Las Vegas’ scorching high-rise market is cooling off this summer

Las Vegas skyscraper closures set an all-time high in the first six months of 2022, but the condominium market — as in the single-family home segment — has slowed amid higher interest rates and concerns regarding the economy.

High-rise estate agents are hoping the changes – with mortgage rates last week falling below 5% for the first time since April – that any slowdown can be attributed to the summer heat and potential buyers traveling.

Data tracked on the Las Vegas Association of Realtors’ Multiple Listings Service shows 644 closings in buildings five stories and above between January and June; that’s 2.5% more than the 628 closings in the first six months of 2021, according to Forrest Barbee, business broker at Berkshire Hathaway HomeServices.

Closures are a lagging indicator and if the June 87 closures are any indication, sales are slowing in the market. There were 129 closures in June 2021.

The skyscraper sector has seen a strong comeback since 2020, when sales fell sharply due to the COVID-19 pandemic. Buyers didn’t want to live in such tight quarters with elevators and hallways, and were put off by enclosed swimming pools, gymnasiums, and other amenities.

Analyzing the 21 high-rise buildings – most on the Strip, as tracked by Applied Analysis – there were 618 closures in the first six months of 2022, a 14.2% increase from 541 in 2021 There were 225 in 2020, 204 in 2019 and 432 in 2018, the firm reported.

The average price for units sold in 2022 was $595,508 and a price per square foot of $486. In 2021 over 12 months, the average price was $561,252 and the price per square foot was $427. This represents a 6% price increase and a 13.8% increase in price per square foot in 2022, according to Applied Analysis.

MGM Signature, a condo hotel, led the way in the first half of 2022 with 86 closures. Juhl in Downtown Las Vegas was second at 70 closing. They were followed by Palms Place, 54; Rounds kicked, 53; Trump Las Vegas, 47; Panoramic towers, 46; Place Turnberry, 41; Turnberry Towers, 36; Allure, 32; The Ogden, 31; Waldorf Astoria, 24; A Las Vegas, 21; Platinum, 18; A Queensridge Square, 16; Sky Las Vegas, 11 and more in the single digits, according to Applied Analysis.

Park Towers at Hughes Center had a sale for $950,000 or $447 per square foot.

The average price at the Waldorf Astoria was $2.31 million or $1,217 per square foot. One Queensridge Place had an average close of $1.67 million or a price of $590 per square foot.

The downtown Vdara condo hotel – which had four sales – had an average price of $778,250 or a price of $1,076 per square foot.

Turnberry Place had an average price of $965,888 or $407 per square foot. A Turnberry Place penthouse featured in May’s Real Estate Millions remains the year’s top sale.

One of the beneficiaries of the strength of skyscraper closures in the first half of 2022 is Juhl in downtown Las Vegas, with its 70 sales in six months. It had 69 closures in 12 months of 2021, 29 in 2020 and 23 in 2019.

Juhl announced on July 30 that he had closed his last remaining penthouse for $880,000 for $611 per square foot, the highest per square foot ever paid downtown, according to Uri Vaknin, director of KRE Capital, the same group of investors who bought One Las Vegas, along with Juhl.

“We had an amazing start to the year and June was a great month for us with 11 closings, but new sales fell as interest rates rose,” Vaknin said. “In June and July, there was talk of recession and higher interest rates that were getting people on edge, and people had to recalibrate. What’s interesting is that rates have just come down and now we’ve had good interest from buyers and things have picked up.

“Buyers come from California and out of state because people want to be in Las Vegas,” Vaknin said. “Investors are also interested because of the high rents that can be charged with a limited inventory of condos. Sales at the Juhl – which was primarily a rental property – picked up after the rooms were renovated,” he added. “Downtown also comes into its own with restaurants and other amenities.”

“The market is leveling off and slowing down because people needed to figure out what was going on, but Vegas is still where Californians go,” Vaknin said. “We see buyers from Seattle. People are moving from other states with remote work and seeing value (in real estate) in Las Vegas. I don’t think we will have such voracious sales numbers as at the beginning of this year, but sales will continue at a normal rate. We may not have 11 sales per month, but five sales per month.

Michael Zelina, a real estate agent with Corcoran Global Living, put a $13.9 million penthouse in Panorama Towers up for sale last week, having previously listed it at $15 million. Sellers recognize they may need to lower prices to attract buyers in a slowing market, he said.

Zelina called the high-rise building market stagnant, with many people still looking but not making offers. He said he remains confident, however, that will change once we get to the fall shopping season.

“I think it was a market scare and everyone took a break,” Zelina said of the stagnation, “interest rates went up and people were worried about the economy. We have a buyer segment that says we’re not buying right now.”

Zelina said the condos that sell are the ones that are upgraded and more desirable.

Anthony Spiegel, a luxury realtor with the Ivan Sher Group and Berkshire Hathaway HomeServices, said what’s happening in the condominium market is the same marketing force that’s impacting the single-family housing market — there’s pause.

“We’ve seen a significant decline in general interest and viewing requests,” Spiegel said. “Most of the time luxury is discretionary and discretionary income evaporates and people wonder if prices have gone up too much.”

Spiegel also cited the stock market reducing people’s net worth and worries about the economy and the political scene. “It’s the first time they’ve braked since the start of the pandemic,” he added.

As for another factor, Spiegel also said this was the first summer that many people were taking vacations and not in the market to buy like the previous two summers. He said he remained optimistic he would bounce back soon.

“I still think a lot of the high-rise market and the single-family luxury market is undervalued,” Spiegel said.

About Mary Moser

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