Las Vegas Sun

November 20, 2017

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LV business leaders, experts to tackle what’s next for economy

With the Las Vegas economy mired in a deep recession, some are suggesting it’s time for the community to hit the reset button.

That is the topic for the Lied Institute for Real Estate Studies, which will host its 12th-annual round table Aug. 19 and 20.

About 80 business leaders, academics and politicians will discuss “What’s Happened? What’s Next?’’ The group will assess what happened to Las Vegas in the past 18 months and what can be done for future growth.

“We sort of felt it was time for people to hit the reset button and find out how we can get out of this,” said Debra March, Lied Institute’s executive director. “It is no different then when a computer crashes. We have been through a difficult downward spiral as a community, and it is time to reboot.”

The round table, whose recommendations will be part of a white paper, will talk about various segments of the business community, including commercial and residential real estate, hospitality, gaming, retail, finance and support professions. There will be sessions on the public sector, education, health, culture, energy and environment.

Las Vegas faces plenty of challenges with tourism declining, tax revenue dropping and foreclosures not expected to abate.

The discussion will center on what needs to be done to make Las Vegas successful in the future, including improving education and attracting companies to Southern Nevada.

These are topics that have been written about and discussed in the past with little to show for it, but supporters said with Las Vegas going through such difficult times, more people will realize the region needs to alter its direction, which has relied on gaming and tourism for a long time.

“That is a very important discussion item,” March said. “That’s why we are inviting gaming folks to the table. For a long time we have been a one-industry town, and we need to look at diversification.”

John Vorsheck, regional manager of Marcus & Millichap, who serves as chairman of the round table, said the backdrop of the economy could be an impetus for business and government leaders to heed recommendations from the panel.

“What do we look like once the dust settles?” Vorsheck said. “It is going to be our responsibility moving forward that we don’t fall victim to this again. It allows the opportunity to take a step out of daily business and address some of the mistakes made and talk about those issues ... and grow so we don’t make the same mistakes twice.”

Las Vegas went through such euphoria with credit flowing freely and expansion rapidly occurring, but now companies are contracting and reducing the space they need. Subdivisions that popped up overnight have many empty homes in them, organizers said.

“I think everyone is coming to grips with what is the reality,” Vorsheck said. “They understand what we experienced from 2002 to 2007 was not a normal market.”

Michael Campbell, managing partner of Colliers International in Las Vegas, said there is definitely a need to reevaluate the city’s direction, and that’s why he suggested this be a topic for the round table. A tremendous number of construction jobs have been lost during the recession and this is moving Las Vegas to more of a one-economy town led by the gaming industry, he said.

“If we are completely dependent on tourism, travel and gaming, we are probably in for a longer comeback than people expect,” Campbell said.

He said there needs to be a shift in thinking, placing a greater emphasis on turning out more high school graduates and more students getting higher education. Unless that happens, companies with high-paying jobs won’t move here, he said.

Some suggest that when a cocktail waitress can earn $75,000 a year or more and valets can park cars for $60,000 a year, they see no need for pursuing higher education.

“I feel like as long as the casino industry is willing to hire 18-year-olds, there is no motivation for them to stay in school and learn a trade. That is the nature of our community,” Campbell said. “Unless we create an environment in the School District where (students) don’t want to serve cocktails, the cycle is going to repeat itself.”

UNLV economist Keith Schwer said anytime a community goes through a recession like Las Vegas is now, it’s a good opportunity to rethink what it is doing. The lesson to be learned is that Las Vegas isn’t recession-proof, and a lot of plans had been incorrectly based on that, he said.

Second, Las Vegas has been overbuilt with commercial buildings and housing and will have to grow out of that excess, Schwer said. Because of that, Las Vegas will be slower to recover than other cities, he said.

“The focus should be on the long-term Nevada question of how do we diversify our economy so we end up with less boom and bust,” Schwer said. “We need to remind people that the last 25 years were unique, and there is no reason to believe we are going to have as prosperous times as we had in the past. People would be misreading things. That won’t happen.”

Even with gaming and tourism, the debate is under way about whether the market focused too much on the high end with luxury resort development and how does it create value to lure customers back, Schwer said.

Maybe the best thing for the casino industry is that there is a movement away from a concentration of casinos in a few hands so there is stronger competition, Schwer said.

Even a movement away from the theme of “What happens here, stays here,” may be better for the long-term health of the gaming industry and community, Schwer said.

That was evident when politicians criticized the banks that took bailout funds and then were planning to hold events in Las Vegas, Schwer said. It needs to be stressed in any campaign that Las Vegas is a place to come do business, and that it’s respectable, he said.

Despite the theme of the round table, not everyone thinks major changes are needed. Soozi Jones Walker, a broker with Commercial Executives and a committee member overseeing the round table, said she has been hearing about the importance of diversification in Las Vegas for 30 years.

Jones Walker said Las Vegas needs to embrace what it has and not kill the goose that lays the golden egg, which is the gaming and tourism industry and pro-business environment. She said she’s concerned about higher taxes harming the local economy.

“If we become a smaller-sized California with the same taxes, business are going to go somewhere else,” Jones Walker said. “Southern Nevada is unique because of what we do so well. It is the experience of Vegas that makes us different, that people come to us even when they have gaming in their own back yard.

“We are not some humdrum community you see in any other state in the country. Some people want all the billboards down and want to be a family town. We are not a family town. Disney is a family town. That is one of those things people lose sight of what we are good at.”

Jones Walker said there is such a big push for alternative energy companies to come to Nevada, but they don’t create a large number of jobs like travel and tourism do.

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