Steve Patterson stands in a room at the Bellagio, overlooking the Las Vegas Valley. While most people see barren land among the high-rise buildings and residential areas that populate the desert, the CEO of Related Development sees dollar signs.
“There’s a resurgence in Vegas in a broad context,” he said.
The Miami-based luxury home rental company plans to have as many as three projects costing an estimated $300 million up and running in the valley by the end of 2019, Patterson said, thanks to Las Vegas’ diversifying economy and upward growth potential.
Speaking alongside company Vice President Kevin Wisdom, Patterson in an interview with Vegas Inc. teased his company’s plans and reasons for investing in Las Vegas:
What do you see here in Las Vegas?
Patterson: We have a pretty good idea that rent growth here is going to continue. “Service industry” used to be a dirty term, but it’s not anymore. The economy in Las Vegas is pretty resilient. Job growth held up pretty steady here while it slowed
down in other cities. They were reaching full employment and Las Vegas kept going.
In light of Fitch calling Las Vegas the most overvalued market and our history with the real estate bubble, why do you feel so confident investing here?
Patterson: We have to have cycles, or we would never make any money. That’s what makes our business work. It’s like surfing — without waves there’s no sport there. We rely on cycles, and Las Vegas is always going to cycle. But there is so much right now that’s working in its favor: six major resort and casino projects, $10 billion in work to be delivered by 2020, that’s a lot of jobs being created today and that’s a lot more jobs going to be created on a permanent basis as soon as those places open up. I feel really good about Las Vegas.
Can you talk about your projects?
Wisdom: We’re working on three projects in the metro area. Our focus to date has been in the southern portion of the metro area, just outside Summerlin. We’ve done our due diligence and feel good about what we’ve done at this point. We’re making progress.
Do you have any examples of specific properties?
Patterson: We’re probably not going to be building another high-rise in Las Vegas. But what’s most important to us is differentiation — we have to build something that people perceive as a real difference. We want people to walk into our door and rent there because we stirred some positive emotion. Not because it’s cheap. Our communities tend to be a little more expensive to live in, but we rely on extremely talented design professionals to help us design a product that is a different environment, a different feel. It’s a comfortable sophistication.
What are those differences that make people want to rent your properties?
Patterson: The amenity package in these communities has gotten over the top. It has gotten more competitive over the last decade. Pools are bigger, fitness rooms are bigger, you have a virtual reality golf, soccer, the list goes on and on. For our residents, the first impression is very important. I think when someone walks in the front door, they make a decision that they want to live there. And it’s our job not to screw it up the rest of the way.
Can you share more details about the new properties?
Wisdom: We want to speak with HOA owners first before talking about that in a news article. That’s the reason we’re being relatively vague.
But can you confirm these new properties will be long-term rentals?
Patterson: Yes, we’d do one-year at the least. And these are not furnished models.
How does Vegas compare to your other markets of interest?
Wisdom: The two markets of interest for us are Las Vegas and Phoenix, and we’re doing an equal amount of investment in both markets.
When did you begin looking here?
Patterson: We started last year, we’ve been looking in Vegas for almost 12 months.
We’re seeing most of the real estate growth in Las Vegas in the entry-level pricing range for single-family homes. Will you have any business in the lower-income markets?
Patterson: We have an affordable group in Related, but that group is not in Las Vegas right now. Our target is going to be that $75,000 average household income family. That’s the customer we’re trying to serve.
What impact does pro sports have on Related’s desire to get involved here?
Patterson: I’m only here because I’m a huge (Jon) Gruden fan (laughs).
Wisdom: It’s great for the city and the quality of life for the people who live here, but it’s also great for tourism. There’s a dynamic associated with that that’s important for the city. It’s a progressive mindset and it shows local leaders have a collaborative mindset in working together to diversify the economy and the industries that are part of it. The types of jobs are changing and that’s positive for everyone, including us. The medical school, which will bring 8,000 jobs to the industry by 2030. There’s a broad economic base here, and the city is very progressive and proactive in that way. It’s very important.