A Tale of Six Cities

Cross-town or cross-country, the search for better real estate deals is on.

  • Avg. rent per sq. ft., Class A: $28.21
  • Avg. rent per sq. ft., other classes: $19.73
  • Large employers: City of Austin, Dell, IBM, Seton Healthcare Network, UTx Austin
  • Percent of population over 25 with bachelor’s degree or higher: 38.8%
  • Percent with advanced degree: 13.2%
  • Median home value: $164,100
  • Venture capital invested in 2007 (through Q3): $418 million

Sources: Reis Inc., U.S. Census Bureau, Greater Austin Chamber of Commerce, PwC/NVCA MoneyTree Report

Las Vegas

With one of the fastest growing populations in the country, no corporate or personal income tax, and an international airport, Las Vegas seems an ideal shelter. Some 263 companies have located in southern Nevada since 2002, including computer maker CDW Corp., which opened a distribution facility in the area last year, and many alternative-energy companies, which have a ready-made market thanks to a state mandate that 20 percent of Nevada Power’s resources must come from nontraditional sources by 2015.

Still, “Sin City” has yet to become a corporate-headquarters haven for brand-name companies. One factor working against it is that office space is not exactly cheap, averaging $25.52 per square foot — more expensive than such cities as Austin and Charlotte. The mountains surrounding the city constrain the supply of developable land, and although construction is booming, office projects must compete with multi-billion-dollar resort projects for construction workers, driving up expenses, according to Matthew Kreft, an adviser at Grubb & Ellis Las Vegas. For bargains, Kreft steers companies toward the downtown central east submarket, where space in older buildings can be had for $24 per square foot. Go to a new building along the recently opened Central Las Vegas Beltway and rents approach $40 per square foot for top-tier space.

The lack of a stable and educated labor pool is another drawback. While the population is growing rapidly, only about half of the city’s 2 million residents are considered part of the labor force. Building a finance team there “would take some time,” says Lori Layton, who heads Ajilon Finance’s Las Vegas office. Salaries for accounting staff (and even CFOs) at gaming and hospitality companies tend to be lower than in other industries, she says, and the lack of other corporate options in Las Vegas makes nearby Phoenix and Southern California look more attractive to many job seekers, including mid- to high-level finance professionals.

Locals are doing their best to change the city’s image, though. “I think the stigma that we had at one time is for all intents and purposes gone; we’re seeing companies consider coming here that five years ago wouldn’t have talked to us,” says Somer Hollingsworth, president and CEO of the Nevada Development Authority. He points to the three-year-old Nevada Cancer Institute, which managed to recruit top-tier doctors from around the country, as “shatter[ing] the myth that smart people won’t move to Las Vegas.” Further positioning it as an area for medical research is the planned Lou Ruvo Brain Center, scheduled to move into its Frank Gehry–designed headquarters late next year. Las Vegas “has the capability to be a headquarters town,” provided that buildings get taller and nascent efforts to provide workforce training take off, says Kreft. “The only thing that could hinder future development is the availability of water.”

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