Real Estate and Development

Las Vegas Foreclosure & Real Estate News

Who would have thought it?

The price of land is so high that some developers in Southern Nevada said they are finding better opportunities right now in California.

That was one of the surprising revelations in a recent forum on mixed-use development sponsored by the Southern Nevada chapter of the National Association of Industrial and Office Properties. The panelists remain bullish about the future of the Las Vegas market and how the opening of new resorts over the next three years will boost the economy. But for now, there are concerns.

"There is a lot of land out there, but it is way too expensive," said Michael Newman, senior vice president with the Trammell Crow Co. in Las Vegas. "Unless, we see some adjustment here, I have grave concerns."

Newman said he's doing two projects in Sacramento and eyeing projects in New Mexico, Southern Utah and Phoenix.

"For Southern Nevada developers, the land prices do create somewhat of a barrier if you will," said John Stewart, vice president of development of the Juliet Cos., a retail developer. "We have seen opportunities available in California, and who would have thought that?"

EJM Development is opening the Arroyo, a 450-acre mixed-use project at the Las Vegas Beltway and Rainbow Boulevard featuring office, industrial and retail.

The typical challenge is where is your next project and with the cost of land that becomes even more of a challenge, said Kirk Boylston, regional director with EJM Development. Speculators have bought and sold land so many times, that it's difficult to imagine a big drop in prices. Projects won't pencil because a lot of the land "won't support a project on top of it."

Newman said there are many landowners who have speculated and questions how long they can hold out given their carrying costs. He said he's seen land off the Las Vegas Beltway that is priced at $1.3 million an acre and there is no use that would support that, including retail and multifamily and certainly not office.

"It is going to be an interesting dynamic to watch," Newman said.

Some panelists suggested that some of those land owners and smaller developers are going to lose their properties over the next two years.

The developers talked about the difficulty in obtaining financing given that rents can only be set so high. Despite that, some said Las Vegas remains attractive and there is a still a strong appetite for institutional equity investors and a flight to quality.

Stewart said that the high cost of land has forced up lease rates and sales prices but that the slowing of the national economy is having an impact on projects as well.

Retailers want to expand but they are taking longer to decide on leases and going through more hoops on their end, Stewart said. That means projects are taking longer to develop and that equates to more money and market risk, he said.

"That is a challenge we are starting to see, and we will continue to see that," Stewart said.

The slowdown and greater difficulty for some developers in getting financed has its advantages. That's a plus for the bigger developers who are able to overcome those problems and not face competition from smaller companies.

Douglas Crook, managing director of Christopher Commercial, which is developing lofts, said there are going to be challenges in closing sales given what's happening with the housing credit crunch. Lenders are tightening up on jumbo loans of more than $417,000.

Despite the optimism about the future, the one concern about Las Vegas going forward is the city's lack of economic diversification outside of gaming. That's something that is difficult to overcome unless a community has great colleges and universities or is priced below its competitors.

And given the high land costs, the second option isn't as feasible. Still, they are optimistic.

"With all the Strip development going on, I don't see how we are not going to be on a big upswing in the next couple of years," Boylston said.

• Coldwell Banker Premier Realty said a $19 million closing on a home in Las Vegas has set a record. It is located on MacDonald Ranch Drive in MacDonald Highlands on the Dragon Ridge Golf Course. It has 18,378 square feet of living area. The builder and architect is Sun West Custom Homes. The home wasn't on the market, but the buyer was interested and inquired about it. The site is 2 acres and includes a tennis and basketball court and covered patio for entertaining. The agents who handled the transaction were Stan Hicks and Mason Richburg.

In other news:

• Nancy Walton Laurie, who Forbes Magazine ranks as the 407th richest person at $2.3 billion, has bought a home in the foothills of MacDonald Ranch. The daughter of the late Bud Walton, the brother and business partner of Wal-Mart founder Sam Walton, paid $17.5 million to Mark and Holly Wattles. She is the former owner of the St. Louis Blues hockey team.

• Former Las Vegas Councilman Michael Mack has been name vice president and will oversee the new luxury properties division of Colliers International in Las Vegas. The new division will specialize in the sales and leasing of resort condos, estates and fine luxury homes. Prior to joining Colliers, Mack served as vice president of acquisitions for Montecito Cos. He also worked as a commercial broker for Montecito and Shea Commercial/Prudential Commercial Real Estate.

• A program airing on Dutch television has come to Las Vegas to film a program on foreclosures. Producer Sebastiaan Knoops said the housing market impacts the American economy and that in turn impacts what happens in Holland. "You can see the ripple effects. It goes across the Atlantic and is causing some concern for economic growth in Europe."

Knoops said they chose Las Vegas because the state leads the nation in foreclosures.

• Marriott is planning a hotel near the Las Vegas Convention Center, GlobeSt.com reported. It reports Marriott wants to develop under its Marriott Marquis brand. The online publication reported Marriott International has obtained 10.6 acres for $186 million. The properties are bounded by Convention Center Drive, Paradise Road, East Desert Inn Road and Debbie Reynolds Drive, the firm reported.

• Commerce CRG has announced the formation of an Office Properties Division led by office sector veteran Michael Dunn. The new division will focus on general office brokerage, including both landlord and tenant representation. The other team members are Michael Dunn, Monty Montierth, Carolyn Curtis and Colin Tapp.

• Nominations will be accepted Oct. 1 through Nov. 16 for the Mayor's Urban Design Awards sponsored by the city of Las Vegas. The awards recognize projects that cultivate walkways and streets that are shared public spaces, promote safety, conserve resources and seamlessly link to their surroundings, and are pedestrian friendly. A category for historic preservation has been added to the three from last year — buildings and their environs, public places and public art. The awards will be presented Jan. 8.

Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 443-3604 or by e-mail at wargo@lasvegassun.com.

Article Source http://www.inbusinesslasvegas.com/2007/09/28/realdev.html