Analyst: CityCenter’s opening will ‘push economy forward’

By Buck Wargo

Thursday, Dec. 17, 2009 | 11:53 a.m.

A day after a UNLV report painted a pessimistic picture about the Las Vegas economy, a local analyst pointed to signs of improvement and at least some hope.

During a video conference today sponsored by Nevada State Bank, Jeremy Aguero, a principal at Applied Analysis, said Las Vegas has a lot to overcome with its job losses, overdevelopment and stalled projects. But Aguero said signs of improvement in the national economy are starting to pay dividends in Las Vegas with visitor volume in September and October ahead of 2008, reversing the trend of previous months. He said the opening of CityCenter should help the city build on that growth in visitors as other resort openings have done in the past.

“We are bullish and hopeful on the opening of CityCenter that it will continue to push our economy forward,” Aguero said.

A report, however, issued Wednesday by the Center for Business and Economic Research at UNLV suggested CityCenter won’t be a panacea for the Las Vegas economy and will cannibalize from other properties and lower room rates.

“We had an massive expansion of rooms during the worst economic crisis since the 1980s,” said Mary Riddel, the center’s interim director. “We are in trouble. We are overbuilt.”

Aguero contends Southern Nevada may not lag much behind the recovery of the nation as a whole because as people have more disposable income, they are going to want to come to Las Vegas. Las Vegas has become a low-cost alternative where money can go much further than other tourist destinations, he said.

“The nation’s economy and global economy are both improving, and we are seeing some signs here in Nevada as well,” said Aguero, who cited fewer job loss claims in a city that has lost 88,400 jobs from its peak.

Aguero tempered his optimism, however, by pointing out that consumers' disposal income to spend won’t be as great over the next 10 years as it has been in the past.

This will mark the end of the megaresort era with the focus in the next decade not building new projects, but filling rooms, he said. Aguero cited concerns about the commercial real estate market with office vacancy running at about 25 percent and retail and industrial vacancies surpassing 10 percent.

“Southern Nevada is in a position we have not seen in a long time,” Aguero said. “There is no next project.”

Las Vegas also remains at risk for an increase in home foreclosures, but Aguero said it appears home prices are stabilizing.

By the latest count, eight of 100 homes are vacant, for a total of 64,800, Aguero said. That will require a population growth of 97,000 to fill that space, which means about 49,000 jobs.

The economy needs to create 75,000 jobs to drop the jobless rate from 13 percent to 5 or 5.5 percent, he said.

Only massive job creation will lower the vacancy rate for commercial buildings, he said.