Is commercial real estate finally coming back to life?

By Buck Wargo

Friday, Oct. 15, 2010 | 3 a.m.

Analysts are saying the commercial real estate market is showing signs of life despite the weakness in the local economy.

Last week, CB Richard Ellis reported the office vacancy rate declined for the first time in seven quarters. The retail vacancy rate fell as well.

That has been backed up by John Stater, research director at Colliers International Las Vegas, who said the office vacancy rate was 23.5 percent at the end of the third quarter, down 0.4 percent from the second quarter and a drop of nearly 10 percent from 2009’s third quarter.

The retail vacancy rate was 10.5 percent, which is up 4.3 percent from the second quarter, but down 26 percent from 2009’s third quarter, Stater said.

“Unemployment in some key sectors appears to have leveled off, which was contributing to the commercial real estate free fall,” Stater said.

The vacancy rate in the industrial market rose 0.7 percent from the second quarter to 15.6 percent and is up 17 percent from 2009’s third quarter, Stater said.

But he said there’s good new in that 177,000 more square feet of industrial space were occupied than vacated in the third quarter. That’s a 673,000-square-foot increase from the second quarter and nearly 1 million-square-foot increase from the 2009’s third quarter.

“This is the first time the office and industrial sectors have shown signs of life in nearly two years,” Stater said.

Stater said 2011 looks promising because even weak job growth should help any recovery.

Stater predicted land prices will decline again in the fourth quarter because developers’ demand remains weak.

Most out-of-state investors are fearful of speculating on land because of the high unemployment rate and overdevelopment, he said.

Economic outlook

The Southern Nevada economy should hold steady over the next four months but not show enough improvement to create jobs, according to the latest report from UNLV’s Center for Business and Economic Research.

The Southern Nevada Index of Leading Economic Indicators rose by 0.29 percent in September compared with August. The index, which measures economic activity in July, was boosted by visitor volume and gross gaming revenue, but was hindered by lower retail sales and residential and commercial construction.

Bob Potts, the center’s assistant director, said the yearlong up-and-down pattern for the index does not show any trend. That suggests little change in the number of Southern Nevada jobs in four to six months.

The Clark County Construction Index was 50.64, the lowest level since January 1988 when the index was 50.37. Construction employment is almost 2 1/2 times more than it was 22 years ago, but residential and commercial permits are about one-third of what they were, he said.

“This shift suggests that workers in this sector are no longer active in new building but have found other construction-related activities such as repair, remodel and infrastructure work,” Potts said.

Home sales decline

The sale of homes in Southern Nevada by Realtors tailed off in September, and that weakened demand has dropped prices, according to the latest report from the Greater Las Vegas Association of Realtors.

The 2,806 sales of single-family homes in September were down 0.5 percent from August and down 16.4 percent from September 2009, the group reported.

The median price fell 3.6 percent from August to September, from $140,000 to $135,000. The median price is down 2.2 percent from September 2009.

Association President Rick Shelton said the numbers suggest the Las Vegas housing market is bouncing along the bottom. He said the end of the federal tax credit April 30 that fueled sales last summer is responsible for slowing sales in recent months.

In the condominium and town-house market, the 797 sales in September were 2.7 percent lower than August, and 7.2 percent lower than September 2009.

The median prices of condominiums and town houses sold fell 3 percent in September to $65,000. That price is 1.1 percent lower than September 2009.

The numbers reflect sales of homes and condos in Clark, Nye, Lincoln and White Pine counties that are part of the Multiple Listing Service.

The association reported that 42 percent of the sales in September were owned by banks, down from 43 percent in August. Short sales comprised 30 percent of September’s sales, the same percentage as August.

The percentage of homes purchased with cash accounted for 45.4 percent of the sales in September, about the same as August.

September marked the fifth consecutive month that inventory has increased, Shelton said. The Realtors reported 22,719 homes were listed, 9 percent higher than September 2009. The number of homes listed without offers was 11,887, a 50 percent increase over September 2009.

In other news

• Patty Nooney, managing director of the CB Richard Ellis office in Las Vegas, is leaving to take a position for the firm in Florida. Nooney, who came to Las Vegas from St. Louis in 2008, has been named to a new position — senior managing director of brokerage, project management and asset services. She will move to Florida by the end of the year. Her replacement has not been named.

• CB Richard Ellis Las Vegas will host Jim Costello, a principal with CB Richard Ellis’ Econometric Advisors, will provide some perspective on the global, U.S. and Nevada economies. The breakfast from 9 to 10:30 a.m. at CB Richard Ellis, 3993 Howard Hughes Parkway. For more information, call 369-4845.

• The College of Southern Nevada Business Department and the Real Estate Help Center will hold a free symposium Oct. 16 on the mortgage crisis to help the public understand loan modifications and short sales and get other questions answered. The program from 1 to 4 p.m. will be at the Charleston campus, 6375 W. Charleston Blvd., Building 1, Room 108.

• Stoneridge Capital Partners, a Newport Beach, Calif.-based real estate investment company, has acquired Sunset Plaza, a 100,000-square-foot office building at 280 Pilot Road. The company did not disclose the price or the seller.

• The theme of the Oct. 21 Crystal Ball housing seminar is “Where Do We Go From Here” not only as a industry but as a city, said Larry Murphy, president of SalesTraq which sponsors the quarterly event. It will feature Bob Mirman, CEO and founder of California-based Eliant, a firm that directs the development of administration of consumer research for homebuilders. Ken Baxter, owner of Performance Marketing America, will talk about the future of Las Vegas. Murphy will outline the third-quarter housing stats and a question-and-answer session will follow. Registration starts at 7:30 a.m. and the program starts at 8:15 a.m. at View 215, 9130 W. Russell Road. To register, go tocrystalballseminars.com. Cost is $29.