High Construction Costs Forcing Only the Strong High Rise Condo Projects to Survive

People get on the bandwagon of a sure thing, see a huge score on paper, then rush in emotionally with their hearts only to be crushed by disappointment. But enough of the Indianapolis Colts - let's talk about Las Vegas high rise condos.

With the demise of ICON, it may be surprising to hear that thousands of condo units in some 130 projects are still in various stages of planning, permitting, development and sales. And even though I'm betting ICON's disgruntled buyers will soon be back in the marketplace, the fact that construction costs in Las Vegas have gone through the roof cannot be discounted - and will probably cause other developers to abandon their Las Vegas high rise condo dreams in the upcoming months.

Here's an interesting, yet mostly unknown fact: once the city of Las Vegas provides approval for a zoning change that is needed for high rise development, the builder has a year to demonstrate "significant progress", which doesn't include pre-sales, deposits, or hard contract signings but rather construction related movement instead. The 12-month window is starting to close on some high rise projects due to higher than expected construction costs and a limited pool of dependable construction workers.

While developers projected their costs and profits when construction prices where significantly lower than they are today, their only reasonable option will be to cancel plans altogether to avoid tremendous losses. That's why you're seeing the newly advertised Spanish View Tower and the Vegas 888 project starting at more realistic prices of over $750K.

With construction costs high and qualified construction workers scarce, coupled with a major player like Related pulling out of ICON, it's completely understandable that high rise condo buyers are scared to pull the trigger on a purchase, especially with developers with less experience and lesser track records.

So if you're an investor looking to perhaps "flip" your unit at closing, you better make sure the price-points are such that someone will want to buy it with your profit added in. And if you're looking for a place to live here in Vegas, or maybe a second home, you better make sure you can carry the payments because it won't be easy. Either way, there are still projects in town that will work whatever your investment objective is. You just have to be careful, avoid the hype, and see the deal for what it is and what it can be in the future. I can help you with that, so contact me for an unbiased view of the market.