Conditions in the Las Vegas apartment market remain challenged; however market data shows improvement in both rental rates and occupancy levels.  According to the most current CBRE statistics (January 2011), the overall physical vacancy in the market is 9.31%, which is down 1.06 % from the 10.37% vacancy one year earlier*.  Of all apartment market categories, the higher vacancy sectors are Class B and Class C communities with 8.90% and 13.27%, respectively. Class A apartments are still performing relatively well with a vacancy rate of 6.72%. Average asking rents for Las Vegas apartments will rise to $808 per month, the first annual increase in three years according to Marcus and Millichap. There are still selected submarkets in the Las Vegas Valley that are performing relatively well.  According to the Fourth Quarter CBRE Apartment Vacancy Survey, the Spring Valley and Summerlin submarkets had an average vacancy rate of 6.70%*

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.  Life Insurance Companies have increased allocations for 2011 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 couple years.  As single family home prices find equilibrium and unemployment stabilizes in the Las Vegas Valley, the multifamily rental market has begun to rebound. It is far cheaper to rent an apartment compared to a single family home. We are seeing the Class C renters migrating to Class A and B properties. This has led to low vacancy and increased rents for these properties. Conversely, Class C/D properties are still struggling with high vacancy rates and increasing concessions***. Finally, forecasts for 2011 call for 900 multifamily units to hit the market, an increase in supply of only 0.7%**. Development will remain limited for the foreseeable future. 

*CB Richard Ellis March 2011 Las Vegas  Report
** Marcus & Millichap 2011 Market Forecast
***Colliers First Quarter 2011 Multifamily Market Review