Where are rents rising and dropping in Las Vegas right now?
Rent relief is here for some Las Vegas residents, but the long-term outlook for apartments in the valley is anything but rosy, a local expert says.
Many renters are seeing rents leveling out and more options in the market as roughly 4,000 apartment units opened last year, another 8,000 are projected to open this year and only 1,500 slated for 2025, said Jeffrey Swinger, executive vice president for multifamily investment sales at Colliers International in Las Vegas.
But new development is drying up because of higher borrowing and building costs, Swinger, who has worked in the multifamily market for a quarter century, said.
During the pandemic, a wave of cheap money and government rebates flooded the market when the Federal Reserve bottomed out interest rates to stimulate the economy coming out of COVID lockdowns. This kicked off a multifamily building frenzy, Swinger said, which is now slowing. That means the rent relief that some renters are now seeing will just be temporary.
Apartment vacancy was at 7.3 percent in the fourth quarter of 2023, a 1.1 increase from the same-quarter 2022, according to Colliers data. Average rent per square foot declined slightly in the last part of 2023 and inventory increased by 1,542 units in the fourth quarter.
Tom Naseef, a commercial real estate agent with Naseef Commercial Services Group, agrees that a flood of apartment units hitting the market this year will put “downward pressure on rents.”
“However, markets are never static and strong rent increases are likely to resume in traditionally higher growth cities like Las Vegas as excess supply is absorbed,” he said.
Naseef also noted that the Las Vegas Strip submarket has seen the biggest rise in vacancy while rents are dropping in the North Las Vegas/Sunrise Manor area. Henderson is seeing the highest rent growth in recent months.
According to Colliers, 9,655 apartment units were under construction as of the end of last year with the largest inventory expansions being in the southwest, North Las Vegas and Henderson.
“The supply and demand fundamentals continue to be strong due to high demand and low supply,” Colliers’ most recent multifamily report stated. “Because of interest rates, new construction will decelerate creating more strain on overall supply going forward. This dynamic will cause occupancy to be strong, and rents to remain flat to positive unless we head into a recession.”
Where are rents rising, dropping in Las Vegas?
Summerlin and The Lakes saw the highest rental rates in the valley, at $1,703, followed by the southwest valley, at $1,693, according to Collier’s fourth quarter report. The area with the lowest rents was University/The Strip, at $1,220.
From the third quarter to the fourth quarter of 2023, rents dropped in Summerlin/The Lakes and University/The Strip, according to Colliers. Vacancy rates dropped in Green Valley, North Las Vegas, the northwest valley and south Las Vegas.
Sunrise Manor/northeast has the highest apartment vacancy rate at 9.03 percent and south Las Vegas had the lowest at 5.96 percent.
Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.