Experts say LV-area awash in land options

Jennifer Robison

Tuesday, Feb. 19, 2002 | 10:51 a.m.

Las Vegas builders and real estate analysts, witnesses to skyrocketing local land costs, regularly blame a land shortage for the steep prices developable local land now commands.

But experts at a February Urban Land Institute seminar concluded the local land shortage is largely artificial, and the valley has substantial amounts of land available for development provided builders and developers get some cooperation from numerous government agencies.

"We keep hearing there's a lack of developable land, and we don't think based on our research that it's a question of physical limitations," said John Restrepo of Restrepo Consulting Group, a local real estate research firm. "It's more manmade limitations."

Restrepo's data, which he compiled with Jeremy Aguero of the research firm Applied Analysis, revealed that at the end of 2000, the Clark County Assessor's office showed 182,000 acres of vacant land in the Las Vegas Valley.

Restrepo said half that land isn't suitable for development for a variety of reasons -- roads and parks already occupy some of the acreage, and environmental issues such as flood basins prevent building on other parcels.

"That leaves us with 91,000 acres of developable land," Restrepo said. "From 1990 to 2000, we absorbed about 3,800 acres a year in the valley for all types of land uses. If you follow those absorption rates, we essentially have 24 years of developable land in the valley."

Restrepo said several issues complicate that assessment, however, by impeding the development process.

First, developable land in the valley rarely comes in the large parcels master-planned developers and builders prefer.

Many home builders and commercial developers are faced with piecemeal assemblage of small one- and two-acre plots to create the minimum 20-acre site that would make a project financially feasible.

For master-planned developers, finding the 1,000-acre-plus chunks they prefer is nearly impossible these days, with the exception of a combined 13,500 acres of Bureau of Land Management property the entity is gradually auctioning off in North Las Vegas and Henderson.

Adding to the obstacles developers and builders face in putting together multiple small parcels for larger development is a reluctance among private landowners to sell their property.

"Everybody loves their ground," said panelist Scott Gragson, a land broker with Colliers International who has been buying properties along I-215 for the last decade. "When we're talking to a seller who is three miles from infrastructure and other buildings, a lot of times they've talked to a friend who told them industrial land is going for $8 a foot, and now they think they have $8-a-foot land.

"I do not believe there's a shortage of land. I think there's a shortage of reasonable sellers."

Another cause of the artificial land shortage comes from the BLM itself.

Its "deliberate but relatively slow public release process" has made big parcels of land a precious commodity, Restrepo said.

In addition, Restrepo cited tightening lending guidelines, which he said make land less affordable, and the somewhat sluggish spread of infrastructure to outlying areas as factors behind the Valley's artificial land shortage.

Though developable land seems in short supply in the near term, Restrepo said population growth will place political pressures on the BLM to open up more land for development in the long run.

Some panelists said the BLM can take steps now to ease the pressure on land availability and prices.

Tim Snow, president and chief executive of the Thomas & Mack Development Group, said the BLM should "coordinate land sales with our transportation system and the kind of zoning that will facilitate (commercial) uses."

Snow also said the agency should work with municipalities to determine uses for land up for auction, and it should place bigger parcels on the auction block.

The BLM could also offer terms and phase deals on larger parcels to relieve the pressure on developers to come up with tens of millions of dollars in cash up front to purchase large properties, he said.

Restrepo suggested the BLM could free up more abundant, affordable land by holding more auctions per year than the two it currently schedules, though the BLM may not cotton to such an idea.

"The longer they hold their land, the more it appreciates, so there's not a huge incentive for the BLM to create more auctions and encourage jurisdictions to participate in helping release the land."

Though the BLM plays a key role in land availability and affordability, local developers and builders aren't relying solely on the BLM to resolve land scarcity issues.

Panelist Steven Molasky, of Pacific Properties, said he believes the market is ready for higher-density apartment development -- projects consisting of three- and four-story buildings on top of parking garages, for example.

Infill development is another potential solution for builders looking for land.

Terri Sturm, of retail developer Territory Inc., said her company continues to scan the valley for potential infill and redevelopment sites, though those efforts have been stymied by inconsistent support from area municipalities.

"There are a lot of new and existing anchor tenants coming into the market who are looking for infill opportunities," Sturm said, "but it's pretty difficult to find a parcel of land much larger than five acres, much less the 20, 30 or 40 acres you would need to assemble to put together a project of (feasible) size.

"I personally have met with several people down at the (Las Vegas) redevelopment agency, and with the county and the city of Henderson, looking at possibilities for redevelopment. But until the governments all come together and help the developers pull these lands together, I don't know that you're going to see a lot of redevelopment."

"In our hearts, we want to see redevelopment, but in our wallets, we say, 'Why go redevelop when it's much easier to go to an area that's newer, with new infrastructure coming in, that's the path of least resistance?' " said Gragson, of Colliers International. "When you're going into redevelopment, you're buying properties and scraping them, and in that case you're probably paying quite a bit more per acre. It's just more difficult to do that unless the city incentivizes you. I think we're several years away from that."