By: HAYIM MIZRACHI, CCIM – President | Principal | Broker
With vaccinations shooting into arms of Americans, and COVID restrictions all but lifted, a return to normalcy is heavily sought. For Southern Nevada that also means a return to conventions, tourism, and live events.
All the focus shifted to the $1 billion West Hall expansion of the Las Vegas Convention Center on June 8, 2021. This would be the first time the 1.4 million square foot hall would be put to use after construction started 2018. It would be 15 months since the last major convention in Las Vegas. Some 54,000 thousand conventioneers would don on Las Vegas for the World of Concrete as the first major show to stick to its schedule. The convention schedule at LVCVA is now full through June 2022.
Attendees of World of Concrete were also the first to ride The Loop, an underground transportation system dug by Elon Musk’s The Boring Co. It utilizes Tesla vehicles to shuttle riders underground through the 200-acre, campus in under 2 minutes. A commute typically 25 minutes on foot. Additional service stations (43) are planned further connecting casinos along the Strip, McCarran Airport, Allegiant Stadium, downtown Las Vegas and eventually even to Los Angeles.
One block to the west, Resorts World Las Vegas would officially open June 24th after 14 years of breaking ground. Initially conceived as Echelon Place Boyd gaming halted construction 2008 due to the Global Great Recession. The property sold to Genting Group in 2013 who finished the 3,500-room resort. This event is not only a pinnacle of live events with acts like Miley Cyrus being broadcast on the resort’s 100,000 square foot LED screen, it is also an affirmative signal of a seemingly bygone area shuttering Las Vegas real estate during the GGR.
The World-Famous Las Vegas Strip is a well-known locale to celebrate America’s Independence. In the first major holiday weekend since COVID restrictions were lifted, an estimated 300,000 of Americas finest celebrated freedom from a very odd 2020 on the 4.2-mile stretch. A bit off strip, new resorts Circa (opened October 2020) and Virgin (formerly Hard Rock opened March 2021) experienced their first 4th of July celebrations. Overall resort room rates for the weekend landed between 17% and 25% higher than 2019 levels.
We could continue with the return of Conor McGregor July 10th at UFC 264 selling out 20,800 tickets at T-Mobile Arena and the public debut of Allegiant (Raider’s) Stadium with EDM concert Illenium as the opening act performing to 35,000 fans (about half of maximum capacity). But the question for the readers of Takeaways might be how does all of that translate to bread-and-butter commercial real estate?
Statistics for Q2 are still being processed but by all measures Vegas is back with plenty more runway than it has had in years past. Let’s review the highlights of the major CRE food groups:
Industrial is living its best life with total inventory around 150 million SF and close to 6 million SF under construction. Vacancy is between 4.5% and 5.5% depending how positive net absorption shakes out in Q2. Demand is fueled by e-commerce tenants.
Retail is Reeling with 117 million SF of total inventory and close to another 1 million SF under construction. Vacancy is between 6.5% and 7.5% depending how positive net absorption shakes out in Q2. Demand is fueled by QSR’s.
If anyone is feeling FOMO it’s Office with total inventory at 50 million SF, however there close to 1.1 million SF under construction comprised of some of the finest office stock ever to be developed in Southern Nevada. While overall vacancy is between 14% and 15% depending how positive net absorption shakes out in Q2, the more attractive submarkets for new development are showing vacancy closer to sub 10%.
It was a trip to re-read when I talked about the Tomorrow’s Vegas and the Hangover Over of 2020. I wrote that post April 2018. I got the hangover part right, just not the cause.
Every born and raised Las Vegan knows, after the hangover, comes the recovery. As the world looks to continue to heal from the COVID-19 trauma, Las Vegas looks to continue to do what she does. Reinvent herself. Bigger and better!
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