A Few Thoughts on Today's Auction

Last year, Auction.com held an auction that included quite a few commercial pieces located in Las Vegas. The general feeling was that the auction was a success - many properties moved, prices were set, and in the months after property sales increased dramatically in Las Vegas. By the fourth quarter of 2011, though, sales were flagging, and they were downright pathetic in the first quarter of 2012.

For this reason, a few people were hopeful about today's online property auction. They needn't have been.

Today's auction was significantly smaller than last year's auction, and the properties far less stellar. By the time I gave up on watching it, only one property had sold (i.e. auction closed and reserve met). Most of the other 9 finished without the reserve being met, and at final bids a bit higher than one would have expected. The inside dope is that most of those bids came from sellers either trying to juice up interest in their properties (alas - they weren't very convincing shills) or maybe set new "market prices" on their properties. One of the "final eight", Stephanie Paseo Verde, seemed to be a genuine item, and most agreed it was the pick of the litter.

Where does this leave us?

Well, clearly today's auction is not going to spark off a new round of buying in Las Vegas. Oh, sales may improve, but it won't be because of the auction. Another auction is being held in a few weeks, and perhaps that one will fare better. In the meantime, we keep slogging through the Great Recession, waiting for bluer skies.

The Employment Coaster ... Buckle Up Vegas

Just thought I would share this graph with you. It shows total employment in all industries (blue bars) in the Las Vegas MSA from 2010 to Feb 2012. According the NDETR, the Las Vegas MSA has lost about 21,000 jobs since Nov 2011. Under most circumstances, this would be worrisome, especially when combined with the weakness experienced in commercial real estate since the third quarter of 2011, but given the weird, bumpy trend we’ve seen over the last couple of years, I’m not so sure. A simple linear trend line (in black) shows that employment is gradually rising, and the series of peaks and troughs might just be an artifact of the process used by NDETR to gather the job numbers. The red line represents net absorption of industrial, office and retail combined. This graph suggests that the trend will be higher net absorption and employment by mid-year. Let’s hope there’s some truth to that.

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