Mesquite Nevada Commercial Real Estate Market, information every investor should know.
In May of 2007 we had no shadow inventory, virtually everything listed was sold including the few foreclosures and banks were not holding them back off the market at that time.
Many questions surround this so called shadow inventory supply of housing, some even dismiss the idea as a scare tactic and illusion. Market facts are as varied as there are markets, many markets that did not experience the extreme boom are relatively healthy while others continue to get sicker. This information is definitely market specific.
Mesquite Nevada real estate statistics since May of 2007 show a steady, dramatic, and continual climb in failed listings. These properties were active for sale and did not sell and are not actively for sale today. Yet the reasons for needing to sell and the needs of seller's in most cases have not changed. In many cases the urgency to sell has only increased. How many people do you know who have put off putting thier home on the market until the market inproves, and how long can they wait?
Notice of defaults, those falling at least ninety days behind on their mortgage payments has spiked to its highest level in the second half of 2009. Many of these will become short sales or foreclosed bank owned properties. They have to be sold and are not currently listed as active.
Foreclosures and bank owned vacant properties in Mesquite NV continue to climb and the banks are not listing them. They appear to be holding them waiting for either a dramatic market change or more likely a change in government regulations regarding asset values and bank solvency. Realized verses unrealized losses on the books of the banks. They may actually believe they can release these at a pace they can control prices, manipulate the market, I know they have not acted rationally but this would be off the scale of stupid.
Today there are around 400 active listings in the town of 18,000 population or so of primarily retirees, at 2 per household that's around 9000 homes and condos. The shadow inventory is much harder to count. You have normal live changes that lead to people moving, health, death, jobs, family size changes, etc.
When you add in the mortgage loan resets, those arm loan adjustments where the payments increase, the walk aways from the under water syndrome, moral or not, it is becoming far more common, and the very high unemployment. Mesquite NV real estate is unique in that most of the people living here purchased either at the beginning of the boom or during and so nearly all paid more than they can net from selling today. Under water whether by mortgage or just cash loss.
Based on vacancy rates, notices of defaults, Mesquite's foreclosure filings, 400 active listings, builders inventories not listed, there may be as many 800 or 900 properties coming available. 2009 was a descent year for number of sales, MLS shows 365 closed as of December 31, 2009 for the year. It was not so good for prices the average sold price was $110 per square foot. That number dropped to $89 per foot in December 2009.
At the absorption rate of 365 per year, it could take until 2012 just to clear the inventory sitting out there today. This of course does not consider new builder competition, which with Sun City in town and plenty of new choices coming soon in Canyon Crest, is going to remain fierce. Supply and demand will dictate pricing.
I believe there is another possibly more important factor driving demand. During the boom years the emphases was "A Rich Rewarding Lifestyle", "The Next Palm Springs" was often heard around the city halls. Many larger and expensive homes were built. The bulk of the market selling to today is the lower end smaller more efficient homes. Expensive gated HOAs and the higher end housing sector is really being hit hard on pricing. The 2009 Median price for all housing sold and closed in Mesquite was $165,000. If you are builder there is a target number for you.
The retirees of tomorrow are focused on preservation of capital, conservation, comfort, and affordability. Few are going to extend themselves beyond their budgets, and most will try to stay in a comfort zone which will allow for more than living month to month just to make house payments. The days of Baby Boomer's spending like they are the weathy class may be gone forever. Bankruptcies have shot through the roof and will continue to go up well into 2010.
Mesquite Nevada's real estate challenge ahead will involve working our way out the hole we currently in, and that could take two to three years. Most importantly though Mesquite 's challenge will be to bring a product to the market in the future that will meet the needs of this retiring generation. Affordable housing must top the list of priorities (think $110 per square foot), solar orientation, efficiency, comfort and livability.
Some may say that Mesquite was built by the wealthy and must remain that way, I say if that be the case it is going to become mighty lonely around here.
Chris W. Miller
ERA Brokers Consolidated
Mesquite NV 89027
702- 346-7200
435-862-5951
Mesquite Market
chris@mesquitemarket.com
Lincoln County Land Market
Nevada Ranch Properties
Thursday, December 31, 2009
Monday, December 21, 2009
Market Update December 2009
Mesquite Nevada Commercial Real Estate Market, information every investor should know. To the best of my knowledge this is where the market is:
There are currently only 12 active commercial buildings listed in the Mesquite MLS, and only 18 commercial land parcels listed active for sale in the Mesquite MLS. Commercial real estate is listed and generalized into these two categories in the Mesquite MLS. I have focused on the improvements, not the vacant land and attempted to break it down for you by highest and best use. There are some properties that do fall into more than one category.
After a careful physical review it appears that there are closer to 30 buildings available for sale or lease, and 45 commercial land parcels for sale or with an option to lease with build to suit in some cases.
Business closings have been dramatic over the past twenty four months, in the neighborhood of 30 have closed and are gone, including a large casino, numerous restaurants, retail shops, builders, associated contractors, suppliers, title companies, mortgage companies, and various other small businesses.
In general, in retail space the vacancy rates range from 100% to as little as 20% per complex, virtually none are 100% occupied. The overall vacancy rate in Mesquite for retail space appears to be running between 40 to 50% of available space. There are between 50 and 70 vacant retail spaces, depending on space size. A vacant 8000 square foot building could count as one space or four units. I would guess there is between 100,000 and 120,000 square feet of idle retail space in the market.
Light industrial space may be worse than retail space in terms of vacancy rates, at least nine buildings are 100% vacant with close to 125,000 square feet of idle space. Then there are another ten to twelve buildings with some vacancy. My best guess is these have another 30,000 to 50,000 feet of idle unoccupied space. There may be as much as 175,000 square feet of vacant light industrial space.
Falcon Mesa Business Park Complex, this complex is a combination of office and retail multi purpose use. Seven of 13 of the total buildings appear to be vacant. When a building was half occupied, I have counted that as half and included these buildings in the above mentioned vacant retail square footage.
The Town and Country Plaza on Pioneer Blvd. has seven or so tenants, all retail except AG Edwards which is the only office space leased. These early tenants are paying close to $1.50 per foot, but I believe that future new tenants may get a better rate. My best guess is that it is 20% retail and 5% office space occupied. The owner seems motivated and very negotiable but will not commit to any numbers without a face to face meeting with the prospect.
The Oasis Professional Office Park at Pinnacle and Oasis Blvd has eleven buildings total and 6 appear to be vacant and for sale or lease. The Brickyard on Mesquite Blvd appears to have ten vacant spaces out of a total of approximately 30.
The 100% vacant buildings in Mesquite include, 175 and 195 Willis Carrier Canyon (40,000 Sq. Ft each), Capital Materials Building 6200 Sq. Ft on 2.58 acres with yard and pole barns, two buildings located in front of Capital Materials Buildings, Calais clubhouse building, office building located in front of Calais clubhouse, Cinco Office building at 4200 Sq. Ft., Harley’s Auto Repair shop on Mesquite Blvd, Rio Virgin Grill Restaurant, Credit Union building on Pioneer in front of Wal-Mart, Walgreen’s Building on corner of Falcon Ridge and Pioneer, Buffalos Restaurant, Wolf Creek Office Building, Convention Center Building, NAPA auto building on Mesquite Blvd, 6000 warehouse on Aztec, 4800 tilt up building at corner of Hardy Way and Bowler, a Building East of Sears. There are a few others but this gives you a sense of the magnitude.
There is vacancy in every commercial complex and as I talked to leasing agents and building owners there was one clear theme, they are begging for people who will pay $1 to $1.50 per foot. They all offer possible tenant improvements with two to five year leases. They hint at possible lower rates, but when pressed, the lowest offer I got was a possible .50 per foot from an agent who would have to ask and see. Many of these buildings have no tenant improvements and have been vacant for over two years.
If building owners are giving away expensive tenant improvements, free months rent, paying taxes, insurance, and additional CAM fees, then the net is far less than current asking rents. We have not really seen price reductions in sales prices or lease rates. The owners continue to hire agents who are inexperienced with little or no commercial background who will tell the owners only what they want to hear. Cost basis and "wants" are the formula being used to price commercial real estate. I would liken it to taking a dangerous river rafting trip with a guide who knows less about rafting, the river and current conditions than you do, risky at best. They list property with no facts to support prices and at reduced commission rates, most CCIM or experienced commercial agents basically refuse to waste their time with amateur agents and over priced properties.
Appraisers call me frequently looking for comps and since there are no comps in over two years I suggest they use a capitalization approach. Of course that leads to a fair market rents discussion. In my opinion, over the next few years until Mesquite grows into the supply .40 to .60 cents a foot will be the going rate. At an 8% cap rate and .50 cents a foot the average asking price is on average about twice the actual market value. Of course the owners and listing agents are sure this approach makes no sense at all.
There is much speculation in the market about the potential effects of the Desert Falls Sports Complex; it is being used by many as justification for future values. It remains to be seen if it will ever materialize. Until it does I would say “What you see is what you get”
Chris W. Miller
ERA Brokers Consolidated
Mesquite NV 89027
702- 346-7200
435-862-5951
Mesquite Market
chris@mesquitemarket.com
Lincoln County Land Market
Nevada Ranch Properties
There are currently only 12 active commercial buildings listed in the Mesquite MLS, and only 18 commercial land parcels listed active for sale in the Mesquite MLS. Commercial real estate is listed and generalized into these two categories in the Mesquite MLS. I have focused on the improvements, not the vacant land and attempted to break it down for you by highest and best use. There are some properties that do fall into more than one category.
After a careful physical review it appears that there are closer to 30 buildings available for sale or lease, and 45 commercial land parcels for sale or with an option to lease with build to suit in some cases.
Business closings have been dramatic over the past twenty four months, in the neighborhood of 30 have closed and are gone, including a large casino, numerous restaurants, retail shops, builders, associated contractors, suppliers, title companies, mortgage companies, and various other small businesses.
In general, in retail space the vacancy rates range from 100% to as little as 20% per complex, virtually none are 100% occupied. The overall vacancy rate in Mesquite for retail space appears to be running between 40 to 50% of available space. There are between 50 and 70 vacant retail spaces, depending on space size. A vacant 8000 square foot building could count as one space or four units. I would guess there is between 100,000 and 120,000 square feet of idle retail space in the market.
Light industrial space may be worse than retail space in terms of vacancy rates, at least nine buildings are 100% vacant with close to 125,000 square feet of idle space. Then there are another ten to twelve buildings with some vacancy. My best guess is these have another 30,000 to 50,000 feet of idle unoccupied space. There may be as much as 175,000 square feet of vacant light industrial space.
Falcon Mesa Business Park Complex, this complex is a combination of office and retail multi purpose use. Seven of 13 of the total buildings appear to be vacant. When a building was half occupied, I have counted that as half and included these buildings in the above mentioned vacant retail square footage.
The Town and Country Plaza on Pioneer Blvd. has seven or so tenants, all retail except AG Edwards which is the only office space leased. These early tenants are paying close to $1.50 per foot, but I believe that future new tenants may get a better rate. My best guess is that it is 20% retail and 5% office space occupied. The owner seems motivated and very negotiable but will not commit to any numbers without a face to face meeting with the prospect.
The Oasis Professional Office Park at Pinnacle and Oasis Blvd has eleven buildings total and 6 appear to be vacant and for sale or lease. The Brickyard on Mesquite Blvd appears to have ten vacant spaces out of a total of approximately 30.
The 100% vacant buildings in Mesquite include, 175 and 195 Willis Carrier Canyon (40,000 Sq. Ft each), Capital Materials Building 6200 Sq. Ft on 2.58 acres with yard and pole barns, two buildings located in front of Capital Materials Buildings, Calais clubhouse building, office building located in front of Calais clubhouse, Cinco Office building at 4200 Sq. Ft., Harley’s Auto Repair shop on Mesquite Blvd, Rio Virgin Grill Restaurant, Credit Union building on Pioneer in front of Wal-Mart, Walgreen’s Building on corner of Falcon Ridge and Pioneer, Buffalos Restaurant, Wolf Creek Office Building, Convention Center Building, NAPA auto building on Mesquite Blvd, 6000 warehouse on Aztec, 4800 tilt up building at corner of Hardy Way and Bowler, a Building East of Sears. There are a few others but this gives you a sense of the magnitude.
There is vacancy in every commercial complex and as I talked to leasing agents and building owners there was one clear theme, they are begging for people who will pay $1 to $1.50 per foot. They all offer possible tenant improvements with two to five year leases. They hint at possible lower rates, but when pressed, the lowest offer I got was a possible .50 per foot from an agent who would have to ask and see. Many of these buildings have no tenant improvements and have been vacant for over two years.
If building owners are giving away expensive tenant improvements, free months rent, paying taxes, insurance, and additional CAM fees, then the net is far less than current asking rents. We have not really seen price reductions in sales prices or lease rates. The owners continue to hire agents who are inexperienced with little or no commercial background who will tell the owners only what they want to hear. Cost basis and "wants" are the formula being used to price commercial real estate. I would liken it to taking a dangerous river rafting trip with a guide who knows less about rafting, the river and current conditions than you do, risky at best. They list property with no facts to support prices and at reduced commission rates, most CCIM or experienced commercial agents basically refuse to waste their time with amateur agents and over priced properties.
Appraisers call me frequently looking for comps and since there are no comps in over two years I suggest they use a capitalization approach. Of course that leads to a fair market rents discussion. In my opinion, over the next few years until Mesquite grows into the supply .40 to .60 cents a foot will be the going rate. At an 8% cap rate and .50 cents a foot the average asking price is on average about twice the actual market value. Of course the owners and listing agents are sure this approach makes no sense at all.
There is much speculation in the market about the potential effects of the Desert Falls Sports Complex; it is being used by many as justification for future values. It remains to be seen if it will ever materialize. Until it does I would say “What you see is what you get”
Chris W. Miller
ERA Brokers Consolidated
Mesquite NV 89027
702- 346-7200
435-862-5951
Mesquite Market
chris@mesquitemarket.com
Lincoln County Land Market
Nevada Ranch Properties
Wednesday, October 28, 2009
Mesquite Nevada Commercial Land Market
Mesquite Nevada Commercial Real Estate Developments
Mesquite Nevada Commercial building permits: 8 new commercial building permits were issued in the first half of 2009, they continue to build and the supply side swells!
As layoffs increase and business closures mount, residential construction has completely stalled. The impending collapse in sales prices and rents seems all to clear. The commercial property value crash which is looming may make the residential mess in Mesquite look like a walk in the park! Mesquite MLS has recorded no commercial property closings in 2009, land or buildings.
There are 32 commercial properties listed locally for sale in Mesquite Nevada, including 17 buildings that are active for sale today.
Mesquite Nevada Commercial Listings
Many more are available, listed with non Mesquite MLS agencies from out of town.
Vacancy rates for office/retail/light industrial warehouse space have sky rocketed, currently it appears there is well over 250,000 square feet of vacant space. The prices for all are headed south at an unprecedented pace.
Mesquite Nevada MLS reports 2 commercial building sales total for 2008. The City of Mesquite bought one of them. Only 3 buildings sold and closed through the Mesquite Nevada MLS in 2007.
The real values are coming, with cash flow numbers that actually work!
The de-leveraging process is bringing down the value of assets of every class around the world. Opening doors in Mesquite to what is virtually a guaranteed bright, high demand future. Fundamentals like cash flow analysis, reasonable rents, and realistic vacancy expectations will likely set future prices.
It will be the margin call type commercial properties that will create the deals. A seller with no cash flow and notes due now, will be forced to sell at greatly reduced prices, below replacement cost. Banks will make concessions. It is a very difficult process and golden opportunity for those with knowledge and cash.
I am available to work as your commercial buyer's agent and watch this market for those exceptional values.
As the inventory grows, so are vacancy rates, creating clear signs of a very large speculative bubble in the office/retail/warehouse space. This will affect prices and rental rates.
Industrial warehouse space has been growing rapidly, prices are way out of line with returns. Due primarily to the City of Mesquite's development of the new industrial area. This market segment should be very interesting to watch in coming months and years.
The amount of vacant space including retail, office, and industrial has exploded. There is vacant space in literally every shopping center, strip mall, and multi unit office building in town.
Mesquite Nevada commercial real estate has grown based on a very short history. Just a few short years ago the north side of Mesquite was virtually non existent, except for the industrial area and the airport. At that time it was home to Primex and that was about it.
As a result of; the elected land promoters, the Palm Springs sales pitch, some very optimistic and expensive studies, the city administration working in the land development business, and the speculative boom that took place, There are a few thousand vacant home sites north of I-15, and enough commercially zoned property to serve the city for many years to come.
The older Mesquite NV commercial properties are still around, the main drag, Mesquite Blvd is lined with the older existing commercial buildings. Many are sitting empty, some looking neglected.
Opportunities are being created for those with the foresight, time and money to see the future growth. Distress and vacancy, from todays investor point of view may be the best of all worlds. The time to make a deal is nearing for those with the ability. Not based on last years numbers or even current NOI numbers, but rather, based on where Mesquite is going over the next ten years.
Have questions about commercial property? There are numerous land parcels and buildings available but not actively listed. Contact me, I have extensive market knowledge and will provide you that information.
Call Chris W. Miller GRI, CRS, ABR at ERA Brokers Consolidated 702-346-7200 or 435-862-5951
Mesquite Market
Lincoln County Land Market
Nevada Ranch Property
Water Rights in Nevada
Are You Ready For A SOLD Sign?
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