Projects of Interest in the market:
The Alexander at South Virginia, a 350-unit, Class A project by A.G. Spanos will be fully delivered in 2010 with an expected absorption of 15-25 units per month. Of the more than 750 units of new construction in the 100+, Class A category now in lease-up regionally, the median absorption of 18 units per month indicates a sluggish demand for apartments at the top of the market.
Key market Stat:
The Reno/ Sparks re-sale home market continues to show steep increases as new home construction dwindles, re-sale prices decline to a median value of $183,000 and housing affordability climbs . This metric accounts for a 15% reduction in apartment demand as qualified tenants move to the for-sale market or the shadow market of single-family rentals acquired by investors. Reduced apartment demand has forced a 5% decline in median rents and a market vacancy of 9% in the 100+ market. The market average rental concession has stabilized at 13% of net effective rents, but additional single-family foreclosures continue to work through the market, with more than 6,000 homes in default and not yet foreclosed.
Distinguishing characteristic of the Reno market:
Unemployment and falling household income have combined with a slight population decline to undermine apartment fundamentals regionally. Weakened tenant quality and reduced net effective rents jeopardize stabilized occupancy for some operators and keep overall occupancy in 100+ projects under 92%. Northern Nevada is exceptionally well positioned to rebound as the recession lifts. Known as a low-tax state with few barriers to business entry, Northern Nevada will surge in apartment demand by 2014 with the echo boom generation and tax refugees from California moving into the region. Astute buyers now have excellent quality to acquire at outstanding values for a region in which little or no new construction is planned or being built.