Vegas rental rates continue to rise

Kevin Rademacher

Friday, June 3, 2005 | 11:06 a.m.

While Las Vegas' nation-leading housing appreciation rate continues to grab headlines, the increasingly congested apartment market also is getting more expensive.

Applied Analysis, a Las Vegas research firm, said first-quarter trends saw increases in rent, rent per square foot and occupancy rates.

"Housing affordability has become a concern for many, as income levels have not kept pace with residential price appreciation," Brian Gordon, a principal with Applied Analysis, said in a statement. "That having been said, strong population and employment growth continue to expand the base of residents seeking housing, which bodes well for the rental market."

The average apartment rent in the first quarter of 2005 reached $788 across the valley, up from $750 a year ago, the Applied Analysis report said. That jump marks an increase of 5 percent. Those rates translate to 88 cents a square foot, up from 83 cents for the same 2004 period.

Average occupancy rates for the quarter reached 96.3 percent, up from 94.5 percent in the first quarter 2004.

The average apartment units in the valley averaged 899 square feet.

Gordon said there is little indication that the trend will ease.

"We believe strength in pricing will continue in the next several quarters with rents rising by more pronounced rates," he said. "Growth rates may achieve 8 percent by the close of 2005. Average rents will break the $800 per unit level next quarter, with per square foot pricing reaching 90 cents valleywide, while concessions offered at many communities continue to remain scarce."

Further complicating the local housing market has been the push to convert apartment units to condominium complexes.

The Applied Analysis report indicated that the sale of apartment complexes for conversion pushed the value of the units dramatically higher.

"The flurry of properties acquired with the intent of conversion to condominium units has allowed property owners to achieve pricing premiums well above those previously realized," Christopher Bentley, principal with the Bentley Group, said in the report.

"During the first three months of 2005, a handful of transactions contributed to an average sales price per unit of nearly $80,000, 31 percent higher than the $53,000 per unit reported just one year ago," Bentley added.