In greater Las Vegas Valley, commercial real estate lags residential real estate by one to one and half years. Residential pricing peaked in the mid 2005 and did not drop substantially until late 2006. Price drops accelerated sharply in late 2007 and are stabilizing in the 300,000 and lower price range as the luxury home market that had been going strong is cooling and prices are coming down now. These days Las Vegas real estate pricing is no longer value based, and the commercial real estate pricing is inversely proportional to the number of foreclosures, both residential and commercial.
As I have repeatedly mentioned, the first wave of commercial foreclosures is just hitting Las Vegas and there are many to come. In many instances, real estate prices will not become realistic with regard to present market conditions, until the third or fourth wave of commercial foreclosures hits Las Vegas and my guess is that it will happen in about six months.
I have read a few articles by other commercial real estate agents about the short term market conditions for commercial real estate in Las Vegas and believe them to be optimistic. I believe the price drops will be drastic.
Some of the foreclosed properties are and will be appraised at less than 50 cents on the dollar. Las Vegas is a far better value today than 5 years ago. None of our 32 billion dollars under-construction projects existed back then. Go figure.
Echelon stopped construction today for an unforeseeable future and that is going to be a big blow to Las Vegas short term.