For several years, NAIOP, the commercial real estate development association, has established and supported initiatives that will help define the industry going forward. These efforts include, but are not limited to, commercial development and redevelopment, roadway and highway infrastructure improvement, economic development, workforce investment and sustainable development.
At a state and local level, chapters from both Southern and Northern Nevada have been able to shape the commercial real estate landscape over the years through its members’ efforts “brick by brick.” The numerous office, industrial, retail and mixed-use projects that many businesses occupy today reveal the viability and opportunities the state once offered this industry. It wasn’t until the “Great Recession” came did this once vibrant industry realize how fragile its economic base really was and how reliant the state was on too few industry sectors, including conventions, hospitality and gaming. While these areas will continue to recover, it is critical that efforts be made to not only branch out from these sectors, but also enhance these industries to a level that future recessions will impact less. With this notion, jobs can be created and preserved within the state. Viable ways can also be found to help support these industries and find new industries to help diversify the local economies within the state.
Earlier this year, representatives from the Nevada chapters of NAIOP joined with its corporate leadership and other state chapters in Washington, D.C. to provide industry insight to elected officials. Additionally, discussions were held to describe how several pieces of legislation currently being considered in both houses could dramatically impact the office, industrial and retail real estate industries.
Several items were discussed at the federal level, including the two transportation and infrastructure bills that are currently being reviewed (House Bill HR 7 and Senate Bill S-1813). While there are currently no specific earmarks in the bills, it is anticipated that the bills will provide funds for critical projects here in the state, create and enhance long-term supply chain routes and employ thousands of workers. Also discussed, was the importance of maintaining leasehold improvement depreciation schedules that are closer to tenant lease terms (i.e. 15 years versus 39, as this generates a significant amount of local revenue within the construction industry and once again keeps many employed on these projects). Lastly, knowing there are inherent risks associated with commercial real estate development, taxing profit or “carried interest” on these ventures at the ordinary income level, versus the traditional 15 percent capital gains rate, will significantly hinder future real estate development as the economy improves.
At the state level, there are several areas that NAIOP is looking for the federal delegation to support. These areas include designation and creation of Interstate 11 from Arizona through Nevada, as part of the Canamex Highway to promote direct and rapid transportation from Mexico to Canada through the western United States. This is a critical link between Las Vegas and Phoenix, as this is currently the only non-interstate route between two adjacent major metropolitan areas in the United States. Also, with approximately 87 percent of the land in Nevada being held by the U.S. Bureau of Land Management, a mechanism must be developed to transfer land to local municipalities without an act of Congress or a lengthy process. Opportunities have and will continue to arise for parts of the lands to be transferred to the local municipalities to promote economic development. Certain sections of the local municipalities will be designated as Inland Ports to provide the state with opportunities to attract major corporations and logistic companies. Lastly, as the state continues to entice new companies and expand existing businesses, the need to retrain the existing labor base through workforce investment programs will be paramount. For far too long many of these businesses looked outside the state for qualified workers, as unemployed and specific industry-trained employees remained underutilized.
With ongoing dialogue and face-to-face annual visits, NAIOP’s message for the commercial real estate industry to its federal delegation will help identify specific issues and provide solutions for years to come.
John Ramous, NAIOP- Southern Nevada Government Affairs Chair, Harsch Investment Properties