Apartment complexes are springing up with increasing frequency — is this good news?
I don’t recall precisely when I first heard the acronym NIMBY, but I do recall what I initially thought of it: Not in my back yard? How silly. How … unprogressive. Then the years flew by, I became a homeowner, and someone wanted to build a storage facility on the empty lot around the corner from my house. Oh, hell no — not in my backyard!
So, needless to say, I was a tad anxious a few months back when earthmovers began leveling the dirt on the empty lot directly across the street from where that storage facility was planned (and, thankfully, nixed) years prior. After the leveling came the lumber. Then came my NIMBY-esque reaction:
Seriously? ANOTHER (bleeping) apartment complex?!
Here’s what I mean by “another”: Just west of this new apartment complex is another one that has been there since I moved into my Henderson home 16 years ago. Ditto another complex just west of that. Across the street and around the corner? Two more.
As for this newest apartment development, it’s hardly the only one under construction or recently completed in my neighborhood. In fact, in an area that’s roughly two square miles, no fewer than eight apartment developments have sprouted in the past 18 months, the largest being the sprawling 30-building, 498-unit Castile Apartments on the northwest corner of Stephanie Street and Interstate 215.
Of course, my back yard is hardly the only one that has suddenly been engulfed by apartment construction. In addition to Henderson, the southeast, west and north sides of the valley are experiencing an apartment boom — so much so that, according to a report produced by New York-based real-estate data firm Reis, Inc. and furnished by locally based Applied Analysis, these four areas of town account for more than 50 percent of the valley’s apartment inventory, with Henderson (28,830 units) leading the way at 20 percent.
The good news? This apartment explosion is a clear indicator that our real-estate market and economy are robust. Also, the overwhelming majority of these developments are high-end dwellings that command rents that are higher than many mortgages (mine included). These new “luxury” properties are responsible for a steady uptick in average apartment rents valley-wide — and by steady uptick, we’re talking 24 consecutive quarters in which the average monthly rent has increased, topping out at $993 at the close of 2017.
So, clearly, our economy is hot, the construction crane is once again our state bird, and people are flocking to the Las Vegas Valley at a pre-Great Recession rate. But, um, yeah … let’s get back to my back yard (and yours). Specifically, what does all this apartment development mean to home values in nearby subdivisions? And what about the traffic impact on our most-used roads and other infrastructure?
David Tina relocated to Las Vegas from Long Island, New York, 22 years ago, and he’s spent the last 17 of those years working in local real estate. Now the president of the Greater Las Vegas Association of Realtors, he has a very strong opinion about these apartment developers.
“Personally,” he says, “I think they’re geniuses. And here’s the reason: We not only have an inventory issue with single-family homes and residential properties, but it’s even more of an issue with rental (homes), which are as difficult to get as buying a home. So even though it seems like a lot, it’s essential for Southern Nevada’s growth to have all these apartments. We need as many beds as possible, because we are third in population growth and first in job growth right now.”
Tina pauses. “If I had the means and the access,” he says, “I would be jumping right into the apartment game.”
According to the Nevada State Apartment Association (NSAA), there were an average of 2,200 units built annually between 2011 and 2016. Going forward, the organization estimates that a whopping 6,234 units a year will be required to meet expected needs by 2030. “The lack of (apartment) development due to the downturn in the economy has resulted in a shortage,” says Susy Breckon, president of the NSAA. “We’re now trying to catch up to projected demand.”
Okay, so it’s clear a surge in population combined with an apartment shortage, a spike in the median price of a new single-family home (now up to $355,000), and stricter lending laws have resulted in this rise in apartment construction. But don’t large clusters of apartment complexes drive down the values of neighboring single-family homes? After all, who wants to buy a house that’s within a five-minute drive of eight new (and countless existing) apartment developments?
“There is a fair amount of NIMBY-ism that’s going to happen no matter where multifamily units go in,” says Jeremy Aguero, principal at Applied Analysis. “There tends to be a stigma.” Consider a recent thread on Nextdoor.com, a hyperlocal website with sections devoted to specific neighborhoods. A rumor that part of the Black Mountain Golf and Country Club in Henderson would be sold to developers of high-density housing resulted in dozens of angry, worried, determined posts by nearby residents committed to keeping apartments out of the area.
But those concerns often aren’t justified, Aguero says. “If you look at the product that is going in today, these are not low-income apartments. These are relatively expensive, high-quality dwelling units that frankly are competing with homes in some ways, as opposed to being a reflection of lower income.”
The veteran real estate agent agrees wholeheartedly with the veteran analyst.
“Nine out of 10 times, (resale home values) are a direct reflection of the neighborhood around you,” Tina says. “It all depends on what these apartments are fetching for rent. These apartments should supplement their (surrounding) community in a positive way if the rental rate reflects the market around it.”
Indeed, while the average asking rent for all apartments across the valley is just shy of $1,000 per month, units built after 2009 are fetching $1,360, per the Reis report. And few renters are experiencing sticker shock, as evidence by the fact that the apartment vacancy rate across the county was a scant 3.6 percent at the close of 2017.
“I live in Summerlin, and I look at the apartment complex they’re building down the street from me as a positive because people are paying a high premium to live there … and have access to the better schools and services,” Tina says. “And, yeah, it will create some congestion. But then they build more roads and they build more restaurants and they build more services, which bring more jobs, and it continues.”
However, as Aguero notes, these high-end complexes won’t help fill the need for economical working-class housing, the kind typically offered by apartments. “It will exacerbate the problem,” he says. “Affordable and workforce housing is already an emerging issue.”
So is that traffic Tina referenced.
It’s 4:30 on a recent Friday afternoon, so, in theory, most of the workforce has yet to call it a week. Yet as I make my way south on Stephanie Street toward the 215, the congestion has already reached a point where I consider ditching my vehicle and walking to the nearest tavern. As I sit at a light (for a second cycle, mind you), I begin to think about all the new apartments around me, particularly the ones that aren’t yet completed.
What will this street, as well as adjacent, frequently used arteries, look like at 5:30 p.m. on a weekday when all those apartment units are rented? If I wanted to sit in traffic, I would’ve stayed in Southern California — at least there I can roll down my windows without freezing or burning.
The light turns green, and as I resume my sluggish journey home, I do a left-to-right scan of this six-lane street (three lanes each way) and notice that every retail center on both sides is built to the sidewalk. Which means there’s no way the city can widen this street even if it wanted to.
“Every time you put a dwelling unit up, you are increasing traffic. The point is a very fair one,” Aguero says. “As you infill some of these developments, is there sufficient capacity on the roadways to be able to handle it? I would like to believe the planning folks have thought through all of that, and that as development continues they will be expanding the streets or putting in transit alternatives that will help alleviate some of (the traffic). But I’m also very well aware that that might be something of a naïve assumption.”
Pushkin Kachroo is a professor in UNLV’s Department of Electrical & Computer Engineering. He’s also something of a traffic expert. Sitting in his office, he attempts to assuage my congestion concerns by assuring me that public works agencies are constantly monitoring traffic flow, relying on intricate computer models that reveal when roadways start to become unbearable time sucks or, worse, unsafe. Kachroo also says there are always workarounds to relieve bottlenecks, even if it appears as though there’s no room for roadway widening — he even suggests the possibility of “building up … like a flyover.”
He also mentions taking alternative routes down side streets whenever possible, and we both agree that smartphone navigation apps very well could become our best traveling companions — especially once some tech genius figures out to how to program them in a way that navigation can be tailored to each person’s preferred travel habits.
Kachroo then offers a few final words of encouragement — sort of. “At least we’re nowhere near California’s rate of congestion,” he says. “But if the growth rate continues …”
And schools? Rick Baldwin, director of demographics, zoning, and geographic information systems for the Clark County School District, says his team monitors growth patterns, and has noted the apartment complexes going up along major corridors. They’ll work their projections into the ongoing school construction bond as needed. Also, in some cases — for instance, near the apartment boom by my place — the district has agreements with city governments to turn selected park sites (which were built on land CCSD owns) into school sites if the student growth spikes.
That stat from the Nevada State Apartment Association is tattooed on my brain: An estimated 6,234 units per year will be needed to meet expected needs by 2030.
So is another nugget from that Reis report: More than 4,000 apartment units are currently under construction in Henderson, the southeast, and west — and another 5,000-plus are planned or proposed.
So is Aguero’s prediction.
“There’s always some concern about overbuilding within the apartment market,” he says. “That having been said, the apartment vacancy rate is less than 5 percent today, which is essentially almost fully occupied, and we’re seeing rents increase. Higher rates of occupancy combined with higher rent rates will create an incentive for increased development, not a disincentive. So this is a trend we’re going to see for a while.”
Translation: Quit your complaining, Mr. NIMBY. Just be damn grateful a developer turned that dirt across from your subdivision into an apartment complex and not a storage facility!