Las Vegas is booming again, and bracing
itself for next slump
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[September 11, 2018]
By David Randall
LAS VEGAS (Reuters) - Diane Han is trying
to leave the Las Vegas of her childhood behind.
Her mother is a blackjack dealer at Caesar's Palace, one of the
mega-casinos on the Las Vegas Strip, while her father works in
housekeeping at another. Han, 25, grew up in Las Vegas, but went to
college in the Bay Area for college and spent a year there working as a
Yet she returned to enroll as a member of the first class at the
University of Nevada, Las Vegas School of Medicine. The school opened
last year to address a chronic shortage of doctors in Southern Nevada
and broaden the city’s economic base.
Few cities were hit as hard as Las Vegas by the 2008 financial crisis
and recession, which eroded consumer spending on the sort of fast
thrills the city had to offer and left it with the highest foreclosure
rate in the nation. Home prices plummeted 62 percent from their peak in
2006 to their bottom in 2012, according to data from ATTOM Data
Solutions, a real estate tracking firm.
Now Han is part of a group of medical students whose decision to stay
and practice in Las Vegas after graduation may give the city hope that
it can reduce its reliance on casinos.
“We are in an early stage of building what could be a start-up culture
here," Han said. "We’re trying to make it a real city, not just a
Nevada as a whole lost more jobs in relation to its workforce than any
other state, with more than 70 percent of those losses in the Las Vegas
region. There, unemployment rate hit 14.2 percent at the depth of the
recession, well above the national peak of 10 percent and nearly triple
where it was before the downturn began in 2007.
Though construction cranes once again rise above casinos along the
Strip, Las Vegas is trying to prepare for the next downturn – whenever
that may be - by trying to wean itself off the reliance on housing and
hospitality and turning to industries ranging from professional sports
to medical care.
"We are trying to build a world class city," says Mayor Carolyn Goodman,
citing investments in infrastructure and efforts to woo new businesses.
Yet the question remains whether it will be enough.
Other hard-hit Sun Belt cities, such as Orlando and Phoenix have
outpaced Las Vegas in job growth since the crisis and have more
diversified economies, said Steven Pedigo, a professor of economic
development at New York University. (Graphic: https://tmsnrt.rs/2CIaReC)
"They were absolutely killed and I think it's fair to say that they are
only starting to rebound now," Pedigo said about Las Vegas. "If Las
Vegas doesn't build some buffer around its economy it will always be a
boom and bust town."
BET ON HEALTHCARE
Over the last five years, businesses including Amazon-owned Zappos, data
company Switch Inc <SWCH.N> and Amazon.com Inc <AMZN.O> itself have
opened new headquarters or regional hubs in the Las Vegas metro area,
bringing approximately 3,000 new jobs thanks in part to more than $15
million in tax incentives. But the University of Nevada's medical school
is at the core of the city's vision of its future.
By 2030, it is expected to add 8,000 jobs and contribute $1.2 billion
annually to the metro area's $111 billion economy. Established with $27
million in state funding, the school now has 143 full-time faculty and
employs over 1,000, said Dr. Barbara Atkinson, the school's founding
"The major impetus to start the medical school was the economic impact,"
she said. "Each new physician that comes here usually hires between two
and five other staff people, and they have more than enough patients.”
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Construction on the new NFL football stadium is seen in Las Vegas,
Nevada, U.S., August 26, 2018. Picture taken August 26, 2018.
The city and state have also invested more than $36 million in
infrastructure, such as street improvements, and marketing and has
another $97 million planned to build out the Las Vegas Medical
District. The city expects the cluster of medical office buildings
and hospitals four miles (6.44 km) north of the Strip will add
16,000 jobs and contribute $2.4 billion to the local economy
annually by 2030.
The improvements are paid in part by bonds issued by a regional
transportation agency that administers the Las Vegas region's first
planning blueprint to handle what it expects to be a nearly 45
percent population growth by 2045.
Already, there are signs that the economy is shifting. Around
100,000 jobs are in health and education-related fields, an increase
of more than 50 percent from 10 years ago, according to the Bureau
of Labor Statistics. At the same time, construction employment is
down 38 percent at about 65,000.
Yet tourism and hospitality, with its thousands of low-paying,
entry-level jobs, still accounts for nearly a third of the region's
workforce, three times the national average. Casinos MGM Resorts
International <MGM.N>, Caesars Entertainment <CZR.O>, Wynn Resorts
<WYNN.O>, and Las Vegas Sands Corp <LVS.N> together employ over
102,400 in the area, according to data from the Las Vegas Global
Economic Alliance, a local development group.
HOUSING HANGOVER EASING
Professional sports and legal marijuana may also help broaden the
The Vegas Golden Knights hockey team reached the Stanley Cup Finals
this year, giving the city its first major professional sports
experience. At the south end of the Strip, a $1.8 billion domed
stadium for the National Football League’s Raiders is under
construction and could host the Super Bowl as early as 2023. Tax
revenues from marijuana sales, which Nevada legalized in July 2017,
surpassed the state’s 12-month estimate of $50 million within 10
"We anticipate that recent, modest diversification in employment
will provide some marginal resilience in a future recession,"
Moody's analyst Patrick Liberatore, wrote in a May report upgrading
the city’s credit rating to Aa2, the third highest investment grade.
Still, the area's reliance on tourism "will always leave it exposed
to economic downturns,” he wrote.
The influx of newcomers into Clark County, Nevada's most populous
county with 2.25 million residents, has helped push housing prices
up more than 15 percent this year so far, though average prices are
still below pre-crisis peaks. Real-estate listing firm Zillow
estimates prices will rise another 8 percent over the next 12
months, driven in part by continued arrivals of Californians priced
out of their markets.
Whether those gains will last, however, is a matter of debate, with
Fitch Ratings recently describing the metro area as the most
overpriced market in the country.
“Las Vegans once thought we were recession-proof,” said Stephen
Miller, a business professor at UNLV. “We learned our lesson and
made some progress, but we need to make a lot more.”
(Reporting by David Randall; Editing by Jennifer Ablan and Tomasz
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