Las Vegas Commercial Real Estate Investment

The commercial real estate property market in Las Vegas presents an attractive opportunity for investors across the country. With a rapidly increasing population, minimal rates of unemployment, and a thriving tourism-driven economy, Las Vegas emerges as a compelling destination for commercial real estate professionals and burgeoning businesses alike.

If your objective is to enhance the efficiency of your real estate portfolio, delving into the realm of structured debt within the commercial real estate sector can prove highly advantageous. What makes this approach so valuable? The consistent and dependable cash flow resulting from fixed-interest payments establishes a robust foundation for investments centered around debt. Irrespective of market fluctuations, borrowers consistently fulfill their monthly obligations, thus ensuring the preservation of the value of your investment.

The Landscape of  Las Vegas Commercial Real Estate

Nestled in the heart of Nevada, Las Vegas shines as a hub of innovation, entertainment, and tourism. Over the past couple of decades, this region has witnessed remarkable growth in both population and economy, propelled by a thriving job market, plus sought-after climate, and an array of business incentives. This transformation has turned Las Vegas and its adjacent areas into hotspots for individuals seeking to venture into the realm of commercial real estate investment.

A significant catalyst behind this surge in population is the city's cost-effective standard of living plus its advantageous tax environment. Nevada boasts the absence of corporate income tax or personal income tax. This distinctive tax landscape has magnetized individuals and businesses alike, contributing substantially to the city's expansion and the subsequent surge in real estate demand.

Moreover, Las Vegas has emerged as an increasingly captivating hub for technology enterprises and startups, presenting enticing opportunities for investors aiming to leverage the growing tech ecosystem. This convergence of favorable business circumstances, a thriving economy, and a strong job market seamlessly positions Clark County and Las Vegas as attractive choices for individuals looking to delve into the world of commercial real estate investment in Nevada.

Las Vegas: A Closer Look at the Region

  • Drawing insights from the 2021 US Census Bureau's data, the estimation of the populace of the Las Vegas metro area nears a significant 2.3M.
  • Notably, Clark County, the very home of Las Vegas, has witnessed a substantial surge in population over the past ten years, boasting an impressive growth rate from 2010-2022 exceeding 19%. This surge is contributed by a flourishing job landscape, an appealing climate, and the buoyancy of the city's tourism industry.
  • With Las Vegas itself harboring close to 647,000 residents, as opposed to the 584,000 recorded in 2010, it secures its standing as Nevada's largest city plus the 25th largest city across the entire nation. 
  • According to the latest report from Data USA, the metro area's population growth clocks in at a commendable 2.15% on YOY basis.
  • Median age, standing at 38.1 years, closely mirrors figures observed in both Nevada and the US overall. Notably, around 41 percent of the residents fall within the age range of 20 to 49, contributing to the city's dynamic demographic.
  • When it comes to economic metrics, the region demonstrates its vibrancy. The median per capita income registers at $33,387, while the median household income paints a promising picture at $63,677.

Employment Landscape of Las Vegas

  • At the core of Las Vegas's economic framework lies a robust tourism industry that plays a pivotal role in bolstering the city's revenue streams. Beyond the realm of tourism, the urban landscape hosts a varied range of businesses, fostering a multifaceted job market. As of February 2023, the metropolitan area registers an unemployment rate of 6.0%, marginally surpassing the national average.
  • Notably, the recent expansion in employment opportunities has been substantial. Figures from the USA reveal a steady annual growth rate of 1.22% within Las Vegas's job market. This upswing is primarily driven by pivotal sectors such as hospitality, leisure, professional and business services, health services, and education.
  • Las Vegas has also evolved into a burgeoning technology hub, captivating numerous startups, plus established tech giants to establish their operations there. The integration of technology introduces a new dimension to the economic panorama and employment arena, nurturing prospects in entrepreneurship, innovation, and technology.
  • The Las Vegas-Henderson-Paradise MSA’s Gross Domestic Product (GDP) stands strong at $136B, marking an impressive growth of close to 54 percent over the past 10 years. 
  • The population employed reflects this vitality with a YOY increase of 1.22%. Additionally, household income within the metropolitan area has thrived, experiencing a notable increase of 2.88% over the course of the past year.
  • The city's strategic sectors include clean technologies, healthcare services, business and financial services, information and communication technologies, creative industries, and general and advanced manufacturing.
  • Among the prominent employers in Clark County are notable names such as Body Gaming, Apollo, MGM Resorts, Clark County School District, and Amazon. 
  • Moreover, the labor pool is enriched by esteemed institutions like the Nevada State College, DeVry University, and the University of Nevada Las Vegas.
  • An educated populace underscores the city's dynamism, with more than 27% of residents holding a bachelor's degree or higher. 9% have attained postgraduate degrees.
  • A strategic geographical advantage positions 9% of the entire US population within a mere 5-hour radius of Las Vegas. 

Office Market in Las Vegas Q2 2023

Source: Colliers

  • In the second quarter of 2023, office vacancies witnessed a decline, settling at 11.0%. 
  • During this period, net absorption experienced an uptick, reaching a total of 315,603 square feet. This robust net absorption contributed to a decrease in vacancy from 11.7% in the previous quarter to the current 11.0%, despite the absence of any new office building completions during the quarter.
  • Furthermore, the asking rental rate for office spaces remained consistent at $2.50 per square foot on a full-service gross (FSG) basis. Reflecting on the state of Southern Nevada's office market in midyear 2023, it remains in a healthy and promising condition.

Industrial Market in Las Vegas Q2 2023

Source: Colliers

  • During the second quarter of 2023, net absorption within the Southern Nevada industrial market experienced growth, reaching a total of 3.1 million square feet. 
  • This addition contributed to a slight increase in vacancy, which reached 1.6%. Notably, the majority of the newly added 3.2 million square feet of inventory were pre-leased upon completion. 
  • Consequently, net absorption surged to 3.1 million square feet, resulting in a marginal uptick in vacancy to 1.6%.
  •  Additionally, the weighted average asking rental rate exhibited a decline, settling at $1.22 per square foot (PSF) on a triple net (NNN) basis. This reflects the dynamic state of Southern Nevada's industrial market in the second quarter of 2023.

Retail Market in Las Vegas Q2 2023

  • In the second quarter of 2023, the retail vacancy within Southern Nevada remained steady at 4.1%. 
  • Positive net absorption of 127,326 square feet was observed during this period. Notably, this net absorption figure marked a significant decline from the previous quarter. 
  • Concurrently, the asking rental rate witnessed an increase, rising to $1.69 per square foot (PSF) on a triple net (NNN) basis.
  • Reflecting on Southern Nevada's retail market during this period, there was a notable net absorption of 127,276 square feet in the second quarter of 2023. This figure exhibited a substantial decrease when compared to the preceding quarter. 
  • The vacancy rate maintained its position at 4.1% throughout the second quarter. 
  • Additionally, a total of 35,406 square feet of retail space reached completion during this period. The dynamics of the market were also evident in the upward movement of the asking rental rate, which reached $1.69 PSF on a triple net (NNN) basis.

Multifamily Market in Las Vegas Q2 2023

Source: Colliers

  • As per AXIOMetrics' data, multifamily vacancies within Southern Nevada witnessed a decline in the second quarter of 2023, settling at 6.76%. This figure marked a decrease of 0.04 points compared to the preceding quarter while reflecting an increase of 2.57 points from the corresponding period a year ago. 
  • The average rent per square foot exhibited stability, maintaining a level of $1.60/psf. 
  • Within the same timeframe, the multifamily inventory saw an addition of 569 units, although this figure was lower in comparison to the corresponding period of the previous year. 
  • Simultaneously, the asking rental rates experienced a slight decrease, reaching $1,474 per unit during this quarter, marking a marginal 0.05% decrease on a quarter-over-quarter basis.

Bottom Line

Las Vegas's transformation from a tourist destination to a flourishing economic hub has positioned it as a lucrative destination for commercial real estate investment. The city's diverse economy, strategic location, and business-friendly environment create a fertile ground for investors to thrive. By understanding the local market, leveraging expert advice, and adopting a strategic approach, investors can seize the opportunity and reap the rewards that Las Vegas's commercial real estate market has to offer.

Assetmonk is one of the best alternative investment platforms. It places a significant emphasis on its specialized proficiency in structured debt within the realm of commercial real estate. Offering a conveniently attainable entry point that initiates at a mere $12,000, Assetmonk takes considerable pride in extending personalized and exclusive investment pathways to its highly regarded investors. Harnessing the comprehensive capabilities of the Assetmonk platform, investors are furnished with the potential to envision a noteworthy Internal Rate of Return (IRR) that could ascend to an impressive 17 percent.

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