Commercial market's woes show in auction bargains
Monday, October 24, 2011
The recent Federal Deposit Insurance Corp. auction in Las Vegas showed just how distressed real estate prices are in Nevada, Arizona and California, attracting about 40 lowball bidders looking to snap up bank-owned properties for pennies on the dollar.
A 4-acre parcel of commercial land in the northern Las Vegas Valley sold for $15,000, while 157 acres of residential land near Kingman, Ariz., went for $50,000.
A group of five office buildings at The Park at Northpointe, built by Glen Smith & Glen Development in 2007, sold for $650,000, or about $24 a square foot. In its third-quarter office market update, brokerage Marcus & Millichap reported a median sales price of $98 a square foot in Las Vegas.
"It's indicative of the market," said John Dixon, chief executive officer of John Dixon & Associates, who conducted the auction Oct. 12 at Springhill Suites. "I think there were some phenomenal buys. We were in Phoenix the night before and it was tough. It was tough in Atlanta. It's tough all over."
Prices are about 30 percent of where they were in 2005 and 2006, he said. Bidding wars erupt only when someone is specifically interested in a property, such as adjoining property owners.
The Northpointe office condos sold for roughly market price, said Mark Musser, listing agent for Bentley Group. About half of the space is "gray shell," or unfinished interior.
"There were some good deals," Musser said. "I actually hopped in and bought after a few deals went down. I couldn't sit there and watch people make money."
Musser picked up a 1.5-acre residential lot in Reno for $2,000, and was the higher bidder at $35,000 for 14 acres of general commercial land along Interstate 15 near the northern Las Vegas Beltway. Musser's bid failed to meet the reserve, and he eventually got the land for $75,000.
Most of the properties had a reserve minimum bid, while a few were "absolute," or sold to the highest bidder. Dixon declined to identify banks represented in the Federal Deposit Insurance Corp. auction.
Winning bidders have 30 days to close escrow. It's rare that lenders don't accept the high bid, but even then, they're usually willing to negotiate, Dixon said.
"Sellers are realizing that if they need to sell, they'd better go ahead because it's not going to get better for quite a while," he said from Marietta, Ga.
One of the hotter pieces of commercial land in Las Vegas was a 1.6-acre parcel at 6600 Grand Montecito Parkway, in Montecito Town Center. Bidding went from $25,000 to $95,000 in about 10 minutes.
Pete Beauchamp of Voit Real Estate Services in Orange County, Calif., said he had the Montecito parcel listed at $412,000 through Voit's Las Vegas office. He said it will be interesting to see how many of the auction properties close escrow at bid prices.
INDUSTRIAL OVERVIEW
Industrial vacancy in Las Vegas rose to 15.1 percent in the third quarter, a report from Commerce Real Estate Solutions shows. The central submarket had the lowest vacancy rate at 8.3 percent; the northwest submarket had the highest vacancy rate at 28.8 percent.
High vacancy rates are driven by weak tenant demand and marginal stability, combined with landlord lease concessions, loan defaults and corporate downsizing, Commerce Real Estate senior researcher Jessica Parrish said.
Landlords are eager to lease their buildings and make short-term deals to generate cash flow, she said. Monthly rental rates range from 35 cents to 55 cents a square foot.
Larger national tenants such as Bloomingdale, Ill., vitamin company Now Foods are beginning to enter the Las Vegas industrial market, looking for lease rates as low as 1998 prices.
"This is one indicator that we have reached the bottom and the industrial market stabilization process has begun for a long, steady recovery," Parrish said. "The economic trends for Nevada show signs of modest improvement, not enough to reduce high unemployment, but enough to ease fears that another recession might be near."
NEW LAW OFFICE
Las Vegas attorneys Marty Keach and Rob Murdock broke ground in September for a one-story, 6,000-square-foot office building at 521 S. Third St. The building is privately financed and will add to the rebirth of downtown Las Vegas, Keach said.
"We have taken an eyesore empty lot and have created a magnificent new look for downtown," he said.
The office will have skylights, a loft area and 50-seat conference room.
Keach and Murdock, who specialize in catastrophic loss, have been recognized by the Million Dollar Advocates Forum, collecting at least a million dollars on more than 20 verdicts and settlements.
BULK REO CONDOS
Barak Nizgoda of Volume Real Estate said investors are looking for bulk real estate-owned, or bank-owned, opportunities in Las Vegas. He's got 30 REO units listed for $1.45 million in a gated condominium community at Decatur Boulevard and Alta Drive.
"The Las Vegas market is very attractive to investors from all over the world," Nizgoda said. "The current market is very affordable to international investors due to the dollar currency's low rate and the low prices in Las Vegas compared to other markets. The investors will also show a greater return in real estate investments in Las Vegas."
COMMERCIAL PLAZA SOLD
Scottsdale Plaza, a 95,000-square-foot office and shopping center at Maryland Parkway and Pebble Road, was sold for $4.4 million to Phoenix-based Sonoran Real Estate Group. Ron McMenemy of McMenemy Investment Services represented the buyer. The seller was Quality Properties Asset Management Co., represented by Gatski Commercial.
FAITH IN LAS VEGAS
Local developer Daniel Grimm has purchased 20 acres at Dean Martin Drive and Irvin Avenue in the southern Las Vegas Valley. He plans to break ground on a 360-unit apartment complex in the summer.
Grimm, who founded GD Development Corp. earlier this year, said he believes in Las Vegas and the "unique resilience of its businesses and the people that power them."
Before starting his own company, Grimm was president of Peebles Pacific Development, where he helped acquire the Mardi Gras hotel-casino and the Las Palmas apartments in Las Vegas.
Commercial market's woes show in auction bargains
Buyers' prices are 30 percent of what they were in 2005 and 2006, observer says
The recent Federal Deposit Insurance Corp. auction in Las Vegas showed just how distressed real estate prices are in Nevada, Arizona and California, attracting about 40 lowball bidders looking to snap up bank-owned properties for pennies on the dollar.
A 4-acre parcel of commercial land in the northern Las Vegas Valley sold for $15,000, while 157 acres of residential land near Kingman, Ariz., went for $50,000.
A group of five office buildings at The Park at Northpointe, built by Glen Smith & Glen Development in 2007, sold for $650,000, or about $24 a square foot. In its third-quarter office market update, brokerage Marcus & Millichap reported a median sales price of $98 a square foot in Las Vegas.
"It's indicative of the market," said John Dixon, chief executive officer of John Dixon & Associates, who conducted the auction Oct. 12 at Springhill Suites. "I think there were some phenomenal buys. We were in Phoenix the night before and it was tough. It was tough in Atlanta. It's tough all over."
Prices are about 30 percent of where they were in 2005 and 2006, he said. Bidding wars erupt only when someone is specifically interested in a property, such as adjoining property owners.
The Northpointe office condos sold for roughly market price, said Mark Musser, listing agent for Bentley Group. About half of the space is "gray shell," or unfinished interior.
"There were some good deals," Musser said. "I actually hopped in and bought after a few deals went down. I couldn't sit there and watch people make money."
Musser picked up a 1.5-acre residential lot in Reno for $2,000, and was the higher bidder at $35,000 for 14 acres of general commercial land along Interstate 15 near the northern Las Vegas Beltway. Musser's bid failed to meet the reserve, and he eventually got the land for $75,000.
Most of the properties had a reserve minimum bid, while a few were "absolute," or sold to the highest bidder. Dixon declined to identify banks represented in the Federal Deposit Insurance Corp. auction.
Winning bidders have 30 days to close escrow. It's rare that lenders don't accept the high bid, but even then, they're usually willing to negotiate, Dixon said.
"Sellers are realizing that if they need to sell, they'd better go ahead because it's not going to get better for quite a while," he said from Marietta, Ga.
One of the hotter pieces of commercial land in Las Vegas was a 1.6-acre parcel at 6600 Grand Montecito Parkway, in Montecito Town Center. Bidding went from $25,000 to $95,000 in about 10 minutes.
Pete Beauchamp of Voit Real Estate Services in Orange County, Calif., said he had the Montecito parcel listed at $412,000 through Voit's Las Vegas office. He said it will be interesting to see how many of the auction properties close escrow at bid prices.
INDUSTRIAL OVERVIEW
Industrial vacancy in Las Vegas rose to 15.1 percent in the third quarter, a report from Commerce Real Estate Solutions shows. The central submarket had the lowest vacancy rate at 8.3 percent; the northwest submarket had the highest vacancy rate at 28.8 percent.
High vacancy rates are driven by weak tenant demand and marginal stability, combined with landlord lease concessions, loan defaults and corporate downsizing, Commerce Real Estate senior researcher Jessica Parrish said.
Landlords are eager to lease their buildings and make short-term deals to generate cash flow, she said. Monthly rental rates range from 35 cents to 55 cents a square foot.
Larger national tenants such as Bloomingdale, Ill., vitamin company Now Foods are beginning to enter the Las Vegas industrial market, looking for lease rates as low as 1998 prices.
"This is one indicator that we have reached the bottom and the industrial market stabilization process has begun for a long, steady recovery," Parrish said. "The economic trends for Nevada show signs of modest improvement, not enough to reduce high unemployment, but enough to ease fears that another recession might be near."
NEW LAW OFFICE
Las Vegas attorneys Marty Keach and Rob Murdock broke ground in September for a one-story, 6,000-square-foot office building at 521 S. Third St. The building is privately financed and will add to the rebirth of downtown Las Vegas, Keach said.
"We have taken an eyesore empty lot and have created a magnificent new look for downtown," he said.
The office will have skylights, a loft area and 50-seat conference room.
Keach and Murdock, who specialize in catastrophic loss, have been recognized by the Million Dollar Advocates Forum, collecting at least a million dollars on more than 20 verdicts and settlements.
BULK REO CONDOS
Barak Nizgoda of Volume Real Estate said investors are looking for bulk real estate-owned, or bank-owned, opportunities in Las Vegas. He's got 30 REO units listed for $1.45 million in a gated condominium community at Decatur Boulevard and Alta Drive.
"The Las Vegas market is very attractive to investors from all over the world," Nizgoda said. "The current market is very affordable to international investors due to the dollar currency's low rate and the low prices in Las Vegas compared to other markets. The investors will also show a greater return in real estate investments in Las Vegas."
COMMERCIAL PLAZA SOLD
Scottsdale Plaza, a 95,000-square-foot office and shopping center at Maryland Parkway and Pebble Road, was sold for $4.4 million to Phoenix-based Sonoran Real Estate Group. Ron McMenemy of McMenemy Investment Services represented the buyer. The seller was Quality Properties Asset Management Co., represented by Gatski Commercial.
FAITH IN LAS VEGAS
Local developer Daniel Grimm has purchased 20 acres at Dean Martin Drive and Irvin Avenue in the southern Las Vegas Valley. He plans to break ground on a 360-unit apartment complex in the summer.
Grimm, who founded GD Development Corp. earlier this year, said he believes in Las Vegas and the "unique resilience of its businesses and the people that power them."
Before starting his own company, Grimm was president of Peebles Pacific Development, where he helped acquire the Mardi Gras hotel-casino and the Las Palmas apartments in Las Vegas.
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