Experts: Makeup of real estate in Vegas changing

Kevin Rademacher

Wednesday, May 11, 2005 | 10:48 a.m.

Between high-rise condos and rising home prices, the Las Vegas real estate market is going through significant change.

Where it's headed is difficult to predict, said a panel of industry analysts speaking at a Tuesday breakfast sponsored by In Business Las Vegas, a sister publication of the Sun. The session was held at the Westin Casuarina Hotel & Spa. Jeremy Aguero, principal with the Las Vegas research firm Applied Analysis, said that the Southern Nevada economy still paces the nation with a 7.6 percent employment growth rate.

One out of every five new local jobs is being created in the construction industry. While the numbers point to continued local growth, there are some ominous statistics to be aware of, he said.

In the fourth quarter of 2004, the cost of living in Southern Nevada was -- except for California markets -- greater than that of the top 10 metro areas from which people most commonly migrated to Las Vegas. It marked the first time Las Vegas passed those areas, which include Utah, Arizona and Texas.

"It's pretty damn disconcerting," Aguero said.

At the same time, the number of driver's licenses surrendered at the Department of Motor Vehicles -- for the 12 months ended March 31 -- was down by 5.6 percent over the same 2004 period, Aguero said.

"The question is, is or is it not being affected by the cost of living," he said, emphasizing that while the early indications do no necessarily signal a trend, "it is at least concerning from our standpoint."

Also adding intrigue to the fate of the real estate market is the soaring price of land. The price of vacant land currently sits about $12 a square foot, a 149 percent increase from a year ago.

"In terms of pressing concerns, this one stands very high," Aguero said.

While the price of land rises, construction is getting taller, with high-rise condominium projects in various states of development across the valley. Aguero said his firm estimates that there are currently 107 proposed towers. The units in those towers carry a median price of $410,000, a price tag only 15 percent of the current population can afford.

The panel had varying opinions on just how many of the condo projects will ever be built.

Richard Lee, vice president of First American Title Co., said as many as 50 percent to 75 percent could eventually be built.

"Over time the real essence is that Las Vegas is changing," he said. "Over time there are going to be more buildings built than we can ever imagine."

Aguero predicted that maybe as few as one-in-three of the proposed towers ever go up.

"Some will come, some will go," he said.

Dan Dellenbach of the Restrepo Consulting Group LLC said that marketing will ultimately determine the fate of many of the projects, adding that projects attached to resorts such as the Hard Rock Hotel and the Palms will have an edge.

"The hipster market is here to stay," he said.

Lee agreed.

"You would have to be a dead man in this town to think that those are not going to succeed," he said.

The panel also agreed that long-term concerns over water will not deter condo development.

"If you build it, it will come," Lee said. "It's all a function of money."

Enough money, he reasoned, will allow for pumping water, negotiating for additional water rights or desalting seawater.

"I know one thing for sure, it's going to cost you and I more to live here," Lee added.