COVID-19 and Commercial Real Estate
by Administrator on May 7, 2020
There's not a lot of information out there on commercial real estate transactions in Las Vegas, NV as of the 1st week in May but the few commercial sales that were transacted in March and April of 2020 appeared typical of January and February of 2020. That may be due to the fact that they were constracted prior to the pandemic and they may have been closings in spite of the economic disruption. I have not attempted to confirm the information yet, but I am watching,
The information on new homes sales, presented via an web presentation, indicated that most of the sales in escrow closed. I think 70% was mentioned. The pandemic did however effect the value of the property sales in March and April of 2020, they were lower but they had already been trending lower in late 2019 and early 2020. While new home construction in Clark County is obviously still underway appraisers, agents, lenders and buyers will all have to watch to see how much downward pressure there is on prices. Builders generally havea relatively large, built-in profitability so it is unlikely that any of them will be damaged by a modest price drop. They are assuming that sales volume returns and that remains to be seen.
There has been forecasting that puts the cities of Las Vegas and Henderson in with a small group of cities that are anticipated to benefit from a mega-growth trend. I don't know what is sustainable, but Nevada is a place like California that favors 1-story and 2-story homes over vertical construction. We appear to be moving away from gaming as a sole source of revenue to an place that focuses on entertainment and shopping. Sports venues are now recognized as an important part of our future and that bodes well for us.
The question on everyones mind is "how much of an impact will this event have on my life?" The answer to that is relatively simple, it will be one of the worst, temporary set-backs that any of us have lived through. The mortgage debacle of 2008 hurt a lot of people over maybe a 5 year period. This blow may be similar, there won't be ongoing mortgage defaults that continued to come up year after year but there will be false-starts and displacements due to employers not needing the same number of employees given the "protections" that are being suggested. Masks, plastic seperators, slow start-ups with staging and other choices will all thwart profits and continue higher than normal unemployment rates.
A slow start-ups mean that some past employees remain unemployed, suppliers have to wait to sell alcohol and food service and entertainers will have to wait. I'm not making any judgments, if that is what everyone agrees with then that is what will happen, I'm only saying that a start-up of this type will bring with it a continued negative impact on the economy.
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