Las Vegas’ American West Development is a unique player in a market dominated by top-performing publics. The firm ended 2016 as the only private builder in Nevada’s Las Vegas-Paradise market’s top 10 home builders by volume, with 500 new-home sales and 382 closings. (D.R. Horton was No. 1 in the market in 2016, with 1,152 new-home sales and 1,088 closings.)
More recently, American West ranks fifth this year to date for new-home contracts, and it led the weekly market with 52 new-home sales for the week of May 21, followed by D.R. Horton with 36 new contracts in the same period.
All in all, American West hovers between an 8% and 8.5% share of the Las Vegas new-home market, which saw 8,099 new-home sales in 2016. With a 38% year-over-year increase in net new-home contracts for the first week of the year, Las Vegas is on pace to issue about 10,000 new single-family home permits this year. Over 4,000 net new-home contracts have already been made through May 1, and American West has 368 of those new-home sales, or an estimated 9.2% of the market.
The Local Advantage
Larry Canarelli, founder and CEO of American West, has based his approach to home building on his background in marketing. He leverages his long-standing knowledge of the Las Vegas market, in which he has run successful home building companies since the 1970s, in order to keep and excel in his current market position.
“We’re fifth the marketplace behind D.R. Horton, KB, Lennar, and they will all do more than 1,200 net sales this year,” Canarelli says. “I’m not going to go too much bigger than maybe 8% to 10% of the market. In 2000, 2001, we were the largest builder here. We built 1,000 homes in each of those years. Fast forward to the bubble years of 2005, 2006, and I didn’t chase. Three of the public builders were building more than 3,000 homes a year at that time.”
Canarelli’s strategy paid off during the recession, when Las Vegas was one of the hardest-hit markets. “When we had the downturn in 2007 and the housing crisis hit, [Canarelli] kept the entire company afloat,” says Daniel Welsh, vice president of marketing. “As soon as it turned around, we were the first home builder to be in a position to be able to get homes back out on the market. And when everything started to change in 2012, 2013, we did 730 closings. We were the No. 2 builder in all of Las Vegas.”
One advantage that benefits American West is the firm’s ability to stockpile land for future development. The company currently has enough land holdings in the Las Vegas Valley, including some parcels held since the 1980s, for over 5,000 detached homes. This move is hard for public builders to duplicate, given their need to bring returns to their stockholders.
“We don’t have to turn our land over for return on investment. We can hold it and let it appreciate,” Canarelli says. “We have more land in the best areas of town than any other builder. That’s my investment posture rather than putting my money in the stock market.”
Given the recovering state of the market, labor and pricing remain a struggle for American West. Canarelli estimates that the market’s construction labor force is less than half of what it was in 2007—a squeeze that, alongside material price increases, has driven up the cost of building new homes in Las Vegas.
Service and Design
Along with architect Malcolm Compton, who has worked with Canarelli since 1976 and has designed over 18,000 of American West’s homes, the company builds its definition of “contemporary” from the designs and styles that will appeal most to Las Vegas home buyers.
The biggest attention driver for American West in 2017 is the Madison model, a tri-level contemporary home in its Las Vegas model home complex. The home contains many of the firm’s design trademarks: two-story windows, kitchen islands at least 40 square feet in size, an energy-efficient appliance and materials package, and very large showers. “It might be easy to do that kind of shower in a million-dollar house, but to get it in a home that’s fairly middle of the market is something,” Canarelli says. “All of our home series [have] large showers in the master.”
Canarelli estimates that 150 people tour the Madison each day. The model’s success drives traffic to the firm’s current communities, including three slated to open later this year.
Skyview Terrace, set to open in October, will offer 145 three-story homes, all with rooftop decks and views of the Las Vegas Strip. Rainbow Crossing will include the Estate Series, which will open in November with 217 homes, and the Select Series, which will open in December with 189 homes. All three communities are priced from the $300,000s.
These three communities all include tri-level homes, much like the Madison model. According to Canarelli, American West builds 90% of the Las Vegas market’s tri-level homes, usually in “stacked architectural” contemporary styles. These homes have found runaway success in the Asian home buyers’ market, which makes up almost 50% of the company’s buyer base. “There are a lot of multigenerational families, so it allows one family to live on the first level, another family to live on the third level, and then they share the middle,” says Welsh.
As the Las Vegas market finds its feet and expands, American West has set its sights on future recovery and growth. The firm’s most ambitious plan at present is a 4,400-lot master planned community, anchored with a water park and located 38 miles from Las Vegas.
The Local Connection
For Canarelli, maintaining a connection to the market doesn’t stop with building homes that appeal to buyers. He and his staff are involved with charity and mission events as well, such as Opportunity Village, a nonprofit that helps intellectually disabled adults. He and his wife are donors to the Smith Center for the Performing Arts, in addition to sponsoring scholarships at Clark County’s Larry Canarelli Middle School.
“We think the reflection of our company comes from the top, the leadership at the top,” Canarelli says. “We are very immersed in the community.”
This spirit of generosity doesn’t stop at the top. Tyler Tebbs, American West’s director of construction, recently made headlines for his donation of two abandoned home structures on American West land to the Clark County Fire Department for use in training exercises.
Overall, Welsh credits the company’s family environment for its success. “We are the only true local builder left,” he says. “We made it through the hurricane, and we came out the other side and we’re still successful. And we’re still competing with all the big dogs.”