Las Vegas Sun

November 17, 2018

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New reports confirm Las Vegas lagging in economic recovery

Some national analysts apparently haven’t received the memo about the Las Vegas-area economy improving.

Even as the state reported last week that the Las Vegas area's unemployment rate edged downward in February to 12.2 percent, three new reports were issued showing Las Vegas remains at or near the bottom of national economic performance rankings.

Marcus & Millichap, a national commercial real estate brokerage and advisory firm, issued its annual National Office Report, and for the second consecutive year, Las Vegas ranked last among the 44 markets ranked.

Marcus & Millichap analysts commented that while the situation in Las Vegas is improving with the projected addition of 12,000 jobs locally this year, the Las Vegas office building market will continue to struggle with a sky-high office vacancy rate of 25.3 percent (a result of the slowdown and overbuilding during the boom years).

"Office-using job growth will push-start a recovery in the Las Vegas office market this year. However, significant occupancy gains and rent growth will remain elusive for several more quarters, as companies rely on underutilized office space in their existing offices to house new hires," the report said.

Separately, the Urban Land Institute and accounting firm PwC issued their annual Emerging Trends in Real Estate report, and, again, Las Vegas ranked at or near the bottom in all the categories it was ranked.

For instance, in the ranking of investment prospects for commercial and multifamily properties, Las Vegas ranked No. 49 — ahead of only Cleveland and Detroit.

Las Vegas ranked No. 50, ahead of only Detroit, in the category of for-sale homebuilding prospects.

In rankings of investment prospects by population, Las Vegas was No. 18 among 18 metro areas ranked with populations of 2 million or less.

Commentators in the report said Las Vegas ''sits on foreclosure crisis ground zero'' and — perhaps relying on outdated information — ''the city’s fortunes ebb further as gambling and tourist traffic hits the skids at recently expanded hotel complexes.''

"In the ‘Era of Less,’ people just have less to blow at the roulette wheel," an unnamed commentator said in the report.

The bottom line in this report is that Las Vegas is one of the metro areas with "generally poor" investment prospects.

But regional competitors for investment and companies that have more diversified economies fared better in the report, with Salt Lake City, Phoenix and the Inland Empire east of Los Angeles listed as having "fair" prospects.

Three more competitors — Los Angeles, Orange County and San Diego — were listed as having "generally good" prospects.

Finally, the Conference Board reported that Las Vegas is among the metro areas with the greatest supply/demand imbalances when it comes to jobs.

In January, Las Vegas had 4.47 unemployed people for every job that was advertised online compared with the national average of three unemployed per vacancy.

If there’s a lesson to be learned from all these reports, it’s that the Las Vegas economy is going to have to create a lot more jobs to further drive down the unemployment rate and to boost demand for homes, apartments and commercial buildings.

In reporting the February Las Vegas metro area unemployment rate fell to 12.2 percent from 13 percent in January, the Nevada Department of Employment, Training and Rehabilitation last week said job growth locally in February was flat after rising 0.5 percent in January.

This means the unemployment rate fell locally not because of job growth but because the size of the Las Vegas labor force declined slightly from 983,900 people in January to 981,700 people in February.

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