Property taxes on vacant land higher than with improvements? -A cautionary tale

So you think your property taxes would be lower because there are no structures on it, in the case of vacant land....Today I just got out of a Clark county assessor appeals hearing, at the State level.  Just argued about an egregious property tax increase of over 400% on now vacant land that gets assessed much higher at its “highest and best use” JUST BECAUSE the dilapidated structures were demolished.

 In the downtown Las Vegas redevelopment area, there is a large bid-ask spread between buyers and seller, and this is precisely why deals don’t get done. At the same time, this high ask, low bid environment leads assessors to utilize this information against property owners, in error. 

County appraisers only use the data available to them, and at times,  like in this case, the comparable sales and active listings of properties surrounding a subject property may not be relevant, and or maybe far superior or far inferior.  They may be too old or too small, or fall just outside of a psychological barrier for development, but not a physical barrier for development, such as a freeway, or Major Boulevard.

Even the MAYOR OF LAS VEGAS verbally told the owners that taxes will go down by demolishing the structures, in grave error in advice. One government department may not have your best interest in mind when it comes to the subsequent, consequential actions of another government department, as was the case here.

Moral of the story? Consult your property tax advisor always, and make sure they’re knowledgeable on the jurisdiction your property is in. Make sure you communicate with them regularly about planned improvements, or in this case, demolition. 

Top Commercial Real Estate Trends & Observations

2016 LAS VEGAS CRE TRENDS & OBSERVATIONS:

1. Regional malls 

We see regional malls needing to either be massively renovated and shifted towards "lifestyle centers", or that these malls now find mixed uses like offices or corporate headquarters that fill anchor spaces.

2. The rise of the mixed user

The Gramercy

Overall, the Vegas Valley has had the luxury of sprawl since its inception, but according to a great article in The Sunday / Vegas Inc. Magazine, mixed use is being received extremely well, with developments that were stalled during the recession (the Gramercy) gaining amazing traction with low vacancy and some of the highest rates in the Valley. Mixed use is definitely not going away.

3. More industrial distribution warehouses growing in inexpensive areas

Faraday Future Conceptual Rendering

With the legalization of medical Marijuana, and the attraction of such capital-heavy tech companies as Faraday Future, the demand for large warehouse and industrial distribution has led to a lot of new large scale product coming on line, both with a tenant in mind, and on "spec" with no specific user in mind.

4. Southwest Las Vegas development continuing at rapid pace

Durango Arby Plaza New Construction

With IKEA coming online earlier this year as just the "cherry on top" of all the activity, the Southwest has become an extremely desirable area with multiple new shopping centers with national, regional, and local anchors coming online, and mid-density new garden style apartments being completed (along with the Gramercy mentioned above in #2). It appears more development is occurring in this region of Las Vegas above all other areas. 

5. Resurgence of downtown arts district

Rendering of Main Street Improvements in the Arts District

As a "second wave" of development departing from the Tony Hsieh-fueled Downtown Project, the Arts District is now home to an increasing number of businesses, with new construction, as well as multiple redevelopment projects. This region is starving for housing though, and it is believed that this lack of housing will stunt the progress. A lack of realistic land costs, coupled with a booming construction industry that has driven up costs for bidding projects has made some residential multifamily developments never become ready to break ground.

Heavy turnover at Prominent Near Strip Retail Center

Recently it has been seen that multiple tenants have vacated the retail center across from the Hard Rock Hotel & Casino and Hofbrau House. The center, located at the corner of Harmon Road and Paradise Avenue is a major center that is home to CVS, Ferraro's Italian, and Paradise Cantina. Recently, Johnny Rockets, Stussy, and Undefeated have closed their locations. No comment was available on their replacements at the time of this article.

0.75 Acre R4 Land Assemblage in Downtown now available

A new assemblage of residential land aimed at developers is now on the market.  316, 324, and 328 N. 9th Street in Downtown Las Vegas was just listed this week on Propertyline and Loopnet. The property up for sale at this time marks an increase in chatter and activity in the Downtown area relating to Multifamily redevelopment opportunities, as new housing stock is in short supply and is in close proximity to the Zappos.com campus and the Ogden condominiums. The properties are available as an assemblage of High Density R4 zoned tear-down residential lots that allow for development within the guidelines of the flexible Centennial Plan. The 316, 324, and 328 N. 9th Street properties are listed by Richard Emanuele and Ryan Misaresh, LEED AP of Team Emanuele at Simply Vegas Real Estate

 

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NAIOP Breakfast brought critical honest thought to DTLV Development

This morning, Real Estate leaders in the Southern Nevada region gathered at The Orleans hotel to discuss the future of Downtown Las Vegas, as an urban core. Many concepts were tossed around between panelists about the "counterculture" of Las Vegas' history and how it has impaired traditional routes to increased density, cultural identity, and gentrification.  

As the conversation got underway, discussions centered around the Arts DIstrict and the sub section of the Arts District known as "18b", as well as the ~61 acres of parcels surrounding Symphony Park. Common issues cited were that there is minimal ability to foster "less" expensive growth through adaptive reuse, because the culture of Las Vegas has always been anti-history in a way, with bulldozers and TNT leading the way into redevelopment, and therefore keeping existing stock to a minimum.

A large issue discussed was that developers are forced into ground up development, and with the current market, it doesn't "pencil".  Addressing  the pervasive issue of a lack of traditional industry, according to panelist Bob Beers, "We're in the counter-culture business, and that's why industry hasn't come here.."  

According to the panelists, not all development efforts in the downtown region have been less than stellar, according to panelist Christina Roush, "there have been pockets of brilliance..." however "[there are] huge gaps that we've totally leapfrogged over" according to panelist Chris Gonya. Playing further into this theme, it was stated by panelist Eric Strain that Downtown Las Vegas has "Cultural Icons, but the connective tissue doesn't exist..."

 The panel consisted of: Councilman Bob Beers of City of Las Vegas, Chris Gonya of Main Street Development, Christina Roush of HB Properties Investment & Development, and Eric Strain of assemblageSTUDIO.