Las Vegas Sun

March 28, 2024

Real estate column:

Las Vegas businesses feeling pinch of rising prices at the pump

For a local cookie shop owner, rising gasoline prices are no cakewalk.

With prices approaching $4 a gallon largely because of political unrest in the Middle East, Las Vegas business owners such as Michael Solomon, owner of two Great American Cookies in Las Vegas, are needing to raise their prices.

“We have to think about raising prices to cover the difference because we can’t continue to make the same money with higher costs,” Solomon said. “With all the political turmoil, we’re not expecting gas prices to go down soon.”

Soloman, who says his shipments from California have risen 1 to 2 percent in recent weeks, said he’s seen the effect in the prices he pays for goods from bottle water and coffee to cookie dough. Shipments to his stores from the East Coast are up more than 10 percent in recent weeks, he said.

Solomon said the business may raise its delivery prices to deal with the problem.

“In the last three weeks, a lot of businesses have seen things go up,” Solomon said. “We’re discussing what to do, but we haven’t done anything yet.”

But the cookie-shop owner isn’t the only one affected. Everyone from real estate to retail is feeling the pinch.

Gatski Commercial Real Estate Services owner Frank Gatski said it’s hard to imagine businesses that aren’t being affected by rising gasoline prices.

Gatski’s firm manages commercial real estate. The owner said he has property managers and other employees who are reimbursed for their travel.

“You can imagine how that hits the bottom line directly, and those gas prices affect our business and overhead tremendously,” Gatski said. “We are already trying to operate with less.”

The property owners for which they work have to pay higher fees for plumbers, electricians and other vendors who service the buildings, Gatski said.

“I have seen trip charges when contractors come to fix a plumbing problem,” Gatski said. “It’s not a lot, probably $15 to $20 per visit, but it adds up.”

Gatski said he hopes the price increase won’t be prolonged, because the commercial real estate industry is suffering already. The last thing it needs, he said, is another cost increase when so many buildings are close to going back to the bank.

Gatski, who has 70 employees, said he’s figuring out what to do himself. Instead of increasing the mileage reimbursement of 43 cents a mile, he may have employees get reimbursed based on their receipts.

“My fear is how high gas prices will go,” Gatski said. “They have risen dramatically very quickly. It may not be very long where I have to pass along this cost to my clients.”

Construction industry outlook

The Nevada construction industry has a long way to go before it recovers from the Great Recession.

The already-challenged industry shed 19.5 percent of its workforce in 2010. Builders are unwilling to take on significant projects, according to a report by the Associated General Contractors of Southern Nevada.

The taxable construction spending in November was $108 million, down 27 percent from $147 million in November 2009, the firm reported. During the 12-month period that ended Nov. 30, taxable construction spending was $1.5 billion, a 32 percent decline compared with the 12-month period ending in November 2009, according to the report.

The total number of jobs statewide went from 810,700 at the end of 2009 to 797,600 at the end of 2010, according to the report prepared by Las Vegas-based by Applied Analysis. During that time, construction jobs fell from 54,800 to 44,100. Building construction workers took the biggest hit going from 9,000 workers to 6,700 in a year, a decline of 26 percent, the report said.

Of the nearly 200,000 Nevadans seeking work, one in three is in the construction, design and development industry, the report said.

It may not improve in 2011, either.

In January, the construction industry through the Building Jobs Coalition released a white paper urging state lawmakers to increase tax revenue and stop raiding funds to better finance infrastructure projects and create 100,000 jobs.

Its No. 1 priority was a dedicated revenue source for capital projects.

Nevada review

A report issued by the Brookings Institution, a Washington, D.C.-based think tank, measured the economic output of Nevada’s cities versus its rural areas. The study was part of a broader one in the group’s Metropolitan Policy Program that shows metropolitan areas will lead the transformation into the next economy.

Nevada’s metropolitan areas — Las Vegas, Reno-Sparks and Carson City — produced $110.5 billion in economic output or 89.7 percent of the total within the state. Las Vegas, which has 72 percent of the population, has $86.9 billion in economic output or 70.5 percent.

The findings were based on 2009 data.

Nevada’s metropolitan areas have 91.2 percent of the jobs with Las Vegas’s share at 71.8 percent.

The rural areas’ biggest contribution to the economy is shown in mining exports, which make up 17.4 percent of the state’s exports. Las Vegas had 63.4 percent of the exports which total $6.3 billion in 2009.

Metropolitan areas had 91.8 percent of civilians employed in science and engineering occupations with Las Vegas’s share at 66 percent from 2005 to 2009.

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