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Posted Aug 29, 2006, 12:15 AM
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The construction level is pretty steady nowadays. And it's good to see Vegas Grand finally get off the ground.
I don't know how I could of missed this article but it caught my attention while I was cleaning out some old papers.
It's LONG but a good read pertaining to the future of overall housing growth in Vegas, trends towards urbanization/high density, as well as high rises.
Singled Out? Observers say traditional one-family home subdivision may fade away
Quote:
Aug. 13, 2006
Copyright © Las Vegas Review-Journal
It's a local mainstay: The new-home subdivision with 150 single-family homes, comfortably ensconced on 6,500-acre lots behind thick cinder-block walls.
More than 71 percent of new homes sold in the Las Vegas Valley today are single-family properties, data from research firm SalesTraq show. Given that market dominance, it would seem inconceivable to consider the typical Las Vegas production-home tract an endangered species.
However, one local housing analyst predicts that sometime in the next seven years to 10 years, the lights will go out on the last traditional new single-family subdivision in the valley.
Steve Bottfeld, a senior analyst with Marketing Solutions, says a multitude of trends will conspire to render new single-family development obsolete within the next decade.
Area builders acknowledge the market changes that are complicating single-family development. But they're also planning adjustments in how they develop that they say could save the single-family tract.
LAND WOES, BUYING TRENDS
Key among the forces that Bottfeld said will squeeze out single-family development is a waning supply of developable local land.
Clark County's Multispecies Habitat Conservation Plan has capped future development in the county at 78,000 additional acres. The research firm Applied Analysis says builders in the county chew up 7,000 acres to 9,000 acres a year, leaving land stores of eight years to 10 years.
"We're in a situation in which buildable land is going to be in short supply," Bottfeld said.
And when any commodity is scarce, its price spikes upward.
Today's land prices already make the conventional single-family community with six homes per acre impossible to build in some parts of the valley. When property sells for $1 million an acre, "you can't put single-family homes on it," Bottfeld said. Witness a 26-acre plot in southwest Las Vegas that recently came on the market at $1.65 million per acre. The lot is zoned for 50 units per acre -- high-density attached housing.
But Bottfeld's prediction is born of more than simple real estate math.
Evolving consumer preferences and demographic trends will drive home buyers into compact, urban communities, he said.
The oldest baby boomers are turning 60 at the rate of 8,000 a day, and every seven seconds, an American turns 50. As consumers gray, Bottfeld said, they're demanding a streamlined lifestyle. The expansive suburban home, the quarter-acre lot, the pool -- all the features that made sense for young, growing families -- have become maintenance burdens to empty nesters.
In addition, a shift away from the nuclear family will bolster demand for attached housing, Bottfeld said.
Unmarried women in particular are buying homes in big numbers: The National Association of Realtors' Profile of Home Buyers and Sellers shows single women compose the second-biggest group of buyers, after married couples. Single women bought 21 percent of homes in 2005, up from 18 percent in 2004. Single men bought 9 percent of homes sold in 2005, the association reported. And a study by Fannie Mae found that single women will helm 28 percent of all U.S. households by 2010.
Bottfeld said those single women have specific housing demands: They want security, proximity to neighbors they know and a "lock-and-leave" lifestyle that allows them to travel without worrying about the lawn.
"There's a whole bunch of singles and boomers who are expressing a preference for the vertical lifestyle, providing that there is an entertainment element to wherever it is they're living," Bottfeld said.
And that entertainment aspect is key, because having recreation nearby will allow home buyers to fulfill what Bottfeld said is a 21st century dream: ditching cars and hoofing it to favorite restaurants, shops and theaters. Between rising gasoline prices and heavier traffic, driving is a chore consumers increasingly want to avoid.
"There's a frustration associated with motor vehicles," Bottfeld said. "Road rage is a relatively recent phenomenon. People really don't want to drive in traffic, and no matter how fast you build roads, you are still going to be in traffic."
The answer to those road woes? Mixed-use developments with mid-rise or high-rise housing clustered around retail and office space.
Kenneth Smith, a principal in Glen, Smith & Glen, seconded Bottfeld's summary of the consumer trends that could lead more home buyers to attached housing.
You'd expect Smith to agree with Bottfeld: Glen, Smith & Glen is developing Sullivan Square, a 16.5-acre community in southwest Las Vegas that will feature high-rises as well as brownstones and lofts. Sullivan Square's Market Street will have 25 retailers, including a café, a pub, a florist, a fish market, a bakery and a butcher.
But Smith isn't just concurring with an endorsement of his business plan; he sees shades of Bottfeld's observations in the 70 or so people who have reserved units at Sullivan Square.
Among Smith's buyers are members of generations X and Y, young adults in their 20s and 30s who would rather live in a city condo than own a single-family spread in Pahrump or Coyote Springs and commute 45 miles to work every morning. Sullivan Square is also capturing its share of professionals, including attorneys, architects, engineers, doctors and teachers, Smith said. Finally, empty nesters are a major portion of Sullivan Square's future residents.
"There is a huge shift going on across the country," Smith said. "People want to return to the heart of the city. It partly has an environmental backdrop, with people worrying about pollution and global warming from traffic. But it's also about people placing greater value on their time. If you're spending 45 minutes a day in traffic each way to and from work, that's a lot of your lifetime sitting in a car."
Bottfeld said the transition toward dense development will reduce urban sprawl and traffic congestion.
And, he added, it could even improve community spirit.
As garages and driveways replaced front porches on modern-day suburban homes, residents retreated to their backyards and spent little time meeting their neighbors. In a high-rise, ignoring the people next door is impossible. Residents see each other on the elevator, in the parking garage, at the building's coffee house.
"We could get back to something we lost in terms of borrowing that cup of sugar from your neighbor," Bottfeld said. "You're going to see a positive change in human interaction."
'THE TIPPING POINT'
Evidence shows the market is already tilting toward attached housing.
Focus Property Group is developing its Mountain's Edge master plan on 3,500 acres of southwest Las Vegas property the company bought in chunks mostly from 1997 to 2002. Focus paid $100,000 to $200,000 an acre to buy the land, and spent roughly $100,000 an acre bringing infrastructure to the site.
For Inspirada, a 2,000-acre master plan in Henderson, Focus paid about $500,000 an acre. The developer will drop an additional $250,000 per acre to install infrastructure at the community.
Those land costs are reflected in very different housing compositions.
At Mountain's Edge, about 20 percent of the homes are attached, estimated Focus Chairman and Chief Executive Officer John Ritter. At Inspirada, as many as 60 percent of the homes will be attached, he said.
"If you look at every major city that has had both the growth in (housing) demand we've had and the constrained land supply we have, that is the direction they go in," Ritter said. "New York, areas of Manhattan, San Francisco and even parts of Washington, D.C. -- those areas became closed in. I think we're on the tipping point toward that kind of lifestyle."
Yet, Ritter and other local builders add that they believe new single-family home tracts have a future in the Las Vegas Valley beyond the next decade.
Klif Andrews, president of Pardee Homes' Nevada division, said millions of Americans remain invested in the suburban format that prevailed across the country following World War II.
"I strongly believe that the American dream still includes a backyard, a garage and a house that's in a suburban neighborhood," Andrews said. "That's an enduring dream for Americans, and I don't think it will go away. It's just getting tougher to make it work."
How much tougher?
Andrews said Pardee requires parcels of at least 40 acres to build a conventional single-family subdivision. But it's become virtually impossible to find privately owned plots of 40 acres or more; Andrews said he hasn't bought that large a piece of property inside Las Vegas in three years. Pardee is mostly living on land it bought at least three years ago, and it has a three-year supply of acreage to build on.
Pardee is also planning to unveil its first local attached communities in 2007, when it breaks ground on townhomes at Inspirada and flats at its Eldorado master plan in North Las Vegas.
But those attached communities don't mean Pardee will abandon the local single-family market altogether. The builder delivers about 1,600 new single-family homes annually in Las Vegas, a number Andrews said would likely fall to about 500 units in the next seven years to 10 years as land remains difficult to find.
To replace the lost inventory, Pardee is heading to Coyote Springs, a planned community 50 miles north of Las Vegas. Pardee is under contract to develop 10,000 single-family homes in the master plan's first phase.
Andrews said such exurbs could ease the pressure to go vertical in the valley.
"In virtually every other market across the country, commuting is a consistent solution for urban issues, whether it's high housing costs or congestion," he said. "You can look to Southern California, Phoenix, and markets in Texas and Florida, where an ocean of buyers commuting from exurban locations to urban workplaces continues to occur."
Executives of Standard Pacific Homes are also banking on sustained interest in single-family homes in Southern Nevada.
The California builder entered the Las Vegas market in May, when it began building Mountain Shadows, a 77-lot community of single-family homes in North Las Vegas. Standard Pacific is planning three additional single-family subdivisions across the valley, and is partnering with four other local builders to develop a North Las Vegas master plan on 2,675 acres of land formerly owned by the Bureau of Land Management.
"To say all the builders will simply fold up their tents and go away -- that's not going to happen," said Jim Cerrone, Standard Pacific's local vice president of sales and marketing. "It's going to be extremely tough. We're going to have to be a lot more creative, and it may mean revitalizing older neighborhoods. I think the market will adjust."
Yet even Standard Pacific will wade into the attached market in 2007 when it starts building townhouses and condominiums in northeast Las Vegas and Henderson. Cerrone said the builder's product mix will ultimately consist of 35 percent attached homes and 65 percent single-family homes. Rather than land pressures or demographic shifts, though, an emphasis on assembling a diverse portfolio is driving Standard Pacific's local entry into attached housing, Cerrone said.
"Most of us grew up in single-family homes, and we want our kids to have the same lifestyle," Cerrone said. "When our kids have kids, they're going to want yards, not a balcony on a 31-story building. And where there's a market (for single-family homes), we'll serve that market."
Added Andrews: "Someone has to convince me that most Americans who are given the choice wouldn't prefer a detached home with a yard and a little bit of space between the houses. We know Americans prefer that, because they'll pay more for a single-family home. People typically get forced into attached housing. They don't choose it."
SAVING THE DETACHED HOME?
Builders don't intend to let detached homes just fade away.
They're tweaking their approach to single-family neighborhoods, looking to impart some of the benefits that come with vertical mixed-use projects.
Home sites will shrink: Builders will fit as many as 10 single-family homes on an acre, up from four homes to six homes per acre half a decade ago, Ritter said.
Those lot specs will require builders to abandon backyards. But in place of rear yards, developers will set aside property for community parks, shopping centers and open space. Rather than planting public areas at the outskirts of a subdivision, planners will place parks and retail at the heart of a community, Ritter said, allowing residents to stash the car in the garage for the weekend and walk to their favorite shops, ball fields and eateries. And those cinder-block walls that ring newer subdivisions in Las Vegas? They won't grace future detached-home developments.
At Inspirada, for example, Focus is looking to include public spaces within a quarter-mile of every home. The master plan's 300-acre town center will house retailers ranging from grocery stores and dry cleaners to boutique clothiers.
Standard Pacific's Mountain Shadows will have a community park at its core. Houses encircling the park will have view fences rather than block walls, so residents can watch their children and greet their neighbors.
And Andrews said Pardee's Coyote Springs communities will incorporate neighborhood parks and open home sites that allow residents to "interact and mingle."
Ritter said consumers can also expect builders to de-emphasize garages, placing them in the back or at the side of the home. Houses will move closer to the curb, and living rooms and family rooms will look out on the street to open up homes to the neighborhood. Streets will narrow to help slow traffic.
The effort to replace yards with community parks will help single-family builders retain some of the consumers gravitating toward vertical communities, Ritter said, as young professionals and empty nesters looking for a low-maintenance lifestyle near retail, restaurants and entertainment find options in newer detached-home communities.
"We don't have to get rid of single-family homes to have intelligent, interactive communities," Andrews said.
Builders and analysts also say potential renegotiations of the county's Multispecies Habitat Conservation Plan and the Bureau of Land Management's disposal boundary -- a ring around the valley beyond which the agency won't sell acreage to private interests -- could forestall the demise of the conventional single-family home.
But Bottfeld said Manhattanization -- which he said refers not merely to the building of high-rises, but to the urbanization of broad swaths of the valley -- is inevitable. Even existing single-family communities could fall to the trend in 40 years to 50 years, he said, as developers buy up pockets of detached housing and convert them to mid-rise or high-rise communities.
Ritter predicted attached housing will make up 60 percent or more of the new-home market in about 10 years. Though he stopped short of forecasting an all-vertical new-home market, he said Las Vegas will take on a decidedly different skyline in coming years.
"It's a very natural progression to a city where people are relating to their neighbors and using public neighborhood spaces," Ritter said. "There's no question that, 10 years from now, attached housing will be an acceptable lifestyle in Las Vegas in those areas that provide for good outdoor public spaces and commercial amenities."
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Yung getting wrecking ball ready for Trop
Quote:
BY DAVID MCKEE
LV Business Press
Once Columbia Sussex CEO William Yung claims ownership to the Tropicana, he plans on taking a wrecking ball to the sprawling, low-rise buildings that cover many of the site's 34 acres. In an interview with "Casino Enterprise Management," Yung announced that "our plans are basically to keep the two hotel towers and showroom, and then pretty much get rid of everything else."
As part of a $2 billion overhaul, Yung would erect a 3,000-room Tropicana, another 3,000 rooms branded to "Hilton or Marriott or something like that," to be followed by a condo tower or a third, 3,000-room hotel. An additional 1.5 million square feet of development would be one-third retail, one-third meeting space and "various commercial stuff" filling out the remainder.
Non-gaming amenities would be expected to drive more than half the property's revenue. The Tropicana's casino is currently on pace for $62 million-plus in 2006 revenues. Yung's target for future Trop casino intake is between $160 million and $200 million annually.
Columbia Sussex CEO William Yung has bold plans for the Tropicana.
"We're not really expecting that much out of it," Yung told CEM Editor Matt Connor. "We'll make our money on the rest of the stuff."
One way that Yung plans to do so is to have Columbia Sussex's hotel operations run everything but the casino itself. Hotel housekeeping staff will double as cleaning staff for the casino proper, he told the magazine. "The hotel cleans the casino for them and does everything else ... 75 (percent) to 80 percent of the infrastructure and the jobs are done on the hotel side," said Yung, a former industrial engineer with the Jergens soap company. That regimen will be imposed on all four Aztar properties being bought. "We've done it everywhere," he said.
Informed of Yung's comments, one casino industry veteran groaned, "If you're going to own a Strip property, don't run it as a grind joint."
Kevin Kline, Culinary Union staff director, added that the Tropicana has an existing contract that includes a successorship clause that would bind Columbia Sussex to the terms of the current collective bargaining agreement. New owners would have to negotiate any changes.
Noting that the Tropicana would be Columbia Sussex's largest casino-hotel, Kline remarked, "once they get in there they'll see there needs to be a full-time workforce that cleans the casino and a full-time workforce that cleans the rooms."
Columbia Sussex also owns the Westin Casuarina, one block off the Strip, a non-union property. Asked if the Culinary would try to unionize the Westin when the collective bargaining agreement is up for renewal next year, Kline said, "We're right now focused on the Tropicana project."
The Westin employs distinct cleaning staffs for its guest rooms and public areas, respectively, said Director of Sales and Marketing Sandra Horvath. She added that she couldn't think of an area in the hotel-casino in which staffers double up on hotel- and casino-related tasks.
In addition to executing the Aztar buyout, Yung is also pursuing two casino projects in Louisiana. He is also seeking casino concessions in Kentucky and Pennsylvania. His rivals for the Keystone State project include Las Vegas Sands.
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Last edited by Reverie; Aug 29, 2006 at 12:20 AM.
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