In 2003, Scottsdale, Ariz.-based Shea Commercial introduced the Las Vegas commercial real estate market to a new concept that would transform the way the industry was doing business. Instead of leasing office or industrial space, the company would sell it.
"Almost everything we develop is offered as a for-sale product," said Jim Riggs, president and chief executive officer at Shea Commercial, which has made its mark by developing Class A office condos and also operates a full-service real estate brokerage. The family-run company supports 65 employees and has offices in Las Vegas, Dallas and Denver in addition to its headquarters in Scottsdale.
Riggs said his company chose to enter the Las Vegas market because of its similarities to the Phoenix market, which included the city’s rapid growth and increasing number of entrepreneurs and small businesses.
"There’s a very high demand for the product we build," said Riggs. "Our niche in the market is finding parcels we can convert and develop; then [we] sell the space off." Its advisory board and board of directors routinely strategize over which sites will sell, concentrating on desirable locations near freeways, major roads and medical centers. So far, 90 percent of its industrial condos or office condo conversions are sold before they’re even built.
Riggs said buying space for office or industrial use has become a viable alternative to leasing for many businesses. The only exception is companies who plan on moving within six months to a year. Otherwise, buying is a more attractive proposition. The company has sold more than 400 office suites. Surprisingly, Riggs said not one business has ever sold a suite. Companies keep them because they’re such a good investment.
Shea typically focuses on offices or suites less than 25,000 square feet. The company has developed more than a dozen properties in Las Vegas and Henderson, and current projects include more than 935,000 square feet of office condo space.
Projects slated for completion this year include Shadow Crest, at Warm Springs and Shadow Crest in Las Vegas, a 41,000-square-foot development of seven single-story office buildings. Another is Shea at Warm Springs, off Warm Springs and Stephanie in Henderson, a 54,000-square-foot project composed of eight single-story office buildings. Shea at Sunset, in Henderson at Sunset and Pearl, will consist of four industrial buildings – more than 56,000 square feet collectively – and 12 office buildings, totaling over 60,000 square-feet.
The company strays from the average developer or broker in several ways. Since Shea maintains an entrepreneurial environment, more than half its employees have invested in the company’s projects.
Its biggest challenges right now are finding land that is reasonably priced and controlling construction-related costs, said Riggs. These rising costs have made developers consider mid-rise or even high-rise commercial projects to get more square feet of space on smaller parcels. Future plans may include partnering with other developers to build more mixed-use projects with greater density and creating more multi-story products, as opposed to the garden-style offices it started out building. Riggs said "for sale" products may include suites in office buildings three to six stories high, with parking garages under or next to the building.
Although interest rates have crept up slightly over the past year, Riggs said they are still low enough to be attractive, and lenders are becoming more creative in offering lending products that fit business owners’ needs. "At the end of the day, we’re really selling an investment opportunity," Riggs said. "That’s how we design all of our buildings."