Apartment rents in Las Vegas dropping for past 6 months, expert says

The biggest reason multifamily rents have been on the decline is approximately 12,000 new apartment units have completed construction in the past two years, said Michael Petrivelli, director of market analytics for Nevada and Utah for CoStar Group. High vacancy is dictating the market fundamentals right now too, he said.

“After reaching an all-time low of 5.7 percent, the vacancy rate spiked to more than 10 percent last year, and remains in this range today,” he said.

Rents in the Las Vegas Valley have been on a roller coaster ride since the start of the pandemic, first dropping in 2020 and parts of 2021 before skyrocketing along with elevated inflation rates. Rents appear to be normalizing and returning to pre-pandemic normals however Petrivelli said weaker demand is still playing into the local market right now.

“Although apartment demand has rebounded in 2024, Las Vegas is still recovering from a malaise in 2022 and 2023,” he said. “In 2022, occupancy declined by 3,000 units while 2,500 units completed. In 2023, occupancy turned positive by 2,700 units, but was outpaced by nearly 7,000 units of completions.”

Landlords are contending with higher-than-usual vacancies, forcing them to resort to rent reductions or concessions to fill units, Petrivelli said.

Las Vegas finds itself in the middle of a housing crisis as high mortgage rates, a lack of new land to develop and a slowdown in homebuilding have pushed prices close to record highs as well as zapped the resale market. Last year was the worst year for residential real estate sales since 2008. Homebuilding also impacts the rental market as it offers new product that can impact rental supply.

Pandemic-era, variable rate financing has also pushed some Las Vegas Valley apartment complex owners into tough financial situations, according to a several area commercial brokers.

Fewer apartment projects breaking ground

This is a nationwide issue that is hitting Sun Belt cities particularly hard, said Jeffrey Swinger, an executive vice president for multifamily investment sales with Colliers International in Las Vegas, in a previous interview with the Las Vegas Review-Journal. Colliers International data shows there are approximately 232,751 multifamily units in the valley.

One of the major concerns regarding the local multifamily market is the lack of construction projects in the coming years, leading some real estate stakeholders to call for an uptick in building. Petrivelli said he doesn’t think the tap has completely turned off, but it’s clearly slowed.

“I wouldn’t call it drying up, but fewer projects are breaking ground, so the construction pipeline is starting to ease,” he said. “There are enough units under construction to drive the vacancy rate noticeably higher if demand underperforms. However, demand has been strong in 2024, and if the trend continues in 2025, we will likely have a gradual compression of the vacancy rate.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.