LAS VEGAS – A report released this week by the Nevada State Apartment Association (NVSAA) shows local apartment rents surpassing their pre-pandemic peak, seemingly at odds with the economic downturn in Southern Nevada.
The report, issued by the NVSAA based on data provided by CoStar, shows local rents growing by 4.2% from the same time last year and now averaging $1,128 per month, up from $1,082 one year earlier.
From 2015 to 2019, Southern Nevada apartment rents grew steadily. That changed when the pandemic hit Nevada in March, with rents declining initially before rebounding in recent months and now passing their pre-pandemic peak.
Asking rents for higher-end apartments are now $1,340, putting them out of reach for a portion local renters. Comparatively more affordable, or so-called three-star properties, are seeing increased demand and some of the lowest vacancy rates, as well as the strongest rent growth. Average asking rents for three-star properties are $1,050, about 20% above their 2007 peak, according to the report.
“The rental market, like basically all of the local economy, took a hit from COVID-19 shutdowns,” said NVSAA Executive Director Susy Vasquez. “But now that stay-at-home orders have lifted and the economy is starting to rebound, the apartment market, like the housing market, is surpassing expectations. It remains to be seen if this will continue once federal eviction moratoriums expire at the end of this year.”
During the third quarter of 2020, the average vacancy rate for local apartments was 5.6%. That’s down from 6.7% one year earlier, and down from nearly 11% during the height of the Great Recession. The decrease in vacancy is attributed primarily to Nevada’s eviction moratorium.
Rising rents and declining vacancies have led to a resurgence in apartment development, with more than 16,000 units being built in Southern Nevada since 2015. With demand keeping pace with this added supply, several properties broke ground in the third quarter.
The pandemic has also slowed sales of local apartment properties. The local sales volume totaled more than $450 million in the first quarter of 2020, then fell to less than $25 million in the second quarter. Deal activity picked back up to about $195 million in the third quarter, but remains well below pre-pandemic levels.
This report is provided by the NVSAA based on data from CoStar, a leading provider of commercial real estate information.
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.