THE OFFICE MARKET IN LAS VEGAS NOW IN AN OWNING RATHER THAN A RENTING MODE
Small business owners such as Clay Bloxham, of PayPros payroll accounting service recently bought a freestanding, 4,100 square foot office condo at Durango Drive for $390,000, working out terms with Bank of Nevada, the property's previous owner.
Bloxham figures to save about 55 percent from what he was paying in rent in similar-size office rent locally. Bloxham looked at 6 different properties to make an easier commute for him and his 8 employees.
Even with office vacancies in Las Vegas at 25 percent and asking rents falling under $2 a square foot, it makes better financial sense for some small businesses to follow Bloxham's lead.
With prices and interest rates low, an owner can control costs and gain tax breaks from depreciation.
A local Realtor said he is selling offices of 10,000 square feet or less for about $80 a foot in the southwest Las Vegas area, while improved buildings, not just shells, are going for $125 a square foot.
Going forward, there will be more bank owned properties coming on the market says a research analyst in Las Vegas.
While banks continue to work with owner-users of smaller mostly vacant office buildings, special servicers are trying to unload larger income-producing properties to the right investor.
Another Realtor said the benefits of renting rather than buying offices are much the same as in residential real estate, because the full amount of expenses can be deducted from taxable income.
Bloxham of PayPros estimates he will spend about $15,000 on new paint and carpets for his office. "We looked at Small Business Administration financing but the bank's terms made more sense."
$27 MILLION WINDFALL FOR THE LAS VEGAS CONVENTION AND VISITORS AUTHORITY
With the economy showing signs of life and the tourist volume rising to near pre-recession levels,the ConventionAuthoritywill have to adjust its budget to account for a windfall.
The Authority is financed by a 12 to 13 percent tax on every one of the 150,000 rooms in the Las Vegas area. Thus, increases in tourism and room rates means more money - a projected $27 million in the travel-board's pockets.
Year-to-date, room tax earnings average for the Las Vegas area are up 19.8 percent over last year. The average daily rate, $105 is 10.7 percent higher than last year.
Of the expected $27 million windfall, $18.8 million will be divided several ways, $2.7 million for community support, $1 million marketing, $5 million advertising, $10 million transfer to capital, and the remaining $8.2 million will be saved.
The Authority's total budget will go from $188 million to $197 million due to the windfall.
NUMBERS IN LAS VEGAS DON'T SUPPORT THE BANKS EFFORTS OF OFFERING CASH PAYMENTS FOR SHORT SALES IN OTHER STATES
Local LAS VEGAS REALTORs ASKS -- "Why is it that 48 percent of home sales are foreclosures and only 26 percent are short sales? "
"It's funny that they put this out there when hundreds of thousands of homeowners who want to short sell get refused? " It's more PR than anything. If lenders really want to move mortgages off the books they would approve short sales for the 10,000 homeowners in Las Vegas that are in short-sale limbo and will short-sell for free - no $35,000 needed."
A mountain of pending repossessions is holding back housing recovery, where prices have fallen for six straight years damping economic growth. Owners of more than 14 million homes are in foreclosure, behind in their mortgage payments or owe more than their properties are worth.
Short sales represented 9 percent of all U.S. residential. transactions in November. Bank owned foreclosures and short sales sold at a discount of 34 percent.
Lenders are finding out that some borrowers would rather risk repossession while living rent free for years before they are forced out.
While Morgan-Chase is offering the largest incentive payments, other banks are also offering them, according to interviews with 12 real estate agents in other states.
Morgan-Chase, the biggest U.S. bank, approves about 5,000 short sales a month. It generally offers about $10,000 to $35,000 in cash payment at settlement. Not all of the sales include incentives.
For banks, a short sale could cut a year or more of the time it takes to unload a property. From listing to sale, the transaction took about 123 days on average. Lenders spend an average of 348 days to foreclose and another 175 days to sell the property.
Wells-Fargo offers relocation assistance of as much as $20,000 to borrowers who short sell or agree to transfer title through a deed in lieu of foreclosure.
Bank of America sent letters to 20,000 Florida homeowners as part of a pilot program, offering incentives of as much as $20,000 or 5 percent of the unpaid loan balance.So, it's happening elsewhere, but why not in Las Vegas?
SOME BANKS ARE OFFERING CASH INCENTIVES TO ENCOURAGE SHORT SALES
Banks, accelerating efforts to move troubled mortgages off their books, are offering about $35,000 in cash to delinquent homeowners to sell their properties for less than they owe.
Lenders have routinely blocked or delayed such transactions known as short sales in which they accept less from a buyer than the seller's outstanding loan.
Now banks know that the deals are faster and less costly than foreclosures, which have slowed due to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, foregoing their right to pursue unpaid debt and in some cases to provide large cash incentives.
Losses for lenders are about 15% lower on these short sales than on foreclosures, which can takes years to complete, while taxes, maintenance and other costs accelerate, not to mention vandalism of homes.
The short sale deals accounted for about 33% of financially distressed transactions in November, up from 24% last year. Karen Farley of San Marcos, California, hadn't made a mortgage payment in a year when she got a form letter from her lender."You could sell your home, owe nothing more on your mortgage and get $30,000," J.C. Morgan Chase said in the letter.
The New York based bank agreed to let her sell her home for $200,000 less than what she owes.
LAS VEGAS PERSPECTIVE -
Rick Piette, manager of Premier Mortgage Lending in Las Vegas, said "giving $35,000 to people may be happening in New York which is a judicial foreclosure state, in which the foreclosure action needs to be processed in front of a judge."
"That means with 18 months to foreclose, a short sale would be cheap considering lost payments for that amount of time. "
Las Vegas has a long way to go before it's tech industry reaches a critical mass. It lacks the Stanford-size intellectual push that helped Silicon Valley become the hub it is today.
But Las Vegas may be able to carve a niche itself, says Zappos executive Rick Duggan, who mentors local tech startups in his spare time.
"Vegas is something completely different. I liken us to the Austin Texas of the world, or Boulder, Colorado, cities that are small but who have a tech presence."
"I don't think the first thing on someone's mind when they think of Vegas is to be tech. Gaming and Tourism are first. But if someone thinks of Gaming and Tourism and Tech that would be a victory."
Las Vegas is fostering a home-grown tech community, but the city also has a few benefits that could draw startups away from the San Francisco area.
"Startups are often dealing with the problem of limited funding, and the fact that Vegas is a very low cost place to live in the West is a very big draw", said Stephan Brown, Director of the Center for Business and Economic Research at UNLV in Las Vegas."
Zappos is also a draw. Romotive co-owner Keller Rinaudo has credited CEO Tony Hsieh's vision for downtown with attracting his company to Las Vegas. Zappos could easily spawn offshoots like App and software development firms or even competing online retailers.
Vegas tech is still in it's infancy. So is Rumgr (the garage sale app). The startup's next step is marketing. They hired a public relations agency and plan to take the App nationwide.
Rumgr also last week launched a new version of it's app which allows buyers to submit a more formal bid on items. The app is offered free on iTunes.
The company hasn't yet implemented a way to make money from the app but may do so late this year.
3 MORE STATES JOIN A NATIONWIDE SETTLEMENT OVER FORECLOSURE ABUSES
Arizona, Michigan and Florida, three of the states hit hardest by the housing crisis will join a nationwide settlement, joining some 40 other states in a deal that will benefit many Americans who lost homes or can't afford their mortgages.
The 3 states involvement buoys hopes that a full 50 state deal is imminent. 5 major states - California, Delaware, Massachusetts, New York and Nevada are still considering whether to join the settlement.
The nationwide settlement stems from abuses that occurred after the housing bubble burst. Many firms that process foreclosures failed to verify documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures.
The deal could be the biggest involving a single industry since a 1998 multi-state tobacco deal. It would force the 5 largest mortgage lenders to reduce loans for about one million households.
The lenders will also send checks for about $2,000 to hundreds of thousands of people who lost homes to foreclosures.
California's backing is particularly critical being the hardest hit in the foreclosure crisis. Homeowners in states that opt out of the deal wouldn't share in the settlement money. The settlement could run as high as $25 billion if all states approve the deal.
The lenders, Bank of America, Chase, Wells FargoCitigroup and Ally Financial have agreed to the settlement. In settling the charges, the states would not seek further civil action but could pursue criminal investigations.
As of February 9, it has just been announced that a deal with 49 states has been finalized.
ZAPPOS INVESTS $500,000 IN NEW STARTUP APP MAKER IN LAS VEGAS
The developers behind iphone app Rumgr confirmed they have receivedan angel investment from Zappos.comCEO Tony Hsieh which will allow Rumgr to operate for one year and to hire 2 employees including an Android developer.
It's too soon to tell whether Rumgr is an idea whose time has come. But it's clearly a new development for Las Vegas.
This is the first in what could be a wave of tech spinoffs from an established company, a model of economic growth which is commonplace in California's Silicon Valley.
The founders of Rumgr all have Zappos ties having worked 4 years at Zappos Henderson before leaving to focus on Rumgr. The trio of founders will work from a downtown apartment provided by CEO Hsieh.
The Zappos link make it easier to obtain funding the trio agreed. Rumgr isn't the first tech startup to receive an investment from Hsieh, but Rumgr is the first startup to sucessfully spinoff from Zappos.
A handful of other Zappos employee startups are in development but have not yet launched. Encouraging employees to be creative is a central tenet of the Zappos philosophy even if that means losing a valued employee.
In an email to the R-J, Hsieh said, "we have always encouraged employees to pursue their passions." Within Zappos, employees are encouaged to apply for jobs in other departments if there is an opening for their dream job."
Hsieh's investments so far have been a bit informal, but he is in the process of forming a Vegas tech fund through the Downtown Project, a separate company he started to invest in downtown redevlopment.
* The World Market Center is expected to draw 50,000 people in early February.
* The Spring version of MAGIC- a fashion show is expected to draw 75,000 people in mid-February.
* ASD Las Vegas- the Spring retail merchandise show expects 41,000 attendees in late February.
Even though the massive Con-Expo construction show won't be seen this year because it meets only once every 3 years, 2012 is shaping up to be extremely lucrative thanks to new events and a major exhibition staged every 4 years.
This year's SHOT show produced phenomenal results for the Sands properties. "The Tuesday and Wednesday days of the show were the fifth and sixth best room days in our history."
The Venetian and Palazzo had 100 percent occupancy during the CES show. The high demand drove room rates higher, with the 2 properties seeing $4 million a night in room revenue for the 7,100 suites.
The city's convention facility gives it an edge on late bookings, since there are several venues in the city that can handle shows that are large and small. While the Convention Authority scouts for shows it wants to bring to the city, resorts are doing their own prospecting.
One of the new big additions will be the big Healthcare Information Management Systems Society annual conference and exhibition, a 30,000 delegate show scheduled for late February at the Sands Expo Center.
"We're seeing increasing strength in the meetings and convention sectors, said Alan Feldman, a spokesman for MGM Resorts International, which hosts large trade shows at the Mandalay Bay Convention Center and smaller gatherings at the Aria, MGM Grand, Bellagio and Mirage.
"Not only are meetings bookings up but the number of room bookings are also up and cancellations are down, all of which is good." "It's a sign that business is getting back to business across the country."
Feldman said that another sign the economy is improving is that conventioneers are staying longer after their meetings.
"Future bookings are looking good and we are seeing strength in numbers of bookings and room rates."
In the first 11 months of 2011 attendees of meetings and conventions represented more than 13.1 percent of the city's tourist visitation. In 2010 it was just under 12 percent.
In the first 11 months of last year, the city played host to 17,756 conventions, trade shows, meetings and conferences, a 4.6 percent increase over 2010. Attendance was up 9.2 percent to 4.7 million people.
LAS VEGAS HOME PRICES EXPECTED TO KEEP DROPPING FOR THE NEXT 6 MONTHS AND RECOVERY WON'T COME UNTIL BANKS INCREASE FORECLOSURES
According to housing analyst Dennis Smith in his annual housing report.
"2012 in my opinion is going to be the most interesting year yet because of the governments intervention trying to manipulate housing recovery."
Dennis Smith is the President of Home Builders Research and said during his hour-long presentation, "just look at the shadow inventory - 2.5 million homes are bank owned and real estate owned, and that 4.5 million people have stopped paying their mortgages, with the number of potential foreclosures estimated at from 8.2 million to 10.3 million."
"These numbers have really shaken up policy makers in Washington. We could see 10 million out of 55 million mortgage holders go to default."
It is estimated that 61 percent of Las Vegas home mortgages are upside down. With 422,000 mortgages in Las Vegas, that's roughly 257,000 homeowners at risk of default.
"Lets assume that half of these turn into foreclosures. No government program could overcome that deficit."
Fannie Mae and Freddie Mac are still refusing to reduce their principal mortgage balancesand loan servicing firms have no incentive to do so because they collect fees based on payment amounts.
"We have to see what happens when that spigot of bank owned foreclosed homes gets turned back on."