Thursday, January 10, 2008

Housing downturn boosts multifamily rentals

Tony Illia writes:

Reeling residential and subprime mortgage markets have increased the number of renters in the Las Vegas Valley. Potential home buyers required to come up with substantial down payments amid tightening credit are increasingly turning to high-end multifamily rentals, reports the Bentley Group, a local real estate advisory firm.

"Nearly 40,000 hotel rooms are coming on line over the next four years, creating more than 285,000 new jobs," Bentley Group President Christopher Bentley said. "Demand for multifamily product will increase to meet the housing needs of new employees."

Yet, the 23,494 homes listed for sale last month have created a "shadow" rental market. Roughly 25 percent or more of those units are being used as rentals until the housing market rebounds. Multifamily builders, as a result, will only deliver 1,500 new units this year, or about 1,000 fewer than in 2006, reports Marcus & Millichap, a real estate brokerage. Vacancies are expected to remain low as rents grow by 3 percent.

...A Boston-based investor, for example, recently bought the 18-year-old, 256-unit Martinique Bay Apartments at 3000 High View Drive in Henderson for $31.85 million, or $124,414 per unit. The 12.92-acre, 278,840 square-foot complex is mapped for condominiums. The sale price equals $114 per square foot. Grubb & Ellis' Joseph Kupiec, Diane Miramontes and Darcy Miramontes represent the seller.

"While many continue to paint a 'doom and gloom' picture of the Las Vegas real estate market, fundamentals within the industry remain healthy," Bentley said. "The multifamily market in particular has remained healthy and is expected to continue to offer sound investment opportunities."


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