SOUTHERN NEVADA CONTINUES PUSHING TO DIVERSIFY ITS ECONOMY

There are fewer signs of that slowdown today. Visitation is skyrocketing again, and new, bigger events and venues are on the way. In very visible ways, Las Vegas has recovered, and appears on its way to coming back even stronger than before. Yet the desire to expand and transform how we do business—and how we can build the future of the region—remains a top priority.

“When things are really good, the idea of investing in economic development might seem like, why do we need to do that? When things are bad, we always ask why didn’t we invest,” says Jeremy Aguero, principal analyst at Applied Analysis. “I’ve seen that cycle at least three or four times during my career here.”

Aguero has been at the data-driven Vegas firm since its inception in 1997, other than a recent turn as an executive with the Las Vegas Raiders and Allegiant Stadium. He says the undeniable strength of tourism in Las Vegas tends to skew the way we perceive an expanding economy—we are diversifying, but the big boost in post-pandemic consumer spending in tourism overshadows the pace of other growth.

“Those things are happening, just not at a scale that offsets the tremendous rebound we’ve seen in tourism,” he explains.

Tina Quigley, president and CEO of the Las Vegas Global Economic Alliance, says local officials and development professionals have refined strategies in recent years and that the community is “a little more realistic in managing expectations” when it comes to diversification.

The Hachman Index, a nationally recognized measure of regional economic specialization or diversity, considers the composition of industries in a region and how that compares to a larger, well-diversified area of the country. Nevada scores a relatively low 73 out of 100, below all other states in the Pacific time zone along with Arizona, Idaho and Utah.

“That number is moving slowly but surely, but when you have Clark County and this one behemoth industry that it has been centered on, bringing in 500 or 1,000 or even 10,000 jobs in other industries [looks] like a drop in the bucket,” Quigley says.

“There is a strong call to action to diversify, and we are thinking in much more realistic terms of what that means,” Quigley says. “Adding to the number of employees in industries like manufacturing, logistics and transportation, clean energy or anything else is huge—[even if] making a dent in that standard index metric is going to be slow but sure—so that [the economy] is not as volatile and vulnerable.

“But we have to be realistic that our whole economy will go through the boom and bust right along with our primary industry,” she continues, “because it’s too big.”

Southern Nevada has come a long way in accepting and embracing the strengths of its tourism-based economy, and Las Vegas has capitalized on those strengths in recent years by diversifying within its core industry. The addition of major league sports teams to the city’s entertainment array represents a natural evolution, but Quigley points out that sports and entertainment “are different verticals” for a number of reasons.

Large venues like Allegiant Stadium (which opened in 2020) and T-Mobile Arena (2016) brought with them additional employment and ancillary businesses. And, partially because Raiders and Golden Knights games attract large numbers of local and tourist ticket buyers, sports events are more economically consistent than other entertainment events, Quigley says.

As Aguero explains, “Prior to the pandemic, sports were the seventh-highest motivating factor in bringing people to Las Vegas. Today, it’s No. 2.

“If you go see a Raiders game, roughly a third, or actually closer to half, of those fans are from out of town. We’ve found already that teams can be more successful here, and we’re able to leverage that with additional events like the NFL Draft and Pro Bowl. On top of that, it’s creating a remarkable amenity for the people that live here to enjoy all kinds of things they’ve never been able to before.”

Pro sports have helped bolster Las Vegas’ “world class city” status in the way former Mayor Oscar Goodman envisioned, and incoming global events like the Formula 1 Grand Prix (estimated at last week’s Preview Las Vegas event to bring an economic impact of $1.2 billion when it debuts in November) and the 2024 Super Bowl are emblematic of Vegas being Vegas and continuing to grow from the core out.

But it has always been necessary to build up other industries not directly attached to hospitality—health care, for example.

Nevada has long ranked very low—dead last in December’s United Health Foundation annual report—in access to primary care, illustrating the urgent need for more funding and physicians. Significant advancements, like UNLV’s Kirk Kerkorian School of Medicine, established in 2017, have begun chipping away at that disparity, but the collective economic and community benefits of a robust industry in Southern Nevada could provide unprecedented stability.

“Southern Nevada grew up really fast, and it grew up around hospitality, … [which] left a lot of gaps, including no clear strategic vision for how to grow health care collaboratively,” says Paul Krakovitz, region president at Intermountain Healthcare, the largest provider in the Western U.S. “As a result, care is very fragmented. You go to your doctor and are referred to a hospital or lab, and none of them are connected. It falls on you as the patient to navigate the system.”

Southern Nevada has one of the nation’s worst primary care physicians-per-capita numbers, and many patients here use expensive hospitality emergency rooms for primary care.

Installing infrastructure that will keep costs down and provide more abundant care is an epic endeavor, but the progress has begun. UNLV’s med school is training doctors and nurses and establishing a primary pipeline for the community, Krakovitz says, and other educational institutions like Touro University and Nevada State College are contributing through specialized programs.

“There’s an increasing awareness of access issues, and to me, that’s the first step, more people recognizing [that the community] is having these issues. We don’t have a fix yet, but a lot more attention is a good thing,” Krakovitz says. “We’re also seeing increased pickup in value-based care, the idea of [practices] taking the full risk for a patient, almost like a subscription-based model. That’s where an entity like a physician group is essentially getting paid to keep you healthy, and that’s a good thing to see growing in Southern Nevada, because [it helps] keep people out of that high-cost health care cycle.”

Health care has additional legislative challenges that hinder the industry’s growth, and in Nevada, those often center on physicians’ reimbursement rates.

On January 23, in his first State of the State address, Gov. Joe Lombardo said he will make sure the government increases rates in areas of acute need, focusing on mental health services. His proposed budget includes a Medicaid program enhancement that could expand community behavioral health centers with six facilities across the state in underserved areas.

Though it remains to be seen whether Lombardo can navigate that plan through the Democrat-controlled legislature, one thing seems clear: There will always be a need for health care, making that industry a good candidate for further development.

“When you look around at the states surrounding Nevada and elsewhere across the country, health care jobs are usually in the top one or two [in volume], and we haven’t seen that yet here but I fully expect we will in due time,” Krakovitz says. “From the economic development side, it provides quality care, it provides safety and comfort for other businesses to come in knowing they can take care of their employees, and it provides high paying, stable jobs, even in downturns of the economy.”

Talk to officials at the state, county or city level and you’ll get the same list of key industries: health care, information technology, manufacturing and logistics, clean energy, finance. These are the business categories primed for prosperity, the industries that make the most sense for Las Vegas Metropolitan area.

Warehousing? Distribution centers have flooded the Valley (particularly North Las Vegas) as e-commerce has exploded, but its jobs are considered low-skill positions, its wages are relatively low, and there typically aren’t many employees involved. Traditional manufacturing? It depends. Does the product and/or process require substantial water? If so, it’s not part of a sustainable plan for the future.

When it comes to specific strategy for economic development, it’s all about using and utilizing Southern Nevada’s established advantages. That’s why advanced manufacturing—essentially using technology to create new and existing products—is one of the most buzzed-about spaces for potential growth. The Las Vegas Valley has the right space, the right location and the right workforce to make it happen.

“What makes us interesting is our location, our sites, our people, and the cost of doing business, and Henderson wins across all four of those,” Smith continues. “We’re very much known as a business-friendly city, and we’re investing in education and our people.”

One of those investments is Henderson’s partnership with College of Southern Nevada to create the Center of Excellence, a $12 million, 20,000-square-foot facility dedicated to workforce development. The specialized programming there will include a curriculum customized by employers, including the massive Haas Automation plant under construction south of the Henderson Executive Airport.

Haas Vice President Peter Zierhut says the machine tool builder considered North Carolina, Texas and Northern Nevada as potential sites for its expansion, but opted to stick close to the company’s Ventura County, California, headquarters and the Southern California ports on which it relies to ship more than half-a-billion dollars in exports in each year.

“Since the project was first approved by the City of Henderson, we’ve put a lot of effort into working with a number of entities, starting with the city and moving on to College of Southern Nevada, and started building close relationships and programming that will help us,” Zierhut says. “And it’s more than just Haas. The whole region [and] the leaders in Southern Nevada have been laser-focused on diversifying their economy, and manufacturing was one they chose even before we signed on to build that factory.”

Opened in 1980, Haas’ factory in Oxnard, California, features just over a million square feet, so the 2.2 million-square-foot project in Henderson marks a significant expansion. With a domestic market share greater than 50% and fast-growing international distribution, Zierhut says, the company needed to build to continue its progress.

The Henderson facility is expected to create more than 2,500 jobs with an average salary of $64,000.

“Manufacturing and logistics lead our pipeline of companies we are considering for Southern Nevada and Henderson specifically, with IT companies No. 2 behind that,” Smith says, adding that the city recently annexed significant acreage in Eldorado Valley southeast of Las Vegas, which could be targeted for similar manufacturing or tech-industry development.

Henderson is also leaning into sports as an economic driver, not only with the recent openings of the Dollar Loan Center on Green Valley Parkway and Lifeguard Arena on Water Street, but also with the acquisition of the Fiesta Henderson site, where a multiuse indoor sports facility could be developed. Smith says such a venue would be an amenity for neighbors and a way to bring more sports tourism to the area in the form of weekend tournament events.

“We’re happy to see regional growth, period. Good jobs coming to the area are good for all citizens,” Smith says. “We think Henderson has a compelling story to tell when doing business, but what’s most important is diversifying all regions of the economy in Southern Nevada, and we believe Henderson is a leader.”

In a new study conducted by Claremont McKenna College’s Rose Institute of State and Local Government, Las Vegas ranked No. 1 and Henderson No. 7 among popular destinations for companies moving out of California. (It should be noted that Haas Automation is expanding from and not moving out of Southern California.)

That doesn’t have to mean a gigantic factory housing thousands of workers. Any size company, any kind of business, can provide a boost to this complex but required effort.

Aguero points to a unique example in CAE Las Vegas, a new civil aviation training center overlooking the runways of Harry Reid International Airport. In the fall, the facility welcomed its first pilots to train on the new Gulfstream Full-flight Simulators.

“People come from all over the country to train how to fly different kinds of commercial aircraft all over the world. I was really impressed by what they are doing,” he says. “It’s very reflective that all types of opportunities exist here, because we leverage tourism and our proximity to other major markets. We have all these things other communities don’t have.”

Certain industries are obvious fits for Southern Nevada, but many other businesses that might defy traditional categorization could still take advantage of Las Vegas’ unique landscape. And there are plenty of planners and developers working to uncover those opportunities and fit the pieces together.

“So much of our economic development has been to try to shore up our weaknesses, but where we have been most successful is by leveraging our strengths,” Aguero says. “I think we’re going to find a lot more of that in Southern Nevada.”