After a 6-month rise in the Southern Nevada CRE Recovery Index between March and August 2011, the index went flat for 2 months and then took a step back in November 2011. Still, on a year-over-year basis, the index was 3 points higher in November 2011 than in November 2010, indicating that the local economy, especially in regards to potential demand for commercial real estate, is in a slow recovery.
Weak points in the index in November 2011 were visitor volume, new residents and container traffic in the Port of Los Angeles. Compared to a year ago, all measures were up except gaming revenue (down one point) and commercial occupancy (flat).
So – what does this mean?
For one thing, it suggests that the road ahead for Vegas CRE might be a bit more rocky than we would like, or would have expected at mid-year 2011. Things have been slowing down a bit, quarter-to-quarter, and we saw a similar cooling in demand for CRE in the second half of 2011. Investment sales have remained strong, though, and that suggests to me that investors are doing their homework and recognize that Southern Nevada has gone into an over-correction. Just the same, I’d prefer to see a stronger recovery underway in Southern Nevada given the potential for economic chaos (Europe, China, Japan, some-other-place-we-haven’t-been-paying-attention-to-that-will-surprise-us) and caution (the election cycle).