This year Las Vegas provided a particularly appropriate backdropfor the annual ICSC Spring dealmaker extravaganza. If anybody inthe real estate business needs a reminder that these areuncomfortable times this overextended desert market provides awake-up call in spades.
A Dubaiesque building spree in the face of stalled demandsuddenly hits the skids. Even in the best of times how many highrollers want to own condos along the strip? That scene may work fora few visits a year, but a regular diet of swarming tourists andeight lane traffic jams can get old pretty fast, except for ahardened few. Cheap land and housing attracted Californians wantingout of high prices and high taxes. Now housing values have tankednearly 30%. As for all the new hotel rooms, when you hear sky's thelimit talk about convention and tourist trends, you know developersare getting ahead of themselves. The tight economy comes at a verybad time for all those casino operators.
At least most other U.S. markets have avoided Las Vegas'sdevelopment splurge. That will be their saving grace as cap ratescontinue to rise and values decline. Softening vacancy ratesshouldn't increase dramatically even as demand slackens. Thisdownturn should be relatively manageable.
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