Land holds its own

Looking at the vacant lot on the northwest corner of Main Street and Washington Avenue, once home to Shady Acres trailer park, you wouldn't think it's worth almost $2 million an acre.

The 11-acre parcel is situated between the aging casinos of downtown Las Vegas and the Catholic Charities homeless shelter, kitty-corner from a Latino tire shop. Tumbleweeds are clustered around concrete trailer pads.

A challenging piece of property, to be sure, but one that's listed by CB Richard Ellis land broker Jeremy Green for more than $20 million.

It's commercially zoned and entitled as a mixed-use project with 442 condo units and 31,000 square feet of retail and office space, Green said.

"Nationally, there's a big trend for transit-oriented development in an urban environment," he said. "Over time, that'll be the convergence area of mass transit."

Demand for high-density, commercial property has carried Las Vegas land values through a softening residential market, a local research analyst said Friday.

Raw land values in Las Vegas stabilized at an average of $793,700 an acre in the first quarter, up 13.2 percent from a year ago, Brian Gordon of Applied Analysis reported. Property values outside the resort corridor appear to have held their ground after doubling over the past three years, he said.

"Recently, we experienced a shift in market demand for vacant land," Gordon said. "While the residential market is reporting a material slowdown, the commercial market is sustaining development in the office, industrial and retail sectors, which is offsetting some of the slowdown and potential price depreciation in the residential sector."

Industrial-zoned land remains limited and in high demand, while the office market is experiencing its most robust construction of future supply in years, likely outpacing demand, Gordon said.

Vacant property suitable for neighborhood shopping centers may return to more normalized asking prices as high-density residential and mixed-use development is not feasible in every location that's been proposed or entitled, he said.

Land prices dropped from $1.24 million an acre in the fourth quarter when premium prices were paid in several real estate transactions on the Strip. Excluding those deals from both quarters, prices edged up 1.5 percent.

The closing of recent Strip transactions, including the sale of 26 acres to MGM Mirage for $444 million, will likely be reflected in Applied Analysis' second-quarter land report.

"Overall, land prices are holding steady in Las Vegas," said Dennis Smith, president of Home Builders Research. "It is almost surreal because of the softness of the general real estate market. Given these conditions, one would assume land prices would soften. But they aren't. Yes, they have leveled off and some builders have sold some of their lot inventories, but overall, land prices have not declined as many had anticipated."

The valley's restricted supply of land is definitely the primary factor, Smith said. In Phoenix, where land supply is not much of an issue, the price per acre is sagging badly, he said.

Smith showed the price of residential land increasing 67 percent in the past two years to nearly $600,000 an acre, though the number of land transactions has plunged. He counted 192 transactions in fourth quarter 2006, compared with 497 in the previous year's same period.

John Ritter, chief executive officer of Focus Property Group, said very few land owners are willing to discount prices because they know there's limited land available in the valley.

"I honestly expected some moderating in prices, but we're not seeing that," Ritter said. "We're buyers right now and we don't see any deals. They're not going up, but they're certainly not going down. I don't see the market roaring back, but it's not getting worse."

Available land is a "moving target" with conflict arising between speculators, different users and government, a report from the Lied Institute of Real Estate Studies said.

"There is a lot of talk about available land," one developer said during roundtable discussions for Lied's report on office and industrial development, "but in many cases, we can't find any sellers. You can say there are 1,000 acres available right here right now, but I'd like you to show me 15 acres that are for sale at a reasonable price."