Distressed Sales Push Valley Land Values Downward

Distressed sales push valley land values downward
Local analysts say recovery won't happen without sustained job growth
BY TONY ILLIA

Southern Nevada vacant land values plunged during the first quarter as bank foreclosures and distressed sales drove prices downward, Las Vegas-based business advisory firm Applied Analysis reported. Valley land values averaged $182,441 an acre at the end of March, or $4.19 per square foot, down 24.1 percent from last year.

Only 150 parcels changed hands during the first quarter, which is less than half the amount from the previous quarter. About 527 acres transferred ownership in the first three months of 2010, or 46.6 percent more than in 2009. Trustee sales, or lender foreclosures, represented 74.4 percent of total land sales in the first quarter, Applied Analysis reported. Traditional arm's-length transactions accounted for less than one-quarter of the total market activity. Deeds in lieu of foreclosure and quitclaim deeds represented the balance of ownership transfers.

The first quarter's largest land deal entailed 71.7 acres at the northeast corner of Blue Diamond Road and State Route 159 in the southwest valley. Nevada State Bank acquired the property in a trustee sale for $35,300 per acre, or 81 cents per square foot. The deal represents 13.6 percent of the total acreage transferred during the quarter.

COURTESY SLETTEN COS
Local vacant land values plunged in the first quarter, data show. Valley land values averaged $182,441 an acre at the end of March, or $4.19 per square foot, down 24.1 percent from last year.

COURTESY THE RICHARDSON GROUP
Jaynes Corp. recently broke ground on a $5.2 million, 30,000-square-foot rehabilitation center for Advanced Health Care of Las Vegas at Jones Boulevard and Sunset Road.

"Deterioration across all commercial sectors, excess housing inventories and a lack of resort development continues to impact the demand for raw land," Applied Analysis principal Brian Gordon said. "With the level of distressed land sales increasing, investors and developers are resetting price points to a level not seen before the boom cycle was in full swing in 2004.

"At the current pace of correction, we are likely to see additional raw land transfer ownership as holding costs may outweigh the opportunity of waiting until valuations improve."

A deepening recession has businesses trimming overhead by downsizing operations, consolidating space and thinning staff. The valley's unemployment rate was 13.8 percent in March, the state Department of Employment Rehabilitation and Training reported. An estimated 137,500 Southern Nevadans are out of work. Banks aren't likely to loosen lending criteria until there are eight months or more of sustained employment growth, observers say.

"There is a tidal wave of vacant land foreclosures being processed, and 2010 will continue to see very high foreclosure levels for vacant land," Las Vegas-based land appraiser Charles Jack IV said. "We won't see any solid recovery of land values on a continuing upward basis until employment improves. It will then take an extended period of time to reduce current vacant inventories and achieve occupancy stabilization."

PROJECTS

Jaynes Corp. recently broke ground on a $5.2 million, 30,000-square-foot rehabilitation center, on 8 acres, for Advanced Health Care of Las Vegas at Jones Boulevard and Sunset Road. Construction on the single-story, 38-room building, designed by The Richardson Group, is scheduled to finish later this year.

Southern Nevada Paving is performing a $942,171 pavement resurfacing of Alexander Road between Cimarron Road and U.S. Highway 95 in Las Vegas. The project is scheduled to finish this summer.

MILLION-DOLLAR DEAL

Member groups of the United Brotherhood of Carpenters and Joiners have committed $250 million to a capital fund controlled by The Related Cos., co-owner of the World Market Center in downtown Las Vegas. Related also serves as construction manager on the $3.9 billion Cosmopolitan of Las Vegas, which is scheduled to open later this year at 3700 Las Vegas Blvd. South. The separately managed account will be used for construction loans on new developments.

RE Capital Partners bought a 47-year-old, 100-unit apartment complex at 2508 Tulip Lane in Las Vegas for $2 million, or $20,000 per unit, from Zion's National Bank. Sale of the 72,500-square-foot building, on 0.81 acres, equals $28 per square foot. Commerce Real Estate Solutions' Gary Banner and Gary Cuff represented the buyer.

Contact reporter Tony Illia at tonyillia@aol.com or 702-303-5699.