LAS VEGAS – A report released this week by the Nevada State Apartment Association (NVSAA) shows local apartment rents were resilient in the second quarter of 2020 while vacancy rates remained relatively stable thanks largely to Nevada’s eviction moratorium.
The report, issued by the NVSAA based on data provided by CoStar, shows rent growth rebounded from a downturn early in the outbreak, though local rents rose at a slower rate than during the past few years. Local rent growth during the second quarter was about 2.2%, compared to 7% year over year.
From 2015 to 2019, Southern Nevada apartment rents increased steadily. Those gains are now slowing, with asking rents during the second quarter of 2020 averaging $1,105 per month, up from $1,080 one year earlier and about 5% higher than their pre-recession peak.
“Fortunately, about 90% of Nevada renters have been able to make their monthly rent payments during this crisis,” NVSAA Executive Director Susy Vasquez said. “But with the enhanced unemployment benefits at a standstill and the pending expiration of the eviction moratorium, we expect these numbers will change during the third and fourth quarters of this year, even with apartment owners and operators doing a good job of working with their residents.”
For the second quarter of 2020, the average vacancy rate for local apartments was 6.8%. That’s up from 6.4% one year earlier, but down from nearly 11% during the height of the Great Recession.
Rising rents and declining vacancies have led to a resurgence in apartment development, with more than 13,500 units being built in Southern Nevada since 2015. While demand has been keeping pace with this new supply, the report notes that recent construction is already driving up vacancies. With thousands of new units under construction or coming to market over the next few years, Vasquez said that will likely increase the apartment vacancy rate.
Apartment development through the second quarter of 2020 continued to be heathy, with 3,117 units under construction in the Las Vegas area. About 45% of those new units are near the southern portion of the 215 Beltway in the Enterprise, Henderson, Spring Valley and Summerlin areas.
Southern Nevada’s economy has been especially hard-hit by the coronavirus pandemic and economic crisis. With casino and non-essential businesses closed during the second quarter, the leisure and hospitality sector saw job losses of around 40%, according to April numbers from the U.S. Bureau of Labor Statistics. Although many local hotel-casinos and other businesses have reopened with new guidelines, unemployment remains elevated.
As a result, Vasquez expects vacancy rates to rise after Nevada’s eviction moratorium ends Sept. 1, with a corresponding slowdown in rent growth and apartment construction.
“Apartment investment in Las Vegas plummeted in the second quarter, seeing one of the largest declines among any major market. Given the changing economic landscape, investors appear to be cautious heading into the second half of the year,” said Jessica Morin, director of market analytics for the Southwest for CoStar.
This report is provided by the NVSAA based on data from CoStar, a leading provider of commercial real estate information.
For more information, see this report and video from CoStar summarizing the Southern Nevada apartment market: https://product.costar.com/home/news/shared/846962352?utm_source=newsletter&utm_medium=email&utm_campaign=personalized&utm_content=p4.
About the NVSAA
The Nevada State Apartment Association is the voice of the multifamily housing industry in Nevada. The nonprofit organization provides a variety of services to its 894 community, property management and business partner members statewide, including legislative support, education and community outreach. NVSAA is committed to promoting and supporting the diversity, integrity and success of its members and their industry. For more information, visit www.NVSAA.org.