Las Vegas: Zappos, 500-Foot Ferris Wheels, and…Real Estate?
The turning of a calendar page from one year to the next often brings with it a renewed sense of optimism. In recent years it was more like, “Oh no, here we go again.” Predictions would forecast more of the same. More foreclosures, more lost jobs, lower home prices, and more of the same old muck and mire. Even the eternal optimists had turned downright pessimistic.
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For so long real estate investors clung to the hope of a turnaround. Then it became a wish that things would stop falling. Next came changes in strategy in order to make money while things were going to Hades in a hand basket. However, a funny thing happened on the way to Armageddon – a wee bit of optimism returned. Sure some places saw signs of hope, but Las Vegas? Surely someone is spiking the Kool-Aid.
A Ferris Wheel…Really?
Without warning it was announced that the local government had approved a plan for an amusement park and Ferris wheel on the famed Las Vegas Strip. Not just any Ferris wheel, but a 500-foot tall behemoth. It would be the largest such structure in the western hemisphere and third-largest in the world. Why would a company want to build such an attraction in Las Vegas considering the way things have been for the last several years? Because they see signs of things changing and want to a leader not a follower. Las Vegas also attracts more than 35 million tourists each year and an amusement park could be a very good fit.
They aren’t the only ones. Zappos, the online shoe retailer, is moving their headquarters, along with a thousand jobs, to downtown Las Vegas (article). While the company is moving from nearby Henderson, they are hiring additional employees had been considering leaving the state altogether. Why are they staying? The favorable tax climate and available workforce are two main factors. There is already talk of this move spurring a number of entrepreneurs to open restaurants and bars in the downtown area. It will certainly help the housing picture.
In addition the local economy is showing signs of increased consumer spending. So much so that Station Casinos, a chain that caters to locals, is in the process of hiring one thousand additional workers. On top of that there is a new stadium and shopping area proposed for the local university that has an excellent chance of coming to fruition (article). In addition, the Cleveland Clinic recently opened the Lou Ruvo Brain Center and there is a performing arts center being built in the downtown area.
A Long Road
To be sure, a recovery in Las Vegas will take some time. But lately it seems as if there are more reasons to be optimistic than there have been for years. I’ve heard from entrepreneurs who feel that this is an outstanding time to be starting a business. Retail and office space is plentiful which makes it easy to negotiate favorable terms. At the same time an increase in consumer confidence and spending increases the odds of such ventures succeeding. So while problems are plentiful, there is actually some real optimism in the air.
For real estate investors this may be a golden opportunity. Purchasing property in the path of this progress could prove to be quite lucrative. More business means more workers. More workers means there will be a need for additional housing. If more homes and apartments are required there will be plenty of opportunities to make money. Are boom times returning? Highly unlikely. However, the reduction in prices over the last several years means that it is possible to turn a real profit. Suddenly Las Vegas doesn’t seem to be such a crapshoot.
In Vegas, I got into a long argument with the man at the roulette wheel over what I considered to be an odd number. – Steven Wright
Photo Credit: Maurice