Conditions in the Las Vegas apartment market appear very challenging over the next couple of years.  According to the most current CBRE statistics (January 2010), the overall physical vacancy in the market is 10.41%, which is up .40% from the 10.01% vacancy one year earlier*. This latest rate however is an improvement over the past year’s peak vacancy of 11.40% in September 2009.  Of all apartment market categories, the higher vacancy sectors are Class B and Class C communities with 10.87% and 13.45%, respectively. Class A apartments are still performing relatively well with a vacancy rate of 7.43%. Average asking rents for Las Vegas apartments fell to a four year low of $770/mo. according to Applied Analysis. There are still selected submarkets in the Las Vegas Valley that are performing relatively well.  According to the Fourth Quarter Marcus & Millichap 2009 Apartment Research Market Update, the Spring Valley submarket had a vacancy rate of 7.1%, while the University submarket exhibits a relatively healthy 9.3% vacancy rate**.

Attractive financing is still available, even with the issues concerning vacancy rates and declining rents in Las Vegas. The most active and aggressive multifamily lenders are the government sponsored agencies, Freddie Mac and Fannie Mae, but they have strict occupancy requirements that eliminate many properties from consideration.  Earlier this year, life insurance companies received brand new lending allocations and expressed interest at directly competing with the GSAs and funding properties that may not meet the GSA requirements. 

The Las Vegas apartment market is currently under a lot of stress, but there are some signs that it may bottom out this year.  Currently the single family home rental market, condo rental market, and apartment market are all in competition with each other. The drop in value of single family homes and condos has resulted in generally declining rents in all sectors over the past year.  Once single family home prices find an equilibrium and job growth returns to the Las Vegas Valley, the multifamily rental market should rebound.  Also, there is not a lot of new supply expected to hit the market, except for projects that were started around the time the downturn occurred and broken condo projects.

*CB Richard Ellis February 2010 Multifamily Report
** Marcus & Millichap Fourth Quarter 2009 Apartment Research Market Update