Out-of-town investors seem to have a knack for identifying hot property in emerging areas of the valley, properties that may carry a stigma from being in a "bad neighborhood."

Beyond the glitz and glamour of the Strip, Las Vegas has some rough parts that tend to scare off new businesses and developers. They've largely stayed away from corridors along Maryland Parkway, Bonanza Road, Martin Luther King Boulevard, North Las Vegas Boulevard and Boulder Highway.

Inevitably, as prime properties around the valley get picked over, it becomes increasingly difficult to find land reasonably priced and well-positioned for a return on investment. That's when smart money starts gravitating toward pockets of town previously overlooked. Sometimes, it comes down to being in the right place at the right time for the right price.

"Every site is unique, and when you get downtown, one or two blocks can be a big difference," said Rich Gustafson, president of San Diego-based CityMark Development. The company is building the $170 million Juhl mixed-use project at Third Street and Bonneville Avenue.

"A master-planned community is the same on one side of the street as the other," he said. "When you go downtown, you have to assess it block by block. Retail may succeed on one side and not the other. You look at who your neighbors are and how they affect you. Is it new construction or old construction? Just like buying a house, you drive down the street and look at who's next to you. Does he have 20 trash cans sitting out?"

Debra March, director of the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas, said research shows growth and development headed to areas with mass transit and "connectivity" to services and amenities needed by aging baby boomers.

"They're not going to want to travel across town for shopping and medical," March said. "Developers are keeping that in mind. They're reacting to what consumers of the future will buy. Data show they want smaller units that are highly amenitized. They want accessibility to transit and good quality of life."

The planned Verge condo project, at the northeast corner of Bonanza Road and Main Street, is within wandering distance of the Las Vegas Rescue Mission, Catholic Charities of Southern Nevada and Salvation Army Family Services. Homeless people, alcoholics and drug addicts abound.

On the other hand, it's close to the World Market Center and Union Park, where the Lou Ruvo Brain Institute is under construction, Verge President Darren Dunckel noted. Fremont Street casinos and local government services provide a substantial employment base.

The Arts District has blossomed with its hugely successful First Friday event, and an entertainment district is springing up on east Fremont Street.

"We look for surrounding areas adjacent to successful areas or where you see success coming," Dunckel said from his Los Angeles office. "With Union Park, being as close as we are to that, we saw that as a huge opportunity. From Main and Bonanza, you can get to anywhere in the Las Vegas Valley very easily and you don't have to take the freeways."

A little due diligence can go a long way toward uncovering a diamond in the rough, Cushman & Wakefield broker Perry Muscelli said. He talked to Henderson city officials to find information about a 15-acre parcel that was recently sold at the Bureau of Land Management auction for the minimum bid of $7.8 million. He said he was surprised that nobody else had asked about the land.

Muscelli learned that a 136-foot boulevard is going to run through the middle of the property, connecting communities such as Anthem, Seven Hills and Inspirada. It's near Henderson Executive Airport and behind Anthony Marnell's future $1 billion M resort.

Even though the San Francisco buyers have to relinquish about 3 acres for right-of-way easement, they're still going to have almost a half-mile of frontage on both sides of a major arterial.

"When we had the only bid, I thought we made a mistake," Muscelli said. "There's going to be a lot of homes built out there. We thought it would be a good speculative play."

Longtime Las Vegas developer Irwin Molasky made a fortune building along Maryland Parkway, starting when it was a bladed dirt road in the 1950s. When Sunrise Hospital opened in 1958, Maryland Parkway was considered the "boondocks," he said.

Molasky spent $50,000 -- "which I didn't have," he said -- to bring in a water line from San Francisco Avenue, now Sahara Avenue.

He paid $3,000 an acre for 640 acres that comprised one square mile from Maryland Parkway to Eastern Avenue and from Desert Inn to Flamingo roads where he built the Paradise Palms community in the early 1960s.

Molasky developed the Boulevard Mall in the late '60s along with several other shopping centers along the Maryland corridor.

"That was the birth of Maryland Parkway," Molasky said. "It's still a beautiful street with landscaping and lots of traffic. It's still a hot retail area. Everything's built out. I'd love to buy land for $1 million an acre, but you can't find it."

Stephen Blue, senior vice president of investment management for Newport Beach, Calif.-based Buchanan Street Partners, said the company's strategy is to buy value-added properties that lie in the path of progress and future development. "Las Vegas offers the best real estate dynamics in the country, if not the world," he said.

Buchanan Street purchased apartments on Sierra Vista Street, close to the Las Vegas Convention Center, on the basis of a suitable return as a redevelopment site, Blue said.

The older, more established east side of Las Vegas has remained relatively unaffected by the exploding sprawl into the suburbs.

Apartments can still be rented for $650 a month, far below the $865 average, and retail space can be leased at $1.45 a square foot, compared with $2.08 valleywide.

"East Fremont area ... this will be the area where money can be made, where people will come and live because it's just a stone's throw from downtown," Mayor Oscar Goodman told the Review-Journal two years ago. "Please pay careful attention to the opportunities out there. What appears to be an empty field with glass all over it and a fence around it could be the next high-rise site."

East Fremont Street is transforming; street improvements and better lighting have made the area more pedestrian friendly. New lounges such as the Beauty Bar and The Griffin have replaced cheap souvenir shops and check-cashing joints.

Some of the less desirable, run-down areas of Las Vegas Valley are looking more attractive as steep land prices make development cost-prohibitive in popular master-planned communities.

Part of the blame for rising land prices in Las Vegas lies with the Southern Nevada Public Land Management Act of 1998, March said. The law allows the Bureau of Land Management to sell some 45,000 acres of federal land at public auction.

The average price per acre has gone from about $30,000 when American Nevada Co. and Del Webb Corp. formed a partnership to buy 1,940 acres in North Las Vegas in May 2001 to more than $300,000 \when Focus Property Group purchased similar acreage in Henderson in February 2005.

That increase has dramatically affected housing affordability, March said. "I wonder if we aren't going to look back on the land auctions and wonder if that hasn't been the reason for skyrocketing prices," she said.

In the past, developers negotiated directly with the BLM to purchase federal land.

The BLM may change its policy about starting bids at appraised fair market value at future auctions, an official said after just one of 31 parcels sold at the most recent auction.

Vacant land values in Southern Nevada continue to respond to market conditions with a slowdown in the number of properties sold amid lagging prices, a third-quarter report from Las Vegas-based Applied Analysis research firm shows. Excluding the resort corridor, the valleywide average for an acre in Las Vegas was $677,300, or $15.55 a square foot, up 1.5 percent from a year ago.

Sales volume, or the amount of property changing hands, has steadily declined over the past two years because of reduced demand for improved uses, supply constraints and prohibitive pricing levels, Applied Analysis principal Jeremy Aguero said.

"We may see land owners without a reasonable exit strategy face challenges during the next several quarters, particularly those that entered the market late in the game," he said.

This story first appeared in the Business Press. Hubble Smith writes for the Business Press' sister publication, the Las Vegas Review-Journal. He can be reached at hsmith@reviewjournal.com or 383-0491.