Las Vegas Sun

March 29, 2024

Real Estate column:

Rotten economy hurts Las Vegas’ prospects for 2011

The real estate outlook for Las Vegas in 2011 is dismal from a national perspective and deep-pocketed investors are likely to focus on other markets, according to a New York-based real estate analyst.

Mitchell Roschelle, an executive with PricewaterhouseCoopers, said real estate investors look at jobs, and with Las Vegas’ unemployment rate at 15 percent, it will be a negative factor in attracting money to Southern Nevada to purchase and develop properties, he said.

“National and international investors we talk to look at Las Vegas as a market where there are problems,” Roschelle said. “There are job growth issues and since jobs are the engine for real estate investment, they’re not bullish on any market that has risk that jobs won’t be created in the near future. That’s the broad point of view of Vegas.”

Roschelle appeared in Las Vegas on Nov. 10 to outline the emerging trends in real estate in 2011 as part of an annual presentation by the Nevada chapter of the Urban Land Institute. A report prepared by PricewaterhouseCoopers surveyed 600 people across the country who work in real estate as investors, developers and finance. In addition, 275 executives were also interviewed.

Las Vegas was ranked as one of the weakest markets for multifamily development and homebuilding, only besting Detroit. It also didn’t cast a favorable light on other commercial sectors.

“Las Vegas missed its bets, building too much just as the economy swooned,” the survey said. “Competition from casinos, popping up nationwide, also erodes market share.”

Some investors may be spurred by a buyer’s market caused by that decline and that may spur more capital, Roschelle said. The good news is that it’s not getting worse, he said.

“The bottom line for Vegas is jobs and when you have casinos trying to take the cost out of the business to drive profitability, those jobs have been taken out and there’s only one place to go,” Roschelle said. “If you want to look at opportunities and where the prospects are only positive, Vegas would be a good place. The problem is how long would it take and are you wasting opportunities to deploy capital that has a higher return potential from a time perspective?”

Roschelle is among those who predict commercial foreclosures will increase for markets such as Las Vegas. He’s been credited for coining the term “amend and extend” to replace “pretend and extend” that banks used to keep from foreclosing on commercial properties over the past two years.

Banks are reluctant to foreclosure on commercial properties, but they realize they have to deal with the low-performing loans rather than turn their heads again, he said.

“The days were when a loan matured in 2008 and they couldn’t deal with it, so they just extended it for another two years. Now it’s maturing again in 2010 and they’re not going to close their eyes and extend it to 2012. They’re going to have to do something.”

Lately, that has meant bringing in third parties for capital to reduce the outstanding debt, Roschelle said.

In other news

• The Center for Business and Economic Research will hold its 2011 annual economic outlook from 8 a.m. to 11:45 a.m. Dec. 15 at the M Resort. For more information, call 895-3191.

• Tivoli Village at Queensridge has signed a lease agreement with Merrill Lynch. It will operate 20,000 square feet within Tivoli Village’s office space set to open in March. It is filling 146,000 square feet.

• Tivoli Village at Queensridge has named SK+G Public Relations and VIRGEN Inc. as its two marketing agencies. VIRGEN will spearhead the brand strategy and media planning and buying and website design. SK+G will manage public relations on a national and regional basis.

• Brookings Mountain West co-director Robert Lang will be the featured speaker Nov. 30 at the 11th annual Contractor Awards Luncheon of the Nevada Contractors Association. The event starts at 11:30 a.m. For more information, call 222-0320.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy