The Southern Nevada Chapter of NAIOP recently gathered for its April breakfast meeting, focusing on the future of development in the Las Vegas valley.
Entitled “Building Up or Sprawling Out: The Southern Nevada Growth Debate,” the event featured a panel discussion that highlighted the challenges ahead in the marketplace.
Held on April 10 at The Orleans, the meeting included insights from notable industry leaders such as Frank Maretti of G2 Capital Development, Guy Martin of Martin Harris Construction, and John Restrepo from RCG Economics.
Moderated by Steve Neiger of CAST, the discussion examined the region’s potential shift from horizontal growth to high-density infill development.
According to Restrepo, the unique landscape of Nevada, and particularly Southern Nevada, presents significant challenges in terms of land availability.
He pointed out that 89 to 90 percent of Clark County is controlled by various federal agencies, posing constraints that other states do not experience.
“We’re limited in our land resources, and we’ve known it,” Restrepo stated, emphasizing the need for more land to be released for development.
Currently, Las Vegas ranks 13th among 36 cities in the Western U.S. for population density, with about 4,000 people per square mile.
While these figures suggest that Las Vegas is in the middle of the pack in terms of density, Restrepo questioned how the region should navigate its development approach.
As the conversation veered toward vertical development, Restrepo acknowledged that while building up may seem appealing, the associated costs could make this option less viable for the region, especially considering Las Vegas’s predominantly low-wage workforce.
“Building up could be part of the answer but not much of an answer in the context of Southern Nevada today,” he remarked.
Neiger highlighted the economic implications of available land with a striking statistic: the lack of land has resulted in a loss of $1 billion in economic development opportunities, according to a study from the Las Vegas Global Economic Alliance.
Martin expanded on this notion, suggesting that the inability to provide adequate incentives, coupled with a dearth of suitable land, hampers growth potential.
He raised concerns that the federal government’s archaic land-discharge processes hinder the transformation of raw land into buildable real estate.
“Are we missing deals? Yes,” Martin admitted, further cautioning that the challenges posed by federal regulations must be approached with care.
Restrepo indicated that his firm’s land study projected around 16,000 acres available for development through 2030, yet about 10,000 acres were deemed substandard for the target user base.
He stressed the importance of location and land characteristics, like slopes, in determining the viability of development projects.
With residential developers more adaptable to high-density construction, the commercial sector faces greater challenges due to these geographical constraints.
Maretti echoed these concerns, noting that comparing Southern Nevada to states like Texas and Arizona is particularly challenging due to the limited availability of privately owned land and the lack of corresponding incentives.
“(We) are on the right path. We’re not providing a lot of incentives for stuff we already do in this state,” Maretti said, reflecting on the economic solutions currently lacking in Nevada.
Moreover, Restrepo shared another hurdle: while Nevada’s tax structure is favorable, the permitting and regulatory processes are less accommodating.
He stated that studies place Nevada in the bottom half nationally regarding business friendliness in terms of regulation.
“Even when comparing ourselves to California in certain communities, they are much more business-friendly regulatory-wise than we are here,” said Restrepo.
He emphasized the need for further examination of the regulatory landscape, suggesting that these barriers discourage companies from investing in Southern Nevada.
Restrepo argued that to foster significant developments, the metro area needs to expand beyond the valley, despite opposition from some environmentalists.
He articulated a perspective that a healthy economy is crucial for achieving environmental progress.
“The blend between environmental progress and economic progress is tied together,” he noted, arguing that growth is necessary for addressing broader issues.
Maretti further illustrated the complexities of vertical development, indicating that residential projects, including apartments, student housing, and assisted living, could be more successful.
However, he cautioned that the financial feasibility of such developments is under pressure due to elevated construction costs compared to traditional horizontal development.
“Vertical retail doesn’t work in many places in this country,” said Maretti, who acknowledged the logistical challenges when integrating retail into garage spaces outside prime locations like the Strip.
A focus on vertical construction must be tempered with the reality that six to fourteen-story buildings typically see increased costs.
Maretti pointed out the disparity in demand for taller buildings in Las Vegas compared to other regions like Phoenix, where demand for six-story buildings frequently outpaces supply.
Although challenges remain prominent in the discussion, Restrepo offered a glimpse of optimism.
He remarked on the relative youth of the Southern Nevada region compared to other parts of the country, suggesting that time and evolution are necessary for economic diversification and improved mass transit systems.
“Economies and regions take a long period to change, and with that comes growth and different types of jobs,” Restrepo explained.
He added that the region’s unique historical reliance on resort tourism had limited its economic resilience, but he believes that ongoing growth pains will pave the way for a more diversified economic landscape in the future.
In conclusion, the panel emphasized the need for innovation in growth strategies, arguing that the balance between high-density infill development and responsible land use is crucial for Southern Nevada’s future prosperity.
image source from：https://businesspress.vegas/real-estate/developers-address-challenges-of-valleys-development-73967/
