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twitterLas Vegas condo hotels remain a tough sell — just ask Trump
Fri, Nov 20, 2009 (3 a.m.)
Sun Coverage
Sun Archives
- Get ‘em while they’re cold (8-14-2009)
- Condos struggle in icy market (2-6-2009)
- Units aren’t closing so Trump says: Rent ’em out (1-24-2009)
- Trump Tower’s shift to apartments could become trend (1-23-2009)
Sales in the local high-rise market rose 7 percentage points in the third quarter, but closings at the Trump International have been essentially nonexistent, according to the latest report by a Las Vegas research firm.
SalesTraq reported that 23 percent of the 1,282 units at Trump, a condo hotel, have closed through the third quarter, the same percentage as in the second quarter.
The condo-hotel market especially has been hurt by buyers’ inability to close because of the lack of financing and because the concept is struggling across the valley. Condo-hotel owners share revenue generated by hotel room rentals with the operator, but drops in visitor volume and room rates have cut into that.
Steve Bottfeld, executive vice president of Marketing Solutions, says the failure of units closing at Trump centers on its location next to the Fashion Show mall. Nearby Echelon Place halted its casino development, and other projects were delayed, thus detracting from it, he says.
Trump, however, can get a shot in the arm from the opening of CityCenter, which should bring in more visitors and make the Trump easier to sell, Bottfeld says.
“CityCenter is going to have a greater impact than the Mirage did in 1989 and Bellagio did in 1998,” he says.
In Las Vegas 45 percent of all high-rise units have been sold through Sept. 30. That’s up from 38 percent at the end of June.
Palms Place, another condo hotel, saw closings rise from 58 percent to 62 percent at the end of the third quarter.
At the third tower at Panorama, closings jumped from 38 percent in the second quarter to 64 percent in the third. Juhl rose from 6 percent to 10 percent, and One Las Vegas went from 15 percent to 17 percent. Newport Lofts in downtown Las Vegas rose from 67 percent to 70 percent and Allure rose 1 percentage point to 53 percent.
Turnberry Towers remained at 52 percent; Streamline Towers stalled at 10 percent; Sky Las Vegas stayed at 80 percent and Queensridge remained at 62 percent.
Economy report released
The Southern Nevada Index of Leading Economic Indicators dropped in October, suggesting the region’s recession will go on through at least February, according to the report released by UNLV’s Center for Business and Economic Research.
The October index measures economic conditions in August. The index fell 3.73 percent from October 2008, and all 10 sectors used in the analysis declined. Segments measured include gaming, visitor counts, convention attendance, retail sales, and commercial and residential construction.
Keith Schwer, director of the center, said the Clark County Business Activity Index fell 11 percent during the past year and 1.5 percent from July.
The Tourism Index is forming a bottom, holding fairly steady between May and August, he said. The Construction Index, however, was weak, down 34 percent over the past year, he said.
Apartment market report
Applied Analysis reports that demand for professionally managed apartments is still weak and rents fell during the third quarter to reach their lowest level since 2006’s first quarter.
The average occupancy rate rose to 91.1 percent in the third quarter, up from 90.5 percent in the second quarter, but that’s below the 93.7 percent rate in 2008’s third quarter, the firm reports.
Average rents fell for four consecutive quarters with the price averaging $840 per unit per month. That is down from $857 in the second quarter, a 2 percent decline. Rents have fallen 5.6 percent since the third quarter of 2008.
The apartment market’s future isn’t looking good because of the weak job picture, the firm says. It won’t recover until home prices stabilize and foreclosures begin to fall.
Jake Joyce, Applied Analysis project manager, says most future apartment-sale transactions will likely result from lender sales.
The southwest valley had the highest rents in the third quarter at $994 per month, while the northeast had the lowest rents at $708. Rents in the southwest valley fell 2 percent and fell 8 percent in the south valley in the past year.
The southwest area had the highest occupancy at 92.4 percent, and the northwest had the lowest occupancy at 89 percent.
Apartment market specialist Michael Belnick says the number of notices of default for apartment complexes is climbing, setting the stage for more foreclosures. Even the bigger properties are starting to fall, he adds.
Among fourplexes through the third quarter, the 284 sales were 89 percent higher than 2008. Despite that increase, the sales volume declined 10 percent, reflecting the drop in prices and large number of foreclosures. The price per unit was $39,100, a 52 percent decline from 2008.
In the five to 99-unit market, 31 buildings sold, three more than in 2008. The average price per unit fell 25 percent to $57,500. Nine buildings with 100 units sold, four less than in 2008. The average price per unit was $34,700, a decline of 57 percent.
In other news
• The Douglas Wilson Cos. report the sale of the distressed Spanish View Towers condominiums on behalf of the U.S. trustee as part of bankruptcy proceedings. The buyer was OneCap Holding Corp., which was the original financier, said Tigg Mitchell, director of brokerage services at Douglas Wilson. Mitchell says OneCap, which held the trust deeds on the property valued at $36 million, will hold the project until the market improves. Construction stopped in July 2006. It has a partially constructed underground garage. The project went into bankruptcy in 2007 when developer Tower Homes was served an involuntary petition by several of the mechanic’ liens creditors. The project near the Las Vegas Beltway and Buffalo Drive has entitlements for 390 units and 29,000 square feet of retail.
Brian Wargo covers real estate and law for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4011 or at wargo@lasvegassun.com.
Discussion: 19 comments so far…
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Key to these sales are amazing low prices, down up to 60% from peak pricing!!!
bottfeld is a moron. trump hasn't closed anything because prices are still too high.
"city center is going to have a greater impact than the mirage in 1989 and bellagio did in 1998." did bottfeld actually say this? who is stupid enough to pay this shmuck money for advice? no wonder vegas is in the toilet. city center will have NO impact whatsoever.
I'd like to buy one of those $39,000 apartments!
If City Center is going to have such a great impact on the city lets build another one. Borrow and spend makes everything better.
Las Vegas is turning into just another city. It has lost it's identity. I never thought this could be possible with all of the newly built themed resorts, and left over properties from the famed past. The northern end of the strip offered tourists a taste of Las Vegas past, while the southern end offered the new. These two complimented each other and made Vegas absolutely a breathtaking experience unlike any other place in the world. Now it is being reported that places like City Center are going to revitalize the city like the Mirage did in '89? I sincerely doubt it. Who is going to get excited about condo complexes? you can find them all over the world. What a SHAME!
Agree with you totally eviron...we really miss what Vegas used to be..its really sad what the big shots have done. Back to the basics..and it would turn around, but then what the h#*% would they do with all those buildings??? Too, bad they just coulden't emplode those...like they did all of the nostalgic casinos of the past..they were the best!!! And yes, then they could well afford to loosen their slots, offer comps, ect...it would be wonderful, woulden't it???
Fellow Idiots - I want my deposit back on that Trump deal and I want it with interest. I just found out Las Vegas is not a market in which to invest. Will the real estate agent who filled out my purchase contract please leave the check at Bill's Gamblin' Place at the desk by the hotdog stand. I am hoping to couple it with my winnings at the tables and hit on a place in City Center to rent for a year. First and last and a doggie dep. and I'll be in, mortgate free, too. Furnishings from Aaron Rents. Thanks to the Good Lord above. Then I can walk to Twist for lunch and dinner. Oh man, there's no place in the world like Las Vegas, and I include Montecarlo in that. Thank You.
I visit 4 times a year for 3 days max at a time then I get bored putting cash in machines. Live in vegas no thanks.
You may not live here, but you care enough to read our online paper
and post comments. You don't have to live here, we thank you much
for visiting!!
"...Critics have charged that the Las Vegas market is in an L-shaped recession, meaning that the sluggishness will continue indefinitely. Steve, on the other hand, asserts that the recession is U-shaped, lasting only about two years. That two-year slump is set to expire in 2008..."
ARE YOU KIDDING ME..? OVER AND DONE WITH IN 2008?
This is another quote from "the man" Steve Bottfeld. This guy holds PAY seminars for Realtors and construction people. They are called "Crystal Ball Seminars". And they are billed as "networking" events.
I think this guy's crystal ball is cracked. And he's collectin' dough off of the lame-brained for a price.
Read it for yourself:
http://erealestateexec.com/local_profile...
That's funny Wizard. Steve Bottfeld is just another snake oil salesman that got lucky on early predictions but is way off base on his thoughts for the future. I wonder what he is selling today?
i don't know who is a bigger hack, bottfeld or salestraqs' larry murphy. yeah, the same larry murphy who in the spring of 2007 announced to a packed house of realtors that "the market has officially hit bottom". why do we give these two an audience, especially when there are way more credible sources out there like schwer and restrepo?
There are going to unbelievable Deals here in 2 yrs or so , now is not the time to buy !!
Maybe we can get Nevada to set up a Condo Keno. Winners recieve a brand new high-rise condo. It could also take care of our recent Nevada budget crisis.
Mr. Bottfeld and also Applied Analysis: If Turnberry is sitting at 52 percent, that's a pretty honest barometer. The property has excellent ingress-exgress off the Strip, but close. Turnberry close to Wynn Resorts land for future development is the reason MGM Mirage built the Residences and later plugged in a significant condo, or condo-hotel, element into City Center. They want to hold customers close for FB and casino revenues, they feared a northern migration of higher end customers should Wynn try something with his large tract. City Center pretty much assures nobody is doing anything, for a good while.
I can't help but pity those poor saps who are paying $700K for a condohotel unit in CityCenter's Vdara tower, thinking that the "great income" they will make by having MGM rent out their unit will generate a nice income stream. Low room rates and way fewer visitors minus mortgage, HOA fees, split with MGM, rental fees, cleaning fees, property taxes, etc equal being so upside-down, it's sickening!
City Centre will only flood the market, Trump knows this and is adding "spin" to survive.