Saturday, April 01, 2006

Real Estate and Development Land price hikes finally getting down to Earth By Jennifer Shubinksi / Staff Writer



Could there be a light at the end of the tunnel when it comes to Las Vegas Valley land prices?
It depends on whether you consider the glass half full or half empty.
In 2005, the average price per acre was $479,200—a 38 percent increase over the previous year, according to a new report by Applied Analysis.
While almost 40 percent appreciation is staggering in its own right, it pales in comparison to the 72 percent increase in land prices experienced in 2004 over 2003, the group reported.
"We're starting to see more normalized appreciation rates; we're really just entering a period where supply and demand are becoming more in balance than they were 12 months ago when properties were achieving above asking rates," said Brian Gordon, principal at Applied Analysis. "That is still happening to a certain extent, but at certain price points it becomes improbable for developers."
As for the fourth quarter 2005, the average price per acre was $367,200—a 47 percent decline quarter over quarter and a 28 percent decline from the year-ago quarter, Applied Analysis reported.
"What we're seeing are shifts in the types of property being acquired," Gordon said. "People can't expect to see appreciation rates of 80 percent year over year.
"It's unrealistic to have those expectations, particularly given the fact that construction costs are increasing and we've seen modest increases in interest rates."
Those cost increases, along with the price of land can make it difficult for a project to make financial sense for a developer.
There are a couple reasons for the sharp declines in appreciation during the fourth quarter 2005, Gordon said.
The numbers include the November 2005 Bureau of Land Management (BLM) auction in which 2,675 acres were sold for $639 million to the Olympia Group. That large sale, which consisted of raw land without any improvements, brought the overall average down. Exclusive of that sale, the valley wide price per acre was $578,000 an acre, an 11 percent increase over the previous year.
Another factor was the type of land that sold.
"We saw more investment activity taking place in submarkets with below-average pricing," Gordon said. "So the north and northeast parts of the valley still reported healthy price appreciation, but property values in that area tend to be below the Las Vegas average, so it brings the valleywide average number down."
The area with the highest average price per acre in the fourth quarter 2005 was the city of Las Vegas, with an average price at more than $700,000. When the numbers are computed at a median price per acre, the numbers in almost all jurisdictions hovered around the $500,000 per acre mark. Henderson was at about $450,000 an acre in the fourth quarter 2005, Applied Analysis reported.
Notable transactions that occurred during the fourth quarter 2005 included:
• The 2,675 acres purchased by the Olympia Group for about $639 million, or $238,900 per acre.
• An 80-acre site for $27.8 million located in the north submarket at Tropical Parkway and Donovan Street.
• A 54-acre site for $47 million located in North Las Vegas near Losee Road and Interstate 215.
• A $55.1 million purchase for 150.8 acres located in North Las Vegas at the southeast corner of Craig Road and 5th Street.
In other news:
The 2007 Realtors Conference & Expo, which will mark the 100th anniversary celebration of the founding of the National Association of Realtors, will be held in Las Vegas.
The dates of the conference are Nov. 12-Nov. 16, 2007, at the Sands Expo and Convention Center. More than 25,000 real estate professionals are expected to attend.
• Tate Snyder Kimsey's design studio in Henderson, built in 1994 and expanded in 1997, recently received LEED-EB certification from the U.S. Green Building Council.
LEED-EB buildings maximize operational efficiency while minimizing environmental impacts. It provides a recognized, performance-based benchmark for building owners and operators to measure operations, improvements and maintenance on a consistent scale, according to the U.S. Green Building Council.
• Langan Engineering and Environmental Services opened an office in Las Vegas. The company has been providing geotechnical engineering and deep foundation consulting services in Las Vegas since 1998.
The Las Vegas office is the companies eighth nationwide. It is headquartered in New Jersey.
• Stoltz Real Estate Partners and Golden Tree InSite Partners acquired a portfolio of office/flex buildings and land parcels throughout Las Vegas. The seller is a partnership between Urdang Advisors and Stoltz Real Estate Partners. Financial details were not disclosed.
The portfolio consists of nine buildings with about 600,000 square feet and a combined occupancy of 80 percent. There are also six vacant land parcels totaling 26 acres targeted for development of more than 500,000 square feet of office space. The portfolio also includes a 9-acre site along Sunset Road, across from McCarran International Airport.
Seven of the buildings and four of the land parcels are located in the Hughes Airport Center. The remaining two buildings and two parcels are in the Hughes Cheyenne Center in North Las Vegas.
Kirt Klaholz, who with Wes Jenson heads the Stoltz Las Vegas office, said the company remains bullish on Las Vegas.
"Our long range plans are to manage want we have and to build more buildings," Klaholz said. "We're also interested in future opportunities, stay in Las Vegas for the long run."
In total, Stotlz Real Estate Partners has about 725,000 square feet of office and industrial space throughout the Las Vegas Valley.
Jennifer Shubinski covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. She can be reached at (702) 259-8832 or by e-mail at
js@lasvegassun.com.