Las Vegas Commercial Market 2014

While some scramble to come up with justifications to support their self-serving conclusion that 2014 will be a strong year for commercial real estate (CRE) in Las Vegas, Nevada there are many reasons to believe that there won't be much of a change from 2014. 

The annual 1.5% increase in employment for the State of Nevada and similarly 1.7% for Clark County have not been a compelling positive statistics, especially since more and more individuals are not counted.  Is a 9.2% unemployment rate a good rate?  Compared to a third-world country it might be, but it’s difficult to talk about how good the unemployment rate is, because it’s not.     

The fact is that commercial real property vacancy rates in Las Vegas are still relatively high in most sectors, absorption is generally down, construction is still abysmal and sales prices per square foot for most commercial property types has generally been down since 2011 (which wasn't a great year to begin with).

There are property owners who have been patiently waiting to get out from under their holdings but the bank deals of the past few years created a soft market and made it nearly impossible for them to sell.  2014 may be the first opportunity for some owners to liquidate.

What else makes me think that 2014 won't be a boom year for commercial real estate in Las Vegas?   The uncertainty about quantitative easing, the upward movement in interest rates, the failure of the government to motivate banks into taking mortgage and consumer credit risks, falling commercial capitalization rates that provide lower returns on commercial real property investments, the true effects of Obamacare on corporate hiring and profits and my feelings (flawed as they may be) that our wild ride is still not over. 

When the Las Vegas Press incessantly points to housing price increases remember that Las Vegas after 12 years is still back to near 2001 property values.  When they talk about a housing boom they don't talk about Nevada's fall from nearly 50,000 housing unit permits in 2006 that has "moved up" to a count of around 10,000 in 2013. 

What is an investor to do? I would suggest that if you are going to get into the market that you spend your time looking for the best buys. As I am sure that you are aware there are always bargains out there, it just takes more time and effort to find them. There are fewer foreclosure / REO deals being handed out by the banks (I guess that can be interpreted as an improvement in the market).  It's true that as the percentage of short-sales and REO sales falls it takes more time to find a bargain.

Glenn J. Rigdon, MA, MRICS, ASA is an experienced commercial real estate broker and commercial real property appraiser located in Henderson, Nevada.  Check out his commercial appraisal articles at or his profile on LinkedIn at  His website is located at

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