Commercial sector of LV real estate expected to thrive

The hotel market, in particular, continues to thrive, with roughly $28.3 billion in expansion expected through 2010, the report said.

“As long as Las Vegas continues to be a destination of choice for shopping, gambling and entertainment, and the population and employment rates increase the way they are, the market will flourish,” the report said.

Commercial real estate markets throughout the Southwest are particularly well-positioned to benefit from U.S. population growth and strong local economies, NAI Global projected.

The report, “U.S. Market Spotlight: Sunshine Brightens Outlook for Southwest U.S.,” explores the factors driving growth in this region and highlights the opportunities and challenges this growth is likely to create.

Doug Schuster, senior vice president of NAI Horizon in Las Vegas, said the commercial real estate sector is carrying residential. With housing starts down by about one-third, Las Vegas has lost a lot of high-quality, entry-level jobs such as drywallers, framers and roofers, he said.

“But the other side of the coin is money is still coming here,” he said. “Maybe people moving here and jobs have slowed, but money is still pouring into this town.”

Schuster said he’s going to have his best year as multifamily investment in Las Vegas continues to produce the lowest capitalization rates with favorable financing.

The NAI report cites large working and immigrant populations, attractive quality of life and moderate climates as key factors supporting corporate expansions and relocations to cities such as Denver, Phoenix, Las Vegas, Houston, Dallas, Los Angeles and San Diego.

“Historically, U.S. workers have followed jobs, but we’re now seeing a dramatic shift in business practices,” NAI Global President and Chief Executive Officer Jeffrey Finn said. “For the first time in recent history, companies are actively looking to relocate to cities and geographies where workers want to be, and that is driving commercial and residential real estate growth in the Southwestern United States. Good weather is one of the biggest reasons as young professionals escape from colder, rainier climates in the Eastern United States.”

Peter Linneman, chief economist for NAI Global and real-estate professor at The Wharton School at the University of Pennsylvania, authored the report.

Resort expansion on the Strip will add nearly 40,000 hotel rooms, 1,000 time-share units and nearly 3.5 million square feet of convention space, NAI reported. Las Vegas is home to 17 of the 20 largest U.S. hotels and attracts 39 million visitors a year.