BluefoxToday blog : Las Vegas CityCenter condominiums tough sell

Las Vegas CityCenter condominiums tough sell

CityCenter Las Vegas NVSouthern Nevada condo market still wallows in the Lehman moment, especially the high-rise luxury segment that occupies choice space for the most part on and around the Strip. Units are hard to sell because mortgage financing has dried up, sharp value declines have scared would-be buyers to sit and wait and the glut of vacant inventory gives no one enough confidence to commit to anything. Las Vegas luxury condominium developers had a totally different vision in mind when they started their projects a few years ago, when the thinking was that if you build it they'll come. Well, they did build it, but they aren't coming.

MGM Mirage's CityCenter unveiled its massive multi-use development on the Strip in December, including a high-rise condo component scattered in several buildings. Just like everyone else in Las Vegas, it has found that selling them is no walk in the park.

The condo-hotel Vdara has managed to close on only 78 out of 1,543 units through April, according to SalesTraq, a Las Vegas real estate information boutique. Although it began closings only in March CityCenter had announced earlier in the year the sale of 698 condos. Mandarin Oriental has closed through April on 32 uber-luxury units out of 227 available, while months ago it reported contracts on 205 of them. Veer Towers has 670 condominiums in two distinct leaning structures where closings just kicked off in May, with 480 of them sold according to CityCenter.

To address the major issue of mortgage availability MGM Mirage began offering seller financing to some buyers. It chopped off 30% from the condo prices over the winter to bring them closer to market. Evidently these changes haven't been enough, though, to excite the recession-weary prospects since the sales figures are very weak. On top of a dysfunctional mortgage and real estate markets comes a dispute with Perini Building Company over construction payments that will make some people reconsider their plans. Buying into a condo project under litigation is generally to be avoided.

Metrostudy, a housing industry research shop from Houston, reported recently that Las Vegas has 8,200 empty condominiums, including the ones from CityCenter. Moreover, SalesTraq informs that at this sales pace there is a 20-year supply of them. That is a tough environment where to successfully market condominiums no matter how luxurious they are. And no matter what kind of Las Vegas Strip views they offer. To efficiently move this CityCenter inventory requires further price cuts, down to where the Southern Nevada high-rise condo market is, otherwise the marketing budget currently in use is mostly thrown away.



Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 6 commentsEsko Kiuru • May 30 2010 09:22PM


Vegas is great...

Posted by Joshua Zargari, MJ Decorators Workshop (MJ Decorators Workshop LI staging and home decorating) almost 8 years ago


It's great and even greater once we get through this challenge.


Posted by Esko Kiuru almost 8 years ago

Ouchy on the 20 year supply!  I am not really shocked given the lending challenges and the economic challenges we have had the last several years.  Hopefully they will find the sweet spot to get these sold!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) almost 8 years ago

Esko: Thanks for the update. Since it appears Vegas was ground zero for much of the mortgage world, it stands to reason it's going to take some time to recover. I know we have issues up here with areas being overbuilt. Bellevue is a perfect example as so many condo's were built and not sold. Now, a lot of them are being rented out until the market turns. Take care.

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) almost 8 years ago


People will be living in Mars by the time all these condos are sold, at this pace.

Posted by Esko Kiuru almost 8 years ago


Most of these CityCenter condos probably end up in the hotel room inventory for now, waiting for sunnier days ahead.

Posted by Esko Kiuru almost 8 years ago