SOUTHERN NEVADA 2015 ECONOMIC OUTLOOK NAIOP Washington D.C. Legislative Retreat February 9-11, 2015 Prepared by:
ECONOMIC OVERVIEW 2
Nevada job recovery from Great Recession after 90 months. Nevada Recession Recoveries: 1948-Present 0% Comparison of Recession Job Growth Recoveries % Job Losses Relative to Peak Employment Month 1948 1953 1957 1960 1969 1974 1980 1981 1990 2001 2007 US 2007-2% -4% US -6% -8% -10% -12% Nevada -14% -16% 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Number of Months After Nevada Peak Employment Source: Bureau of Labor Statistics. 3
Las Vegas recovery somewhat mixed. Rank Among 60 Largest US Metros: 2000-2013 Population Change (#) #10 Population Growth (%) #3 Employment Change (#) #10 Employment Growth (%) #5 Real GMP* Change (#) #33 Real GMP* Growth (%) #25 Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, *RGMP 2001-2013. 4
US real GDP further improving, compared to recent years. US Real GDP Forecast: 2003-2015 18,000 5% Billions of Chained 2009 Dollars 17,000 16,000 15,000 14,000 13,000 Real Gross Domestic Product % Change 4% 3% 2% 1% 0% -1% -2% -3% -4% 12,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-5% Source: Bureau of Economic Analysis, International Monetary Fund. 5
Las Vegas real GMP growth also improving coming out of Great Recession. Las Vegas Real GMP Forecast: 2003-2015 105,000 100,000 Real Gross Metro Product % Change 15% 10% Millions of Chained 2009 Dollars 95,000 90,000 85,000 80,000 75,000 70,000 5% 0% -5% -10% 65,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bureau of Economic Analysis, RCG Economics. -15% 6
Job growth hurt in 01 Recession but crippled by Great Recession. Las Vegas MSA Employment vs. US Employment (% Change): Dec-95 to Dec-14 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Las Vegas USA -15.0% Source: Bureau of Labor Statistics. 7
Great Recession severely reduced population growth, now recovering. Clark County Population vs. US Population (% Change): 1981-2013 10% Las Vegas Years Las Vegas Lost Jobs USA 8% 6% 4% 2% 0% -2% -4% Sources: World Bank, Clark County Comprehensive Planning. 8
«Headline» Unemployment rate improving but U-6 rate still too high. Nevada U-3 & U-6 Unemployment Rates: Q4-09 to Q4-14 Percent (%) 25.0 20.0 15.0 10.0 5.0 19.2 20.4 11.3 21.5 22.3 23.6 23.7 12.4 13.5 13.8 14.4 14.2 U3 23.3 13.6 23.3 13.5 U6 22.7 13.1 22.3 12.7 21.4 22.1 20.3 19.6 12.3 11.9 11.0 10.8 19.0 18.1 18.1 17.4 10.4 9.7 9.8 9.4 15.9 15.3 16.2 8.8 8.3 7.7 0.0 Note: Quarterly figures are rolling averages of the 4 quarters ending in the noted quarter. Source: Bureau of Labor Statistics. 9
Wages, after adjusting for inflation, remain stagnant. Las Vegas MSA Average Weekly Earnings: Dec-08 to Dec-14 $750 $700 Dec-14 Nominal: $700 Nominal Avg. Weekly Earnings $650 $600 Inflation-Adjusted (2007$) Avg. Weekly Earnings Dec-14 Real: $622 $550 Source: Bureau of Labor Statistics. 10
Age of the part-time worker. Weekly hours dropping as unemployment rate drops. Las Vegas MSA Average Weekly Hours: Dec-08 to Dec-14 38 37 36 United States Nevada Las Vegas MSA 35 US: Dec-14: 34.5 34 NV: Dec-14: 33.4 LV: Dec-14: 33.3 33 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Source: Bureau of Labor Statistics. 11
Employment index steadily improving, work remains to reach full employment. Las Vegas MSA RCG Employment Index: Dec-05 to Dec-14 104 102 100 98 96 Dec-14: 95.8 94 92 90 88 86 Sources: Bureau of Labor Statistics, RCG Economics. 12
Las Vegas skilled worker pool has boomed since 2000. Las Vegas MSA High-Skill Population Growth (% Change): 2000-2013 MSA Bach. Degree+ Pop. Growth Rank Total Pop. Growth Rank Charlotte, NC 102% 1 35% 5 Grand Rapids, MI 93% 2 9% 33 Las Vegas 91% 3 45% 3 Austin, TX 80% 4 49% 2 Raleigh, NC 79% 5 51% 1 Riverside, CA 74% 6 34% 8 Nashville, TN 72% 7 27% 12 Orlando, FL 66% 8 37% 4 San Antonio 66% 9 32% 9 Phoenix 63% 10 34% 6 Source: Census Bureau. 13
Nevada jobs bounce back big in 2013, but U-6 rate remains stubbornly high. Nevada Employment vs. Rest of US (% Change): 2013 Fastest Growing States 1-YR Growth Rate Slowest Growing States 1-YR Growth Rate North Dakota 3.7% Rhode Island 0.7% Nevada 3.4% Arkansas 0.6% Florida 2.8% DC 0.6% Oregon 2.8% Pennsylvania 0.5% Utah 2.8% New Jersey 0.5% Texas 2.7% South Dakota 0.4% Colorado 2.7% Vermont 0.3% California 2.6% Virginia 0.3% South Carolina 2.5% West Virginia 0.1% Delaware 2.4% New Mexico -0.2% Source: Bureau of Labor Statistics. 14
RevPAR recovering slowly from recession but back up over $100. Las Vegas Valley Hotel Revenue per Available Room: Dec-04 to Dec-14 $130 $120 $110 $100 Dec-14: $101.23 $90 $80 $70 $60 $50 $40 Source: Las Vegas Convention and Visitors Authority. 15
Visitor volume at highest ever levels & continues to spike. Las Vegas Valley Visitor Volume: Dec-04 to Dec-14 3.5 3.4 Dec-14: 3.43M 3.3 Millions 3.2 3.1 3.0 2.9 Source: Las Vegas Convention and Visitors Authority. 16
Gaming revenue increasing due to baccarat; net baccarat stagnant. Clark County Gaming Revenue: Dec-04 to Dec-14 $950 Total Gaming Revenue $900 Net Baccarat Millions $850 $800 $750 Gaming Rev. Total - Dec-14: $796.2M $700 Gaming Rev. Net Bacc. - Dec-14: $671.8M $650 $600 Source: Nevada Gaming Control Board. 17
Taxable sales nearing all-time high, continues to fuel LV economy. Clark County Taxable Retail Sales: Nov-04 to Nov-14 $3.5 20% $3.0 CC Taxable Sales YOY Chg. Nov-14: $3.01B 15% 10% 5% Billions $2.5 Nov-14: 8.1% 0% -5% $2.0-10% -15% -20% $1.5-25% Source: Nevada Department of Taxation. 18
Gas prices have tumbled over the last several months. US & Las Vegas MSA Gas Prices: One Year Ago to Current (2/2/2015) $3.50 Las Vegas MSA U.S. Average $3.30 $3.10 $2.90 $2.70 $2.50 $2.30 $2.10 Year Ago Month Ago Week Ago Yesterday Current $1.90 Source: AAA. 19
LOOKING FORWARD Three Rules of Forecasting If you give a number, don t give a date. If you give a date, don t give a number. If you get it right, don t look surprised. -- Anonymous 20
LOOKING FORWARD How Others See Us 21
SoNv has average development & redevelopment opportunities. 2015 Metro Perspective: Top 10 Metros for Development/Redevelopment: Opportunities + Las Vegas MSA (Of 60 Largest Metros) 1 Houston 4.62 Weak 2 Dallas/Fort Worth 4.24 Declining 3 San Jose 4.20 Average 4 Seattle 4.19 Improving 5 New Orleans 4.17 Strong 6 New York Brooklyn 4.15 7 Denver 4.14 8 San Francisco 4.09 9 Nashville 4.06 10 Minneapolis/St. Paul 4.05 57 Las Vegas 3.17 58 Milwaukee 3.17 59 Spokane 3.17 60 Birmingham 3.17 Based on survey of 1,400 industry leaders. Source: Emerging Trends in Real Estate 2015 ULI-PwC Survey. 22
SoNV lags in projected economic strength among western metros. 2015 Strength of Economy Scores (Out of 5): Local Outlook: West Region 1 2 3 4 5 Weak Declining Average Improving Strong Based on survey of 1,400 industry leaders. Source: Emerging Trends in Real Estate 2015 ULI-PwC Survey. 23
SoNV CRE lags investment prospects lag other western metros, cont d. 2015 Sector Investment Prospects (Out of 5): Las Vegas & Western Region Based on survey of 1,400 industry leaders. Source: Emerging Trends in Real Estate 2015 ULI-PwC Survey. 24
LV office occupations appear to have potential this decade on a #s basis. Las Vegas Major Occupations Forecast, by Total Jobs: 2014-2020 600,000 500,000 516,008 549,365 400,000 300,000 200,000 224,860 235,364 195,381 209,506 100,000 2014 2020 2014 2020 2014 2020 Industrial Office Retail Source: EMSI, RCG Economics. 25
Las Vegas retail occupations should see greatest growth on a % basis. Las Vegas Major Occupations Forecast, by Percent Growth: 2014-2020 8.0% 7.2% 7.0% 6.5% 6.0% 5.0% 4.7% 4.0% 3.0% Industrial Office Retail Source: EMSI, RCG Economics. 26
Less than optimal LV real estate prospects: investment, development & homebuilding. 2015 Top 10 U.S. Metros to Watch Plus Las Vegas: Overall Real Estate Prospects (5 is Highest Score) Market (Of 75 Largest Markets) Investment Development Homebuilding 1 Houston (1, 1, 2) 4.01 3.80 4.21 2 Austin (2, 4, 1) 3.85 3.68 4.33 3 San Francisco (3, 2, 5) 3.82 3.75 3.80 4 Denver (5, 5, 4) 3.66 3.54 3.87 Based on survey of 1,400 industry leaders. 5 Dallas/Fort Worth (9, 8, 3) 3.56 3.43 3.98 6 Los Angeles (6, 6, 6) 3.65 3.52 3.73 7 Charlotte (7, 7, 7) 3.61 3.44 3.71 8 Seattle (4, 3, 17) 3.70 3.72 3.34 9 Boston (8, 9, 14) 3.58 3.37 3.39 10 Raleigh/Durham (16, 17, 9) 3.42 3.24 3.57 64 Las Vegas (62, 64, 64) 2.59 2.46 2.58 Source: Emerging Trends in Real Estate 2015 ULI-PwC Survey. 27
LOOKING FORWARD: SO. NEVADA S ECONOMY & REAL ESTATE MARKETS 28
Vacancy rates recovering across board, led by Industrial real estate. Las Vegas Valley Commercial Real Estate Vacancy Rates: Q3/04 to Q3/14 30% 25% Industrial Spec Office Anchored Retail Q3'14 Off: 22.9% 20% 15% Q3'14 Ret: 11.4% 10% Q3'14 Ind: 10.3% 5% 0% Source: RCG Economics. 29
Lack of larger units hampering Industrial growth in LV; but help on the way. Las Vegas Valley Distribution of Available Industrial Units, by Size: Q3/14 1,600 1,400 1411 (94.6%) Number of Available Units 1,200 1,000 800 600 400 200 0 53 17 7 2 0 0 1 1 (3.6%) (1.1%) (0.5%) (0.1%) (0.0%) (0.0%) (0.1%) (0.1%) Size Categories (sf) Source: RCG Economics. 30
Home sales slowing as price rises & cashbuyers leave market. Las Vegas MSA Weighted Sales & Median Home Price: Dec-04 to Dec-14 $350,000 9,000 Median Home Price $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Median Price Total Sales Dec-14 Median Home Price: $188,191 Dec-14 Total Home Sales: 3,763 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Home Sales Source: Home Builder's Research. 31
Looking ahead: Las Vegas MSA poised to continue making strides. Las Vegas MSA Population/Employment Forecast (% Change): 2014-2015 Las Vegas MSA (Pop./Emp.) 2014 2015 Population* 2.0% 2.1% Population** 1.8% 1.8% Population*** 1.3% 1.4% Employment** 1.9% 1.9% Sources: *CBER, **Woods & Poole, ***NV State Demographer. 32
Food service & administration jobs lead Las Vegas industries in size. Top 5 Las Vegas Industries, by Total Jobs: 2014-2020 180,000 160,000 140,000 153,514 141,893 144,398 138,757 2014 2020 120,000 111,983 106,977 100,000 80,000 60,000 77,274 70,036 70,762 64,757 40,000 20,000 0 Food Preparation and Serving Related Occupations Office and Administrative Support Occupations Sales and Related Occupations Personal Care and Service Occupations Building and Grounds Cleaning and Maintenance Occupations Source: EMSI. 33
Service jobs will continue to lead. Las Vegas Top 10 Job Forecast (# Change): 2014-2020 Rank Description 2014 Median Hourly Earnings Job Growth (2014-2020) 1 Food Preparation and Serving Related Occupations $12.11 11,621 2 Personal Care and Service Occupations $12.21 6,512 3 Office and Administrative Support Occupations $15.68 5,641 4 Building and Grounds Cleaning and Maintenance Occupations $14.73 5,279 5 Sales and Related Occupations $14.28 5,006 6 Healthcare Practitioners and Technical Occupations $39.41 3,843 7 Transportation and Material Moving Occupations $16.16 3,690 8 Healthcare Support Occupations $15.17 2,376 9 Management Occupations $39.32 2,254 10 Business and Financial Operations Occupations $27.22 2,056 Source: EMSI. 34
Healthcare & STEM jobs will grow by greatest amount, by percentage. Las Vegas Top 10 Job Forecast (% Change): 2014-2020 Rank Description 2014 Median Hourly Earnings % Chng Jobs (2014-2020) 1 Healthcare Support Occupations $15.17 13.1% 2 Community and Social Service Occupations $23.23 11.8% 3 Computer and Mathematical Occupations $33.26 11.4% 4 Life, Physical, and Social Science Occupations $32.76 10.5% 5 Healthcare Practitioners and Technical Occupations $39.41 10.5% 6 Arts, Design, Entertainment, Sports, and Media Occupations $20.98 9.9% 7 Personal Care and Service Occupations $12.21 9.2% 9 Food Preparation and Serving Related Occupations $12.11 8.2% 9 Building and Grounds Cleaning and Maintenance Occupations $14.73 8.2% 10 Legal Occupations $40.58 7.3% Source: EMSI. 35
YESTERDAY, TODAY & TOMORROW IN PICTURES 36
While 2015 definitely won t be another 2004... 37
It won t be another 2008 either... 38
It won t even be another 2009 2013... 39
But even though still a bit wobbly, the recovery will continue to take hold in 2015. 40
Contact: Katrina Bruce Chapter Executive NAIOP Southern Nevada Tel: (702) 798-7194 Fax: (702) 798-8653 katrina@naiopnv.org www.naiopnv.org 41