2015 Las Vegas Land Market

While the latest statistics indicate a slowly increasing average land sales price per acre in 2013 and 2014 most of the vacant land sales transacted were zoned or planned for residential development.  In fact many vacant properties sold in the past 2 years that had commercial zoning and / or commercial planning were subsequently reasoned for a residential use. 

The commercial land market is still plagued with the high vacancy rates of office properties that have decreased only slightly over the last few years and the office vacancy is in fact still flying high near 20%.  That is an amazingly high number when you consider how long it has remained high.  As an appraiser I still notice the shiny, empty floors in many new office buildings, the fact of the matter is that there is relatively little demand for commercial land because there is still a glut of developed office properties. 

Retail and industrial vacancy rates are not as high as that noted for office buildings but clearly there is no boom going on in any of those market segments.

While the demand for vacant residential land has been strong when compared to commercial / industrial land there are limits to residential absorption.  It looks to appraisers like everyone now wants their property to be residential, and many owners are actively acting to get themselves into the that market, but at some point the worm will turn. 

New homes are still in relatively strong demand and a premium is still being paid for new versus resale homes.  New homes in February, 2015 reached a median sales price point near $ 291,860, per UNLV statistics, or $ 150 per square foot (SF) while median resale homes were reported to have sold for $ 177,000 or $ 100 per SF.  That's a big differential and its part of what motivates home builders. 

As a Las Vegas appraiser I have studied the change in vacant land values in Las Vegas over time for several years.  Vacant land sales prices correlate highly with their location (of course), size, off sites and use potential (zoning and planning).  Hard zoning is in my opinion an important factor that affects real property value, there is less time lost and less risk of loss for a potential buyer if zoning is already in place.  Land in Las Vegas is also subject to a number of overlays and sub zones and they can have a significant impact on value.

Restricted properties, like those located in an "RNP" or rural neighborhood preservation district allow development at only 2 dwelling units per acre (DUPA), while R-2 zoned land in most jurisdictions allows for medium density single-family residential development at 8 DUPA.  There are a few properties out there that already have R-3 and R-4 zoning that allows for 18 DUPA to 25 DUPA or a higher density that’s either very high density single-family or multiple-family apartment complex land, and it's obvious that there is a demand for it. 

It's my opinion that even though there is still some unsolved absorption problems in the commercial markets the overall land market will continue to move up modestly in 2015.  There is a great deal of anticipation for 2016, I have seen a number of signs with announcements for construction in that year, however it is too early to tell whether 2016 will be the turnaround year that we are all waiting for.

For more appraisal information contact Glenn Rigdon, MA, MRICS, ASA a Las Vegas / Henderson Nevada commercial real estate appraiser via email at grigdon@cox.net or via his business website Horizon Village Appraisal (http://www.horizonvillageappraisal.com), or you can also click on “Contact Us” on the home page of this website.

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