Published Monday, Nov. 29, 2010 | 4:39 p.m.
Updated Monday, Nov. 29, 2010 | 9:46 p.m.
Map of Zappos.com
2280 Corporate Circle #100, Henderson
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In a move that could change the economic landscape of downtown Las Vegas, Zappos.com will take over City Hall, moving its headquarters and about 1,000 employees there sometime in 2012.
The CEO of Zappos, who had considered moving his company out of state, will purchase City Hall and relocate the online shoe retailer’s headquarters to the building that has served as the seat of city government since 1973, the company and Las Vegas city officials announced Monday.
Tony Hsieh, Zappos’ 37-year-old CEO, has been working with city officials for more than a year to complete the deal. He is buying the property in partnership with the Resort Gaming Group, whose founder and CEO Andrew Donner made an unsolicited offer to the city of Las Vegas to buy the site and about seven surrounding acres earlier this year with the intent of developing it as a corporate campus for Zappos.
The Las Vegas City Hall announcement came Monday afternoon, after its spokesman had denied any knowledge of the deal.
The company’s move from suburban Henderson, where more than 1,000 employees field customers’ calls, to downtown Las Vegas would be a significant boost to the area that has been the focus of the city’s redevelopment dreams. Hsieh would not only get the City Hall building at Las Vegas Boulevard and Stewart Avenue, but also seven acres to the east.
The company’s plans for that largely vacant land are unknown. But owners of neighboring businesses are optimistic the arrival of a business whose sales are said to top $1 billion annually and which has become an industry leader in customer service — business leaders and customers regularly tour Zappos’ headquarters to learn their methods — could have a major impact on the depressed downtown business climate.
Hsieh (pronounced shay) did not return the Sun's calls for comment.
The move coincides with Mayor Oscar Goodman’s announcement earlier this month that plans to construct an arena downtown are more likely to occur at Symphony Park than the old City Hall site. Speaking of plans to build an arena, the mayor said earlier this month that the 61-acre Symphony Park site is viewed as “more advantageous and more cost-effective, significantly increasing the project’s overall potential for success.”
Moving the arena to Symphony Park opens the door for the city hall to find a new use.
Sources close to the city say the city will pay Cordish Cos, the would-be developer of an arena, $2.5 million to abandon its rights to develop the City Hall site. Sources said Cordish still had a year left on its option to develop the City Hall acreage.
The city is so set on the new arena location, sources said, other potential Symphony Park developers are being asked to abandon their plans to make room for the arena. Many of those plans have been stalled by the recession.
“This will be a game changer for Southern Nevada,” Goodman said in a prepared statement. “This move will bring about a critical mass of creative persons to the inner core of Las Vegas in addition to causing a significant shot in the arm for the economy and for new jobs.”
Sources said that before setting his sites on downtown Las Vegas, Hsieh had planned to move the company out of Nevada. Hsieh, an innovative business mind, now believes the downtown move will benefit his company and the city.
“He sees the chance to really make an impact on downtown Las Vegas,” a source said.
City officials had said they would announce plans for the old City Hall on Wednesday.
New City Hall location
The earliest any move could take place is early 2012, when the new City Hall is expected to be finished a few blocks away at 518 First St.
Persons who have been tracking the unfolding plans said Hsieh would likely develop the seven acres that are included in the deal to either create a corporate center or to contribute to the ongoing redevelopment of downtown and the so-called Fremont East District, four blocks of entertainment venues and bars separate from the electric-canopied Fremont Street Experience.
Zappos’ move would magnify the area’s growth with an influx of employees who would not only spend money at downtown businesses but could also become residents of the area, potentially moving into high-rises built during the boom of the mid-2000s that stand largely empty. Those include the Streamline, finished in 2008, just south of City Hall.
“Zappos being in that location is going to be a boon for local businesses, which already thrive off the day workers — the lawyers and government workers,” said Bruce Hiatt, a luxury real estate broker. “It’s huge. This is one of the leading companies in the United States using social media in its marketing, and it’s great for Las Vegas having corporations being there on the leading edge of technology.”
Jeremy Aguero, principal analyst with Applied Analysis who has previously been hired to look at development patterns for the city, called the Zappos move “a huge coup.”
“You have to be impressed with what the city has already done — the Lou Ruvo Center, World Market Center, the Smith Center — but this is going to be the first large, nongaming employment center downtown. It’s the first step forward into really making downtown Las Vegas a place where people want to live and work at the same time. I can’t think of a better fit, to be perfectly honest, than Zappos.”
John Restrepo, an economic and real estate analyst, said the influx of more than 1,000 jobs will be great for downtown and could be a “catalyst” for future redevelopment. “It’s enough of a critical mass to create additional redevelopment downtown, while encouraging other developers to move there,” he said.
Hsieh has had a golden touch in improving new ventures. When he was just 24, he sold his online advertising business, LinkExchange, to Microsoft for $265 million.
One Zappos employee said the announcement was made to company workers this afternoon, and that there was some discussion about employees now having to drive to the Spaghetti Bowl to get to work. Many had moved to Henderson to be near its facility there.
"If Tony thinks it's the best thing, I have to agree with him because he's gotten us this far," said one Zappos employee who asked not to be identified.
At Zappos — the name is derived from zapatos, the Spanish word for shoes — Hsieh reportedly helped increase sales to more than $1 billion. Having moved to Henderson in 2004, Zappos has been listed as one of the “Best Companies to Work For” by Fortune magazine. The corporation’s office, according to employees who have spoken to the Sun, creates a fun, relaxing environment. During Halloween, for example, large sheets of plastic were put up and the interior of the office was turned into a large haunted house.
Hsieh also delivers an interesting, sometimes humorous online feed of his thoughts through Twitter, including this one from November 25th: “Thanksgiving tip: After removing it from the oven, be sure to let the turkey rest 20-30 minutes. It’s had a long day.”