Consumer faith will help restore equilibrium locally, Urban Land Institute panelist says

By HUBBLE SMITH 11/13/08
REVIEW-JOURNAL

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       Housing in Southern Nevada

Anyone looking for a glimmer of economic hope may have found it Wednesday at an Urban Land Institute panel discussion on emerging real estate trends in Las Vegas.

While not much positive came from the two-hour session, housing analyst Tim Sullivan of The Sullivan Group said the residential market is not dead.

"It may be in a coma, in a deep sleep, barely breathing, but no, it's not a corpse," Sullivan told about 200 real estate professionals at the Four Seasons.

Sullivan said the market needs to find a point of equilibrium, and he thinks it's almost there on the resale side. Prices are back to where they were four to five years ago, he noted. The new-home segment may have a ways to go.

"When we start to see consumer confidence turn around, then we've hit equilibrium," he said.

Majestic Realty Vice President Rod Martin said there's been no new development in the industrial market, which is good because tenant demand is practically nonexistent.

"It's as slow as I've seen it in my 15 years here in Las Vegas," Martin said.

Las Vegas was saved by skyrocketing land prices, Martin said, because it stopped developers from overbuilding industrial buildings. Although industrial vacancy rates have increased to about 8 percent in Las Vegas, some 35 million square feet is sitting vacant in California's Inland Empire east of Los Angeles.

Majestic owns 5 million square feet of space in Las Vegas, including GES Exposition Services headquarters at Beltway Business Park, and it's 100 percent occupied, Martin said.

"I don't think anybody's ready to throw in the towel and say we're done doing business in Las Vegas," he said. "In my mind, it's still tied to the gaming and hotel industry and they'll figure it out. They're going to figure out a way to get people to come to Las Vegas."

Tom Roberts, corporate vice president of development for Station Casinos, said Tuesday night's opening of Aliante Station in North Las Vegas provides a good snapshot of the local economy.

Gaming revenue is down for the year, but only by single digits, he said.

"Aliante is seriously an indicator that people will come," Roberts said. "Obviously they're not spending as much, but they will come."