Print
E-mail
Share
digg
Newsvine
Facebook
Stumble
Technorati
reddit
Fark
twitterWorst in nation: Las Vegas commercial properties in distress
Steve Marcus
Empty space: This vacant office building at the northwest corner of Rainbow Boulevard and Interstate 215 was constructed by Plise Development. Foreclosure proceedings began with now shut down First National Bank of Nevada.
Fri, Jun 19, 2009 (3 a.m.)
Sun Archives
- Office market depressing land prices in valley (6-12-2009)
- Vacancies don't deter longtime LV developer (6-12-2009)
- Housing collapse gets the blame for industrial market's woes (5-1-2009)
- Phoenix's commercial market shows what awaits Vegas (4-24-2009)
- Industrial vacancy rate soars in Southern Nevada (4-17-2009)
- Las Vegas braces for commercial foreclosures (4-17-2009)
Sun Topics
Sun Coverage
The number of commercial properties facing foreclosure is growing rapidly, and observers said a massive bank takeover of office and retail buildings is likely in the coming months.
In its June 4 report, New York-based Real Capital Analytics said April had the largest increase in properties in default, foreclosure or involved in bankruptcy in this recession. The firm ranked Las Vegas No. 1 in the nation with $9.7 billion worth of properties in distress and another $5.7 billion worth that have been resolved. That’s a bump from its report earlier this year stating the value of troubled loans in Las Vegas was $6.4 billion.
Since the first of the year, lenders have filed default notices against 323 properties in the valley, according to Nevada Title Co.
Most of the bank takeovers have been undeveloped land — more than 90 percent by one estimate — but real estate brokerages say more lenders are starting to take possession of buildings as well.
“The lenders are tightening up, and the deadline is coming on loans, and they are not refinancing,” said Jeff Harris, president of Nevada Title. “That is causing some turmoil. It has been mainly land we have been dealing with so far, but I hear rumblings that buildings are on the way. Hopefully, lenders will loosen up and give people some breathing room.”
Any property takeover by lenders is expected to depress prices more as the lenders seek to get the properties off their books. That could lead to more foreclosures and weaken local and regional banks that made the loans.
Susan Collins, vice president of property management with Gatski Commercial, said that since the end of March her firm has taken over management of six commercial buildings totaling 250,000 square feet after the properties went through receivership.
Collins said she expects to be managing another 400,000 square feet in the next 30 days.
“For the first time in my 20 years in the business, clients are struggling to make mortgage payments,” Collins said. “Properties are going into receivership, and this is the tip of the iceberg. It is going to continue to escalate the rest of 2009.
“Foreclosures hit the residential market, and now it is happening to commercial. It is a whole new ballgame for everybody. We are all trying to feel our way through this. It is coming so rapidly.”
In its report, Real Capital Analytics outlined the $9.7 billion in distressed properties:
• $4.48 billion in land.
• $2.4 billion in hotels.
• $1.6 billion in retail with 5.4 million square feet.
• $830 million in apartments with 7,374 units.
• $177 million in offices with 678,377 square feet.
• $43 million in industrial with 258,819 square feet.
• $27 million in “other” properties.
One of the troubled loans is a default by Triple Five Group’s Great Mall of Las Vegas, one of the more prominent properties.
Cotton said lenders are getting court orders in which properties are put in receivership for those in default. That allows lenders to protect assets with the receiver taking control of the buildings and collecting rent. The owners, meanwhile, are trying to work out a deal with the lender.
With office vacancy surpassing 20 percent and retail and industrial buildings reporting increases in vacancies, landlords are struggling to find tenants.
“We have tenants who have been in business 20 to 30 years that are closing down completely,” Cotton said. “We are seeing a lot of business failures. And with so much space available, there is a lot of competition. When you are trying to renew leases, you have to be aggressive or you will lose tenants.”
Michael Campbell, managing partner of Colliers International, said his firm has at the request of banks taken over management of a variety of properties from undeveloped land to a golf course (Stallion Mountain).
Campbell said he hopes lenders will rewrite loans, but that may be impossible. Meanwhile, many property owners are filing for bankruptcy to postpone foreclosure until they can formulate a plan or as a way to avoid personal guarantees, he said.
“I would say we are headed in a downward direction, but I don’t see that it has ramped up yet,” Campbell said. “With all these loans coming due, there will be more defaults and foreclosures.”
Kevin Higgins, senior vice president of Voit Commercial, said there’s no indication that lenders will ease off on pursuing foreclosures. Lenders tried to work with clients in 2008, but started filing default notices in January, and that is picking up steam. The timeline from filing default notices to foreclosure is four months, he said.
“It is going to be interesting this next six months,” Higgins said.
Discussion: 33 comments so far…
Post a comment
- Most Read
- Discussed
- Most E-mailed
- Corrections officer with Metro killed in U.S. 95 crash
- System fails to catch contractor’s family tie with county
- The pull of a drug, a push to the brink
- Where to watch UFC 106
- Findlay guard Joseph scores 33, talks about UNLV
- UNLV and Southern Illinois will be guarded tonight
- Bishop Gorman takes Sunset Region title in win over Cimarron
- Basic’s magical season continues with trip to state semifinals
- Reid clears major health care hurdle, daunting weeks ahead
- Was there an ulterior motive in parking the stripper-mobile?
Blogs
Culture and Entertainment
UFC 106 walk-in music: Griffin changes his tune, secures win over Ortiz
The Kats Report
For props, Lewis Black needs only his manic delivery and torrid material (7 Comments)
Elsewhere
Sands China raises $2.5 billion in Hong Kong IPO (2 Comments)
Marquardt v. Sonnen scheduled for UFC 109
Bloggity, Bloggity, Bloggity
Will a fourth consecutive title by Jimmie Johnson be good or bad for NASCAR? (4 Comments)
Top Chef: Las Vegas
The Jet Stream: And then there were four
Top Chef Episode 12: On keeping it simple
- Live chat
- Tuesday, noon PST
- Chat with Krista Creelman
- Problem Gambling Center executive director Krista Creelman will answer questions about gambling addiction from Las Vegas Sun readers from noon to 1 p.m. Tuesday, Nov. ... Submit question
Calendar »
- 22 Sun
- 23 Mon
- 24 Tue
- 25 Wed
- 26 Thu
-
The Four Tops at The Orleans Showroom
Orleans Hotel-Casino
-
The Chase at Downtown Cocktail Room
Downtown Cocktail Room | 10 p.m. to 11:59 p.m.
-
Lady Gaga album release party at Revolution Lounge
Beatles Revolution Lounge | 10 p.m. to 11:59 p.m.
-
Food drive at Christian Audigier
Christian Audigier The Nightclub | 10 p.m. to 11:59 p.m.
-
Above & Beyond at Moon
Moon Nightclub | 10 p.m. to 11:59 p.m.
The Sun
Locally owned and independent for more than 50 years.
Deeeeep Recession!
Campbell, is that you?! Way to go with Colliers, I forgot you had that venture!
Congrats!
:0)
More than 10% unemployment lasting more than 6 months equals a depression according to some economists. Are we there yet?
This is the third wave, homes/condos, hospitality, now commercial. That area around 215 and rainbow is a real ghost town, Manhattan West Condos is stalled (80% finished) and all the commercial vacancies. My dentist was saying he was overstaffed. People will let there teeth go. I wonder if Hospitals will be next? Look how many have been built? I think your looking at 5 years before this recovers, and who is going to build anything now?
I was out at the M Resort-that new resort- on Friday, there were about 15 people in the Buffet at 9 am. I think they are going to fold.
Maybe China will invade us and these buildings can be filed with occupation troops?
When they note that people are filing BK because of "personal guarantees", you know times are bad. When a person puts up their own credit to finance a project, and the project fails, they are in deep trouble. Sorry, but they should have known better.
mred
I myself have not gone for some routine tests my doctor wanted me to do because when I was unemployed, I fell behind in paying lab bills and the like and I told her I couldn't afford ANOTHER bill from these places. Insurance only pays for so much and in my opinion, they overcharge you anyway because you do have insurance.
Don't assume M Resrot will fold. You may have caught it at an off time - a Friday morning. People are still working here and Friday morning is not the time to go to a casino buffet for most working people!! Try a Saturday or Sunday morning and see what happens!!! My guess it will be crowded. (Who goes to casinos on a Friday morning anyway???) The Strip has been packed the last couple of weekends so people are still coming here, albeit not spending as much money as they did a year or two ago. My friends and I go to Rampart a lot and on a Friday evening - it is PACKED, so reserve judgment on the M Resort.
Regarding the story at hand. There are way too many of these commercial strip malls that have been built. Everywhere. How many nails salons, UPS stores, etc can this city have?? And these things were built within half a mile/mile of each other. As far as the larger commercial properties, there aren't enough businesses here to warrant so many low rise buildings to be built. It never DID have enough businesses, even in the last 10 years and it won't in the future either. Again...it is, and was, greed that caused so many problems Las Vegas is facing today.
PS
"I wonder if Hospitals will be next? Look how many have been built?"
How many have been built??? Where?? One in the southern end of the valley and one in the northwest part of the valley. That is not "too many"!! Per population - we don't have enough hospitals. All are a good 10-15 minute ride in an ambulance (if you're lucky) so hopefully, you won't have to get to one quickly if you have to. Then you'll be changing your mind about Vegas having too many hospitals. Cities never have enough hospitals.
you know it's bad when there are more cars in front of archie's thai then in the parking lots of the office buildings in that area.
With the tenants leaving and rental income declining this results in far less value for commercial and retail property. This is going to greatly effect property taxes in the coming year. Have the cities and counties started decreasing their budgets to reflect this or are they going to pretend it's a shcok next year when revenues are down and they begin looking to raise taxes again?
Hey all. This week on In Business Las Vegas, we take a closer look at the valley's commercial real estate market and where it's headed with Applied Analysis principal Jeremy Aguero. That's on Las Vegas ONE, Cox Cable Channel 19 at the days and times below:
Saturday
10:00am
Sunday
5:30am
7:30pm
Monday
1:00am
Why is this news now? Anyone with half a brain could have seen this coming a year ago...
Foreclosed office buildings would make conversion condos for those forclosed out of houses / only fair -- found a cool site; Balkingpoints ; incredible satellite view of earth
"Again...it is, and was, greed that caused so many problems Las Vegas is facing today." - I don't think that all of the types of businesses you list (nail salons, etc.) are indicative of greed. Where do you draw the line between greed and the chasing of the American dream? Aren't people entitled to pursue business, earn money, and survive? The only real greed I saw in the past decade was that of the realtors. I also saw a major failure on the part of our city "leaders" to seriously study the impact of all of that rapid growth and the potential for damage that could (and did) result if things went sour. Then again, our local and state "leaders" don't have a clue as to what to do to try to actually attract new kinds of revenue for this state. No, I do not have any ideas of my own; but that's why we elect and PAY these people, is it not?
"I don't think that all of the types of businesses you list (nail salons, etc.) are indicative of greed"
That's not what I meant; I should have been more specific. Sorry. I totally agree with what you said about the realtors, the politicians (which we now can assume that lots of money went under the table to get zoning for a lot of properties that were built circa 2002-2006).
TOTALLY AGREE that the State and City leaders have no clue on how to operate a large city like Las Vegas and get rid of that hick town attitude; the leaders need to attract other businesses, businesses that would generate revenue and jobs. The city is doomed if they keep depending on the casino industry and construction industry - I don't even have to go any further about the construction industry. For this city to survive, the leaders have to start thinking differently or else it will be a ghost town in 20 years, or one huge Section 8 community. They need to hire experienced city planners from other big cities like NY, CHicago, LA who know how to deal with urbal sprawl. People who KNOW how to run things and do things constructively (definitely city engineers from NY and Chicago since those people actually know how to design and build roads!! THey have to "dream" bigger and not just in building mega casino resorts. But consider who is running the show, both on the State level and city level.
And ANY policitian who gives the okay to build ANY MORE master planned communities should get voted out of office or fired. That development they keep talking about on the way to Mt. Charleston; the one that is going to have 15,000 new homes......since there aren't enough homes available here in Vegas!!
Who is Cotton?
you anti-realtor people are morons.
teaser...explain to me how realtors caused this problem, please.
do you blame the cashier at burger king for how much a whopper costs?
no...because a whopper costs the EXACT amount the market ( the public ) will pay for it. if they were charging too much...they wouldn't sell any and they'd be out of business.
realtors do not control the price of real estate, nor do we make people sign loans for homes they can't afford.
how are we any different than a person that builds a building in the hopes of getting rental income from it? according to you, those people are "chasing the dream", but somehow, the guy that FINDS a tenant for that property...to provide you with income...is greedy?
ya, ok.
Cotton says "You're not going to find any tenants anytime soon"
Make these foreclosures into homeless shelters.
With lease rates so dirt cheap out of state conpanies might check them out. There must a use for all the commercial space.
Perfectly simple solution: condemn and demolish the old, run-down parts of town... forcing businesses and renters into the new parts of town. Then there's a fresh start to building up the urban areas.
No wait, let's sit around and do nothing for the next 5 years and watch crime and unemployment skyrocket.
I'm betting the city and the private developers and banks, etc. opt for the latter... hence, I've already moved out. Good luck!
There's a new catch phrase spreading around. It's called the NEW Normal.It says a lot for what was and what will be.
Totally agree with Mandy. I live in Henderson, and the areas around Black Mountain are littered with empty buildings, solid waste piles, and deserted developments. The city has no clue how to regulate development. Now we just elected another lifetime public servant Mayor who has been sucking at the public trough for more than 20 years. More of the samo, samo. Well, we get what we vote for, so just get ready to bend over for the coming years. Grab your ankles. It must be the sordid school system turning out dumbbells by the thousands. Oh well, working for tips is great. Right???
I remember a catch phrase called "Manhattanization". And I remember "priced out". And the "new reality [sic]" about financing a house.
At least everybody knows that this is the first time ever this has happened. China, India, Rome, etc. never had to deal with this, huh?
NEW Normal? You've got me banging my head against the wall.
Don't blame your politicians, it's not what they're there for. If you want to change a law, that is the only reason they exist. What needs to happen is for people to formulate a vision of what they want to see in 50 years. Take a trip downtown and get lost... on purpose. You'll see that developing a 7/11 on a small lot, and then slapping up a subdivision, and on and on, just isn't going to cut it when the city gets bigger and bigger. Now you have the best city to build a brighter future... and you're sitting in on the best moment to plan it better, and everyone is listening to you... Quit bitching.
I went to South Point today and it was very busy.
I say gas at $4 agallon would be the death of LV. Build that damn train.
Still no word on who Cotton is. I'm guessing he works for Triple Five or Real Capital Analytics, but Wargo forgot to give him props.
So Chicago knows how to design and build roads. Take a trip to Chicago and drive around a lot and get back to us with the horror stories in your driving adventures. Many of the roads turn into parking lots during rush hour which seems to last 24 hours a day.
The titans of business and government only have one thing on their mind. Growth. Growth solves every problem, at least in their eyes. They close their eyes to the problems that growth brings. All the big cities want those big office buildings to bring more people and more spending into the city. Instead of getting those jobs out of the city and spread them around to reduce traffic, pollution, gas consumption, and travel time for the people, those cities are trying every crazy idea to keep those jobs and add more. Many CEO's and politicians want illegals, and the baggage they bring, because the more you have the more growth there is. Growth allows those in power to take the easy way out rather than making the tough decisions. We all see the disasterous results of their lack of growing a pair.
Nick - At 4.00 per gallon, or even 5.00, a round trip for two from Los Angeles to Las Vegas would still cost more on a train than to drive. Furthermore, if that "damn train" terminated in Victorville, no one would take it.
this is simply round 2 of the depression
banks will have to let go of all the foreclosed houses soon otherwise they will go bust themselves...
one thing we noticed about "the district" it was no different than a strip mall with a few pretty trees, what vegas needs is small boutique shops with different goods , the type of shop the owner serves you, the type of shop you can buy different goods from...
this is what strip malls should be like, not all walmarts, wholefoods, applebees, ann taylors, etc even town square failed and they got greedy and filled it with more of the same high street stores..
I was preparing to write a post regarding the irrational blaming of Realtors for our current financial woes but Stevem hit the nail on the head.
Real Estate agents are not at fault here. Sure there may have been and there there may still be some bad ones out there. But the reputations will be of those who come out the other side. And it's not going to be easy, for any one. The problem is and has been the lenders. With foreclosure it's even worse. Banks will receive an offer, then sit on it because they feel they MIGHT get another or better offer. If they do accept it, they send back not a signed copy of the contract, but an adendum which basicly re-writes the entire contract. They often use out of area Title Companies who don't have a clue about your area and don't seem to have a clue about what they are doing.
So no, I don't see Realtors as the ones who are at fault here. What I see is a banking industy that became way to large and far to sure of itself.
Consumer spending makes up 70% of the Gross Domestic Product.Unemployment levels continue rising.People out of work only buy what they need.People still working are becoming more frugal with their spending.The economy is still shrinking,unable to provide enough jobs for everyone looking for work.No jobs,no paychecks,no consumer spending,no economic growth.I live in Northeast Florida and the same thing is happening here.It could take years for this economy to stabalize.In the meantime,those of us who have been unemployed for months are struggling now.Many Americans are losing everything they have because they have nothing or very little to fall back on.