NAIOP Southern Nevada – October Breakfast Overview
“Move Some Dirt with the Best in Land Business”
Scott Gragson, Colliers International, executive vice president, land division
Bob Gronauer, Kaempfer Crowell, managing partner
Liz Andocia, Toll Brothers, Inc., land acquisition manager
Kevin Higgins, CBRE, executive vice president, moderator
A special thanks to those who joined us at October’s breakfast meeting at The Orleans. The topic was “Move Some Dirt with the Best in Land Business,” which focused on the issue of land and development. The meeting featured a great panel of experts providing insight into the shortage of land, how it’s affecting their business, and what they predict would happen within the next 12-24 months.
The panel was moderated by Kevin Higgins, Executive Vice President at CBRE and included industry leaders Scott Gragson from Colliers International, Bob Gronauer from Kaempfer Crowell and Liz Andocia from Toll Brothers.
There is often discussion on the scarcity of land and what is available, from large tracts of land that require infrastructure, to infill properties which have many constraints to develop.
With Southern Nevada experiencing a growth spurt, we are seeing more developments of all types taking shape within each city. For example, with the support and leadership of Mayor John Lee, North Las Vegas has seen an increasing number of commercial and other development in the works, especially around the Las Vegas Motor Speedway.
Panelists seem to agree that they would like to see more public-private partnerships to help each area grow and develop in a way that benefits everyone.
One of the takeaways, as recommended by panelist Bob Gronauer, is to encourage employees from within your company to sit on the town boards that review and regulate developments in Southern Nevada. Although this can be a challenge and does take time, this balances the composition between residents and developers who have a business background, as these town boards help shape the policies on how to build commercial, industrial and residential projects.
Scott Gragson also discussed land speculation, saying that it is slowly coming back. However, he added that land deals have been a bit difficult lately no matter where you go. For example, the Apex area, he believes this will be mainly for industrial developments that often can’t afford to be anywhere else in the Las Vegas Valley. As for the Kyle Canyon area, it has no infrastructure in place, so that will be a long wait. He added that banks are no longer financing large portions of the purchase price like they did in years past, so he wouldn’t want to leverage that unless there was a real end-user.
Kevin Higgins added that another constraint he observed has been timing and the velocity of deals. The land owners today are no longer allowing six months to handle the entitlement process, rather are giving developers 30 days.
However, we are seeing that Southern Nevada is again in a period of steady growth, highlighted by new attractions like the professional sports teams and new stadium and arena projects coming into play with hockey, baseball, basketball and football teams. The development of these high-profile projects drives other forms of development, from residential to retail. Of course, these projects also boost our local economy and add jobs.
So what will we see happening within the next 12-24 months? Bob mentioned that in some areas, such as the northwest, there are a lot of developments currently in the works (e.g. Skye Canyon and other master-planned communities) that will improve and grow that area. He added that we will begin to see a lot of golf course conversions, whether with partially developed or fully developed courses. But with land scarcity pressuring the supply side, we may also see a lot of golf courses closing in favor of some form of residential or other development.
Scott added that we will likely see an increase in big box around the speedway as more infrastructure comes in. He also mentioned that a lot of home builders are currently looking into the western part of Henderson and that there may be more industrial development going in around the airport and the area near the stadium being built for UNLV and the Raiders. In the southwest area of Henderson we’ll start to see more development, including a road that will connect Inspirada to Las Vegas Boulevard, providing another route to California. In the southwest area, particularly along the beltway, we may see more health care facilities, corporate headquarters, office and retail.
For Liz, she is looking at the housing market holistically, saying that one of the changes that she is starting to see are that certain areas which were not popular for home buyers 5 to 10 years ago are seeing a steady increase in housing (e.g. Cadence in Henderson). However, as an increasing number of new home buyers are millennials, there has been a shift in their approach in purchasing a home (i.e. location, commute time, etc.). She has seen an increase in efforts to diversify the economy, where employment centers are continuing to spread throughout the valley to meet the needs of the new home buyer.
Lastly on the issue of land scarcity, is the Bureau of Land Management still the key player, with the option to expand the boundaries of the valley? No, said the expert panelists, it’s not the entire answer. But it is part of the solution, Scott said.
With proper planning, Bob added, conversations need to happen today to discuss the vision for the next 10-20 years, looking at ways to grow without necessarily expanding development boundaries.
Back in 2004, when the demand for housing was through the roof and home builders were scrambling to find areas to build, they were limited because of the BLM boundaries, so they had to look beyond the Las Vegas Valley to places like Pahrump, Coyote Springs, etc. However, Liz believes that it would be advantageous for us to explore growth outside of the boundary and push for expanded boundaries.