las Vegas and 84-unit Park Towers at Hughes Center, along with another 9,546 units, or 9.8 percent, still being planned or pre-sold.

"The vast majority of units in the pipeline have been sold and their total is exponentially higher than the present market inventory," maintained Gordon. "Land owners and developers are dealing with conservative reactions by the investment community and potential buyers, in response to recent reports that a supply-demand imbalance is inevitable."

At the end of the first quarter, an estimated 754 units, or 17.8 percent, were listed for resale, with an average asking price of $803,900, or $622 per square foot. Yet first-quarter resale prices averaged $764,000 per unit, or $537 per square foot -- about 5 percent below the median asking price.

PROJECTS

Omni Group Development recently broke ground on a $25 million, 48,000-square-foot retail complex at Windmill Lane and Bermuda Road. Cartmill Rogers Construction is the general contractor, with Pacific Design Concepts as architect. Windmill Lane Plaza will feature such tenants as Nevada Heart & Vascular, Smoothie King, Sundance Medical Center, Signature Day Spa & Nails and Anytime Fitness. Gatski Commercial's Rob Lujan is the leasing agent. The complex is scheduled to open in the first quarter of 2008.

Omni also recently completed the $12 million, 22,800-square-foot Rhodes Ranch Plaza at 8785 and 8795 W. Warm Springs Rd. Cartmill Rogers Construction is the general contractor with Pacific Design Concepts as architect. The two-building, office-retail complex features such tenants as Sumo Sushi II, Marco's Pizza, Luxury Nail & Spa, Custom Home Loans, Preferred Family Dentistry and Sundance Medical Group. Lujan is again the leasing agent.

SR Construction completed the $2 million, 9,393-square-foot Cheyenne West Animal Hospital at 3650 N. Buffalo Drive.

LM Construction is performing a $369,991 tenant improvement for the Oyshi Sushi Restaurant at Rainbow Boulevard and Robindale Road. The 4,160-square-foot project is expected to finish in the fourth quarter.

LM is also doing a $69,082 tenant improvement for Caffé Gelato in the Boca Park Marketplace at 1000 S. Rampart Blvd., Suite 15. The 1,160-square-foot store is expected to open later this year.

MILLION-DOLLAR DEALS

Cal-Nev Land Co. refinanced 177 acres of land in Sandy Valley for $5.575 million, or $31,497 per acre. Builder's Capital's Steve Brockman provided the loan.

Bard Hofland bought a 13,843- square-foot office building at 228 S. Fourth St. for $3,246,500, or $234 per square foot, from 228 South Fourth Street LLC. IPG Commercial's Dean Willmore, Elizabeth Moore and Joe Samples represented both the buyer and seller.

CPI Six & Seven LLC bought 15,118 square feet of industrial space at 6659 and 6655 Schuster St. for $2.64 million, or $175 per square foot, from the Eric G. Tarr Trust. Grubb & Ellis' Xavier Wasiak represented the buyer and Sweetland Industrial Realty's Paul Sweetland represented the seller.

The Nevada Department of Administration signed a five-year, $2.6 million lease for 17,482 square feet of office space in the Westbay Office Park at 3016 W. Charleston Blvd. CB Richard Ellis' Jan Hoback represented the tenant. The reported average rent equals $2.47 per square foot.

Brown & Brown Insurance of Nevada signed a seven-year, $1,842,393 lease for 13,358 square feet of office space at 975 Kelly Johnson Dr. Stoltz Management's Wes Jenson represented the lessor, SEF/GTIS Vegas Investors LLC. Commerce CRG's Michael Dunn and Cushman Wakefield's Jay Hoselton represented the tenant. The reported average rent equals $1.64 per square foot.

DB Trust bought 11,099 square feet of industrial space at 6667 Schuster St. for $1,587,157, or $143 per square foot, from DDM Investments. Paul Sweetland represented the buyer.

tonyillia@aol.com | 303-5699

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