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Gaming Guru

Hubble Smith

Developers' Biggest Need: Workers

15 September 2004

Commercial and home construction will continue at a healthy clip for the next couple of years in Las Vegas, but the rising cost of development could threaten the city's competitive advantage, a real estate consultant said Tuesday.

Contractors have so far been able to withstand increases in land prices and building material costs as the city's population and job growth drives development.

"People say we're still cheaper than California," John Restrepo, principal of Restrepo Consulting Group, said at a Nevada Contractors Association luncheon. "That's not the issue. We need to stay competitive with Phoenix and Albuquerque, (N.M.), and Salt Lake City."

Restrepo said industrial developers are already being pushed out of the valley by high land prices and that residential builders are having to squeeze more units onto less land.

The building environment here is getting tougher, too, as more developers complain about a shortage of skilled labor.

"It's a huge problem," said Chet Nichols, vice president of Amland Development, which is building Park Avenue condominiums on Agate Avenue near Las Vegas Boulevard South. "We would have probably finished by now had it not been for the exponential increase in materials and construction costs and the general lack of qualified labor."

Contractors said they haven't felt any ripple effect on building material costs as a result of hurricanes and storms that have ravaged parts of Florida and the Caribbean islands.

An economic report from the Nevada Department of Employment, Training and Rehabilitation lists carpenters as the highest-demand occupation requiring long-term preparation.

Carpenter employment was 18,115 in 2003, with 871 average annual openings projected from 2000-2010. The average annual wage of a carpenter is $42,382.

"While we continue to man calls every day and we've taken in 200 members a month, they (employers) obviously would like to get the worker they want and it's probably not what they like," said Marc Furman, administrative assistant for Carpenters Local 1977 in Las Vegas. "Productivity also is an issue when there are lots of jobs to pick from. Managers that like to dictate by fear have no leverage."

Some carpenter jobs are not as lucrative as others, Furman said. For example, a carpenter might leave a lower-paying public works job for something in the gaming industry.

Construction laborers were No. 9 on the demand occupation list for Nevada, with employment of 11,486, average annual openings of nearly 500 and average annual wage of $29,562. Electricians were No. 10 at 7,797 employment, 400 annual openings and $47,509 average annual wages.

Overall, construction employs 89,200 workers in Las Vegas, up 10.3 percent from a year ago.

David Papadupulo, vice president of Olson Precast in Las Vegas, said material costs across the board and skilled labor are the two most important issues facing local contractors.

He said concrete has become a "valuable commodity, more so than I've ever seen it in 15 years," largely a result of foreign demand.

Another executive agreed.

"It's pretty interesting, what's going on in Las Vegas," said Mike Dean, president of M.J. Dean Construction and chairman of the contractors association. "Materials have shot up. Steel and concrete prices affect a lot of other things than just steel and concrete."

Dean said the trend toward vertical construction in Las Vegas has been good for his business. His current projects include an expansion of Fairfield's Grand Desert time share, Marriott's Grand Chateau time share and Panorama Towers, which is expected to break ground soon.