REGIONAL AND METRO LAS VEGAS CITY DATA

The following geographic, physical, political, governmental, sociological, economic and financial aspects of the community provide an overview to the subject market. Highlights of national and regional (Nevada, California, Arizona and Utah) economic conditions will be noted as they affect the Las Vegas area.

INTRODUCTION

Metropolitan Las Vegas is situated in Clark County, Nevada as ± 275 miles northeast of Los Angeles, California, and about 285 miles northwest of Phoenix, Arizona, in the Nevada Great Basin desert. Clark County contains ± 5,173,760 acres or 8,084 square miles.

Metropolitan Las Vegas consists of the cities of Las Vegas, North Las Vegas, Henderson and Boulder City as well as central and rural unincorporated areas. Henderson is at the south end. Boulder City, further southeast, is on a mountainous ridge near Lake Mead. Unincorporated townships include Winchester, Paradise Valley, Spring Valley, Lone Mountain, Paradise, Whitney, Enterprise and East Las Vegas.

CLIMATE

Las Vegas has a desert setting at an elevation of ± 2,016 feet, surrounded by local foothills and mountains. The climate has arid, desert influenc­es with summer high temperatures in range of 100 degrees to 120 degrees Fahrenheit with winter lows in the range of 25 degrees to 45 degrees. The spring and fall months have moderate temperatures. Rainfall is infrequent with the yearly average usually between 2.5 and 6.5 inches. Monsoon type thunderstorms occur infrequently in late summer.

BACKGROUND

In 1829, Rafael Rivera, a scout for Mexican Traders, entered a green valley nurtured by desert springs and called it Las Vegas (Spanish for the Meadows). For many centuries prior, the area was solely inhabited by several Native American tribes - the Paiute, Shoshone and Washoe. In 1844, explorer, soldier and pathfinder Col. John C. Frémont (for whom the main downtown thoroughfare is named) rested near the headwaters of Las Vegas Springs on an overland expedition along the Old Spanish Trail. Local settlement began in 1855 when Mormon leader Bringham Young sent 30 LDS missionaries who established an encampment just north of what is now downtown. These missionaries raised crops, baptized Paiutes and mined lead; however, none of these ventures proved successful and the ill-fated settlement was abandoned after three years. In 1865 Octavius Decatur Gass built the 640-acre Las Vegas Ranch using structures left behind by the Mormons as his base.

The City of Las Vegas was officially born in 1905 when the Union Pacific Railroad connecting Los Angeles and Salt Lake City decided to route its trains through the rugged frontier outpost with a population of only 30 people. In 1907, Fremont Street first used electric lights and gambling and business flourished serving railroad men and prospectors from nearby mining operations. In 1928, during the depression years, the federal government authorized Boulder Dam that is located ± 30 miles southeast along the Colorado River. From 1931 to 1936, about 5,200 laborers worked close to 24 hours a day to complete what was later renamed Hoover Dam and often called the eighth wonder of the world.

Gambling was legalized again in 1931 and prohibition was repealed in 1933. Las Vegas gaming establishments and speakeasies could now legitimately continue to serve local workers and tourists who came to see Hoover Dam by the thousands. The El Rancho Vegas, which was ultra luxurious for its time, was built in 1941 on what would become the Las Vegas Strip; and, beginning a trend that still continues today, each new property tried to outdo existing hotels in luxurious amenities and thematic splendor. Legalized gaming, the six-week residency period for divorce and low state taxation attracted tourists and residents in the early stages of development. Postwar affluence, improved highways, around-the-clock gaming and entertainment of the neon powered "The Glitter Gulch" and the wedding industry boosted the local population to over 50,000 in the 1950's. The growth of casino development fueled by headliner entertainment and large-scale capital improvement has carried Las Vegas from the 1950's to the present. Nellis AFB and the Nevada Test Site have provided stability and employment diversification since the mid-1970's. Las Vegas still has the fourth lowest tax burden in the nation.

Las Vegas hotel/casinos have competed since their beginnings to be the newest, tallest, most grand but most importantly the largest. In 1989, Steve Wynn introduced the Mirage with its five-story waterfalls, 50-foot erupting volcano, lush tropical foliage, dolphin and white tiger habitats and 20,000-gallon coral reef aquarium. This first modern themed "mega-resort" became a tourist attraction in and of itself and set the standard for new hotel casino development in Las Vegas. The Excalibur immediately followed in 1990 with what was the largest hotel in the world at the time. A second wave of themed "mega-resorts" included the Luxor, Treasure Island and the MGM Grand. They were called "The Big Three" when they opened in late 1993 and early 1994. Several waves of new mega-resorts followed bringing other strip or off strip resorts such as the Rio, the Hard Rock, the Stratosphere, New York-New York, the Monte Carlo, the Bellagio, Mandalay Bay, the Venetian, Paris Las Vegas, and the Palms Hotel and Casino. The most recent addition to the strip mega-resorts is the Wynn Hotel.

Though not an all inclusive list, other hotel casinos outside the Strip resort corridor, which cater largely to local residents, include Boulder Station, the Fiesta, the Orleans, the Fiesta Henderson, the Santa Fe, Silverton, Sunset Station, South Coast, Green Valley Ranch, Red Rock, and the Texas Station. Las Vegas is now a world famous tourist destination. The metro area hosted over 38,000,000 visitors in 2005, which had an economic impact of approximately $37 billion.

In July 2006, MGM Mirage began pouring the foundation of the MGM City Center, the largest private development under construction in the United States. The City Center will be an upscale urban residential district complete with high end shops, gourmet restaurants, cinemas, parks and unique pedestrian environments. At the rear of the seven tower project will be a 60 story resort hotel and casino featuring two massive curved hotel towers with 4,000 rooms plus an ebony condo hotel tower with 1,543 units. At the north and south ends of the project will be two small boutique hotels including the 215 room Mandarin Oriental Hotel and Residences, which is expected to draw sophisticated overseas guests. The project’s centerpiece will be two glass residential towers with a total of 810 lofts and over 500,000 square feet of retail space.

This type of development appears to be the next wave of development in the Las Vegas market. Over the next two decades, new projects are expected to have different, unique elements and multiple use profit centers. A perfect example of this new wave other project on the new "South Strip", which also broke ground in July 2006, Urban Village. Urban Village will be a 50-acre, $1.5 billion project of brownstones, lofts, condo hotel units, and flats at the corner of Las Vegas Blvd. South and Pyle Ave. This project will have over 2900 total residences starting in the high $300s for 800 square foot condos and a full array of commercial services and amenities in its own self contained neighborhood. Urban Village will be located between the new South Coast Hotel and Casino and the upcoming Station Casino development, and offer an affordable alternative to the higher priced center Strip developments.

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Clark County, Nevada is the southern most county in the state, bordering California to the West and Arizona to the southeast. Most of Clark County is located within the Mojave Desert. A dry, low-desert climate provides the area with year round summer like conditions. Adjoining Nevada counties include Lincoln and Nye. Clark County was created on February 5, 1908 and named for Senator William A. Clark of Montana, builder of the San Pedro/Los Angeles & Salt Lake Railway. Clark County is the sixth largest of Nevada's seventeen counties, covering approximately 8,084 square miles (20,937 square kilometers) and accounting for 4.4 percent of Nevada's total surface area of 110,540 square miles (286,297 square kilometers).

NELLIS AFB AND THE NEVADA TEST SITE

Nellis Air Force Base dates back to 1942-1945 when it was established as a training center for B-17 and B-19 bomber squadrons. Later in 1958 it become a unit of the USAF Tactical Air Command. The base covers ± 11,000 acres with ± 12,000 square miles of air space and ± 3.0M square miles when including restricted ranges. Nellis AFB is known as the "Home of the Fighter Pilot" with over 7,200 military and 2,000 civilian personnel. The 1995 operations expenditures totaled ± $242M.

In December 1950, the Atomic Energy Commission established the Nevada Test Site as a ± 1,350 square mile underground nuclear testing area located ± 65 miles north of Las Vegas. The Department of Energy (DOE/NV) and subcontractors locally employed ± 2,800 persons in 1995. Nellis AFB and the Nevada Test site are subject to political, congressional, NATO and defense budget constraints and influences. The Stealth fighter squadron has been relocated to New Mexico, but the 66 Air Rescue Squadron (ARS) has become operational. A nuclear testing moratorium is in effect with early 1990's reductions to the current size/use. Prior employment was in range of 8,000 persons at budgets approaching $1.0B. During fall 1994, EG&E as the major contractor declined to submit for a contract continuation in favor of other ventures. Currently, Bechtel Nevada manages the NTS with proposals commonly reported in materials testing, safety testing, waste disposal technologies, solar energy, etc.

DEMOGRAPHICS – POPULATION

Clark County and Nevada Populations, 1992-2006

Data Source: Nevada State Demographer

Source: Nevada Department of Employment, Training and Rehabilitation (DETR)

According to population estimates made by Clark County Comprehensive Planning, the population in Clark County grew to 1,912,654 in 2006. This reflects population growth of 5.3 percent over the 2005 estimate of 1,815,705. In 2007 we expect population to grow by 4.8 percent and another 4.6 percent in 2008. That will bring Clark County's population to 2,004,000 in 2007 and 2,096,000 in 2008.

Source: CBER

INDUSTRY AND LABOR FORCE

The economic base of the Las Vegas metropolitan area has primarily consisted of the income derived from tourism, the service industry, military installations, governmental and municipal agencies as well as mining, manufacturing, distribution and the Nevada Test Site.

The following labor market data provides industry specific employment information between the years 2006 to 2007. It is notable that employment growth in Las Vegas, as noted by the "Total Industries" employment figure, has consistently increased since 2000. Service industry jobs increased dramatically in the Las Vegas MSA between the year 2000 and the year 2007. Service jobs started in 2000 with a count of nearly 658,800 and finishing with count of 791,500, a 20% increase in only 6 years.

Source: Nevada Department of Employment, Training and Rehabilitation (DETR)

Source: State of Nevada, Department of Employment & Training.

Nevada Occupational Employment & Projections 1998-2008

Nevada-Statewide / All Industries

Largest Occupations / Ranked By Base Year 1998 Employment

Source: Nevada State Demographer’s Office “Nevada Occupation and Employee Characteristics”

*Some industry information is suppressed, due confidentially statute

Source: Nevada Department of Employment, Training and Rehabilitation (DETR)

Source: State of Nevada, Department of Employment & Training.

Source: State of Nevada, Department of Employment & Training.

Las Vegas MSA Employment/Unemployment 2000 to 2006

Source: State of Nevada, Department of Employment & Training.

According to the Nevada Department of Employment, Training &Rehabilitation (DETR),

Nevada’s unemployment rate inched up for the month of April to 4.4 percent, according to the monthly report released by the Department of Employment, Training & Rehabilitation (DETR).That’s a small increase from March’s 4.3 percent, and still below the national average of 4.5 percent, said Terry Johnson, DETR director. Nevada’s three metropolitan areas saw similar modest adjustments. Las Vegas saw a slight increase, from 4.2 percent in March to 4.3 percent in April. Conversely, Reno/Sparks dipped from 4.4 percent in March to 4.3 percent in April. Carson City’s unemployment rate also registered a decrease from 5.2 percent in March to 5.1 percent in April, but remained above the national average. Compared to April 2006’s job growth of 4.8 percent, April 2007’s job growth rate saw a significant drop to 2.7 percent, the weakest employment growth rate reported since May 2003.

“Current trends are certainly pointing to a softening of the economy, ” Johnson said. “ Nevada has seen exceptional job growth and low unemployment rates, so it is expected that our economic momentum would slow a bit. Nevada’s job growth continues to surpass most other regions. The economy is still expanding, allowing jobless individuals to quickly find gainful employment, while also absorbing the thousands of newcomers to the Silver State.” National trends, like gas prices hitting an all-time high, may be contributing to Nevada’s economic slow-down as well, Johnson said. Additionally, the housing slump continues to play a major role, leaving a large number of construction workers unemployed.

Source: State of Nevada, Department of Employment & Training.

The housing slump remains a contributing factor to Nevada’s unemployment figures, Johnson said. The construction industry added 2,200 jobs to February’s employment increase, but the industry employed 1,100 fewer workers than in February 2006. Additionally, DETR has seen a 50 percent increase in the number of construction-related claims for unemployment benefits within the last year, Johnson said.

“The housing market continues to slow down, causing construction-related jobs to be in less demand,” Johnson said. “According to reports from the housing industry, requests for permits are down 50 percent.”

Johnson said there is good news in a less conspicuous sector of Nevada’s economy — manufacturing. Employment in manufacturing increased by 5.3 percent in Nevada over the past 12 months, generating 2,600 new jobs. During the same period nationwide, nearly 100,000 manufacturing jobs have been lost, which accounts for a 0.7 percent decline in employment.

Johnson said both components of the manufacturing industry — durable goods (items expected to last more than three years, like slot machines) and non-durable goods (food items, etc.) — have contributed to the increased employment. “Such an increase in a non-gaming industry indicates Nevada’s capacity to build a diverse economy and offer a broad range of jobs to people with a broad range of skills,” Johnson said. “Nevada definitely shows promise for the coming year in terms of job growth and continued low unemployment. The state is still out-performing most of the U.S., which indicates that our economy is a healthy one.”

Southern Nevada Index of Leading Economic Indicators

Source: CBER

Source: CBER

UNLV’s Center for Business and Economic Research reports “The Southern Nevada Index of Leading Economic Indicators (SNILI) moved down for April (based on February data). Moreover, the index is heading down as measured from the same month a year ago. Trends based on more than two months a year apart, however, yield a flat trend, suggesting neither expansion nor contraction. Construction continues to be the most significant problem. All in all, we can clearly say the economic outlook is guarded at best.”

Source: CBER

Meanwhile, the most expensive construction project in the state’s history has begun. MGM Mirage began work on the $7 billion Project CityCenter on the Las Vegas Strip. Plans call for seven high-rise towers that will provide 7,800 hotel and condominium units and considerable retail and entertainment space. An estimated 7,200 workers will be on site at the peak of construction, and the project is expected to provide about 12,000 permanent jobs. The development is slated to open in 2009.

Project CityCenter is the largest, but not the only, major project planned for the Las Vegas Strip. The Venetian and Wynn Las Vegas resorts are building new hotels adjacent to their existing facilities. New investors have proposed development on the former Westward Ho hotel and Wet ‘n Wild water park sites. The most widely anticipated announcement, however, is Harrah’s Entertainment’s plans for the mass of land it has acquired behind its properties on the east side of the Strip.

Tourism, health services and construction are in large part driving the economy, in the wake of stabilizing fuel prices and hurricane devastation in the southeast, the tourism and construction industries appear to remain stable. Due to the sudden surge of rebuilding activity in the southeast region, local builders will likely face even greater competition for materials and skilled labor. In short, Nevada’s economic performance remains impressive given the current political and economic backdrop. Record oil prices, rising interest rates, a slowing global economy, and escalated tensions in the Middle East have failed to stem the optimism about Nevada’s economic future.

An April 24 , 2007 discussion of Nevada Economic Conditions by Dr. Schwer of CBER was noted as follows:

Nevada Economic Conditions

Housing remains the weak sector in an otherwise growing economy, both nationally and in Nevada. Those who argued that there would be no slowdown in 2007 are in full retreat. Similarly, those foretelling doom continue to wait. Of course, the housing slowdown that began in 2006 has stalled some business activities and has created unknowns that cloud the future of some sectors, but all in all, the facts point to the Silver State and the nation continuing to expand at slower, more measured paces. Nevada job growth continues, up 3.5 percent in February 2007 over the same month a year ago, even though unemployment is up from 4.0 to 4.5 percent over the same period. Still, the unemployment rates for Las Vegas and Reno remain below 5 percent, standing at 4.3 and 4.7 percent, respectively.

Whether housing will stall future overall economic activity remains an open question. But, having seen sharp declines in permitting (down 61.1 and 49 percent for March 2007 relative to March 2006 for Las Vegas and Reno, respectively) and U.S. housing starts off by 23 percent and similar downward adjustments for some months, one can conclude that these severe shocks did not derail the current expansion. Adjusting to the housing overhang will take time. Prudence suggests that excess supplies may remain in key housing markets, including Las Vegas and Reno for awhile. Statements about having reached the bottom of the housing shortfall are premature. After the fact, one will be able to pinpoint when the recovery began.

Among the key sectors acting as a counterweight to the decline in housing, two merit comment. First, gaming revenue growth is now at small rates, at least for the state of Nevada and Las Vegas. These rates follow a period of exceptional growth. For February 2007, the state gaming revenue is up 2.9 percent and Las Vegas, the state's major tourism metro, is up 3.6 percent. Reno, having a smaller market and facing strong competition, reported a decline of 4.6 percent for February 2007 relative to February 2006. Second, taxable sales, a major state revenue source, was flat, up 0.9 percent for January 2007 compared with the same month a year ago. Over the same period tax revenues were up slightly for Las Vegas and down slightly for Reno. These more measured rates of expansion in gaming revenue and taxable sales go a long way in describing the slower recent pace that the Silver State now finds itself.

R. Keith Schwer, Ph.D.
Director, CBER

CURRENT NEVADA ECONOMIC STATISTICS – Source CBER

Source: CBER

Source: CBER