November 13, 2012 - 5:18 pm
Tony Hsieh’s infusion of $350 million into downtown development has made Las Vegas one of the nation’s top emerging markets for technology employment, a report Tuesday from the Jones Lang LaSalle commercial real estate firm said.
Las Vegas added 6,898 tech jobs in 2011 for a 22.9 percent year-over-year gain, taking the No. 2 spot on Jones Lang LaSalle’s ranking of markets by high-tech employment growth. San Francisco remained No. 1 with 28.6 percent annual job growth.
Venture capital activity is increasing and supporting startup activity that probably will bring future job creation as new companies gain their footing and begin to grow, the report said.
Hsieh, chief executive officer of Zappos.com, is credited with helping nine start-up companies in Las Vegas with his Downtown Project, which includes a $50 million technology fund. His relocation of Zappos headquarters from Henderson to the former Las Vegas City Hall is expected to bring 1,000 tech workers downtown next year.
“With Zappos’ relocation and everything going on with the Downtown Project, they’re driving a lot of demand,” said Bret Davis, office broker for Jones Lang LaSalle in Las Vegas. “We’re seeing a lot of demand from out of state. There just seems to be a general optimism about the market.”
A growing scarcity of available, qualified workers in established innovation centers is driving new clusters of activity in Phoenix, Las Vegas and other emerging markets, Jones Lang LaSalle reported.
The high-tech services segment added 108,500 jobs in the 12 months ended Aug. 31, an increase of 4.6 percent. That growth rate is double the overall office-using employment, which increased by 2.3 percent with the addition of 653,000 jobs in the same period.
Highlights from the report include:
■ High-tech services make up just 8.6 percent of office-using jobs in the United States but accounted for 17 percent of annual employment growth.
■ Las Vegas is beginning to cultivate a presence in the high-tech industry.
■ Hsieh’s $350 million Downtown Project could help to transform Las Vegas into an incubator for startups. Total venture capital dollars flowing into high-tech companies reached $15.5 billion in the four quarters through June 2012, up 13.1 percent from the year-ago period.
■ Most tech companies in Las Vegas are tied to gaming, but Zappos’ presence could change that. Take Two Interactive, maker of the “Grand Theft Auto” video game, recently moved to the Vegas Tech building at 302 E. Carson Ave.
■ Las Vegas offers many of the ingredients needed to attract young tech entrepreneurs, including a low cost of living and 24-hour workforce.
While employment growth is strongest in established hubs such as San Francisco, Seattle, New York and Boston, mobile technologies pioneered by the industry have enabled employers to branch out and permeate major office markets.
“Las Vegas, you know, is the land of entrepreneurs, and that’s why we love it,” said Viney Singal, founder of Las Vegas-based Valtus Capital Group. “You have a business idea in hospitality, technology, gaming, hotels … the city backs you and you’re able to get visibility quickly. That’s why companies love doing business in Las Vegas.”
Rather than go head-to-head with other employers to hire programmers, marketers and business developers, a growing number of companies are locating in emerging markets that offer lower costs and more affordable space.
Technology companies today are more likely to base site-selection decisions on access to intellectual capital and favor markets that offer the urban living and amenities young workers prefer.
Dan Coughlin, owner of the popular LeThai restaurant in the East Fremont Entertainment District, said his business feels the impact anytime Hsieh stays at The Ogden, the high-rise condo where the Zappos chief has taken up residency.
Hsieh leased about 50 units at The Ogden as “crash pads” for Zappos employees and prospective startup business owners.
“When these people are down at The Ogden, we can feel that effect just from people walking around,” Coughlin said. “He brings people through when he’s in town. He stayed here, and it’s a big deal. He genuinely wants to see people succeed.”
Contact reporter Hubble Smith at email@example.com or 702-383-0491.