Northern Nevada Economic Update
Presented at CHASE International Company Meeting
July 29, 2015
By Leah Wagner
Corporate Relations Manager
So you’ve all heard about that battery factory that ‘s being built just outside of Reno. Of course Tesla is the talk of the town here, but was the Tesla deal just a one hit wonder because our legislature was cajoled into passing some outrageous incentives and because our Governor body slammed Texas, Arizona and New Mexico with a flashier tax package?
So now we have this giant shiny sparkly thingy out in the desert that the whole world is gawking at, but besides Tesla, is Northern Nevada’s economy doing ok now that the rest of us get to pay off Tesla’s taxes for the next 20 years?
As real estate professionals, we all know that home prices are rising significantly in our market. The new catch phrase in our region to describe rising home prices is “The Tesla Effect”. But is the euphoria of “The Tesla Effect” just a repeat of pre 2008 “Irrational Exuberance”, and when us actual Nevada taxpayers can’t handle making the payments on our handsome governor’s $1.25 billion engagement ring to Tesla, when this next housing bubble bursts, will we all get blasted with more gangrenous necrotic slime than the stuff that drowned us in 2008?
Yes, your clients understandably suffer severe PTSD from 2008, and when they see a surge in home prices, they freak out at the possibility of another bubble. What we must educate our clients with are the facts that home prices are not currently spiking in Northern Nevada because predatory lenders are passing out $800K mortgages to bums passed out in the gutter in front of the plasma center while Fannie & Freddie are pimping junk loans to Wall Street, and federal regulators are asleep at the wheel driving our housing market off a cliff.
The conditions driving the current economy and housing market in Northern Nevada are entirely different than pre 2008. Our housing market is not driven by the pre 2008 spec building on steroids and junk loans to defaulting borrowers who were already dead for 15 years at the close of escrow. Northern Nevada’s current economy is driven by the most solid and diverse economic growth in the nation.
What we are calling “The Tesla Effect” began before Tesla made their earth shattering announcement in September 2014 to build the world’s largest factory here in Reno. Tesla is NOT a one hit wonder. Before Tesla, we were already having economic flash flood warnings. Apple was here before Tesla. Dell was here before Tesla. Barnes and Noble and Amazon were here before Tesla. Petsmart, PetCo, Zulilly, UPS, FedX and Walmart’s distribution centers were all here before Tesla.
But after Tesla came, the entire world took a closer look as to why would Tesla choose Northern Nevada, and the flash flood before Tesla quickly turned into a Post Tesla Tsunami.
What qualifies as an economic Tsunami? For one thing, 5% growth projected over the next 5 years. For comparison, in the mid 2000’s high growth years when our economy was running at its peak, our record rate of growth was 2.2%. In our state’s entire history, we have never experienced 5% growth.
Where is this economic growth coming from and why is it coming to Northern Nevada?
Nevada’s business friendly environment
About that outrageous $1.25 billion tax abatement Governor Sandoval gave Tesla – Nevada wasn’t even close to what Texas and Arizona were offering – not by a long shot. Tesla is here because of Nevada’s business friendly environment.
Elon Musk, Tesla Motors CEO, stated “This is not just about the incentives,” he said. “Nevada is a “really get things done state. That was a really important part of the decision.”
Craig King, CHASE’s COO and I had the unique opportunity to have lunch on the day of the Tesla Announcement in September 2014 with Lance Gilman, Storey County Commissioner.
Lance regaled us with stories of the Tesla deal. Tesla asked Lance what the time frame was for obtaining permits in Storey County. Lance pulled a permit out of his briefcase and said, “Here is your permit. I have a shovel in the back of my truck. Let’s go break ground right now.” The Tesla execs were astounded. Many factors went into the Tesla deal, but Nevada’s lightning fast, lack of red tape permit process catapulted Nevada ahead of the competition.
“In other places, they (companies) may have 20 to 30 permits to pull or agencies to get approval from,”said Mike Kazmierski, president of the Economic Development Authority of Western Nevada. “Any one of which could stop the process.” . . . AND cost companies millions of dollars and years in the process of failing to get these onerous permits! But NOT here in Nevada!
Tahoe Reno Industrial Center
Besides being very tax and regulation friendly, Northern Nevada has another little economic TRIC up its sleeve that no other state has. Except this TRIC isn’t little. This TRIC is colossal. Of course the TRIC I am referring to is the Tahoe Reno Industrial Center. Located just a few miles east of Reno on I-80, TRIC’s land mass is the same size as the city of Las Vegas. TRIC is the largest Industrial Park in the World, and besides being the largest industrial park on the planet, TRIC has the most lenient business regulations and zoning ordinances of any region in North America. Combine the fact that TRIC is the most business friendly environment in North America with the fact that it is only 30 miles from the border of the most tyrannical anti-business state in the nation, it is purely logical that businesses are flooding into TRIC from California, and are scooping up land next to TRIC’s celebrity residents.
So who are some of the rock stars who moved into the hottest new industrial zip code out at TRIC?
Of course, Tesla is the most famous, and Tesla’s economic impact to TRIC is massive. Because of the gigafactory, the land immediately surrounding Tesla is now sold out to many other companies such as Panasonic that have a direct business relationship with Tesla.
In January 2015, Switch announced plans to construct a $1 billion data center to be located at the Tahoe Reno Industrial Center.
Switch’s Northern Nevada operations include a 3 million square foot facility – the same size as Tesla’s GigaFactory on a 1000 acre parcel. This center will store data for the US Government & fortune 500 companies like Ebay & Amazon, and create 5000 jobs – mostly highly skilled, many in the 6 figure salary range.
After landing superstars like Tesla and Switch, rumors are flying and the hot topic is, “What is the next amazing company that is coming to Northern Nevada?”
A much better question is “What is the next amazing industry that is coming to Northern Nevada?” because it is not just individual cool companies that are coming here – entire industries are relocating here.
Amazing Industries in Northern Nevada
While the whole world was bedazzled by the sparkliness of the gigafactory, in 2014 a multi billion dollar industry flew under the radar into Northern Nevada and made it their international headquarters.
It is the Drone Industry. Reno has been recently nicknamed “The Detroit of Drones”. In December 2013, Nevada was selected as one of only 6 FAA approved drone test sites in the nation. Nevada, naturally endowed with the best flying weather, the most open airspace, the best tax and regulation environment, the best technological and research infrastructure assets such as Nellis, Creech, Fallon Naval Air Station, UNR’s School of Engineering Drone Program and Desert Research Institute, plus with Governor Sandoval gifting the use of Stead Airport to Drone Research, Northern Nevada was the irresistible choice for incredible companies like Drone America, Ashima Devices, Flirty, Nevada Dynamics, and Google.
Of course, Tesla dominates the news of the manufacturing industry that has landed here, but did you know that in 2014, we actually had two electric car manufacturers move to northern Nevada?
Cenntro Automotive Manufacturing (headquarters)
Cenntro Automotive is a Nevada based manufacturer of all electric, commercial vehicles. The versatile Citelec and KOMBI EV, both zero emissions SMART vehicles are used in a variety of environments including parks, farms, warehouses, resorts, campuses, industrial facilities, and airports. Both models are manufactured in Sparks, Nevada.
Jobs created: 300
Located from: New Jersey
Here are just a few more amazing manufacturing companies that have recently arrived in Northern Nevada-
Advanced Refining Concepts, LLC Manufacturing
Advanced Refining Concepts, LLC owns a patented near zero emissions process that produces GDiesel ®, a state approved alternative diesel fuel with vastly cleaner emissions and more efficient combustion than traditional diesel fuel. GDiesel ® requires no modifications to vehicles or engines or existing storage infrastructure. ARC is based in Reno, NV with additional operations in McCarran and Sparks.
Located from: Nevada
Fulcrum Sierra Biofuels Manufacturing
Fulcrum Sierra Biofuels, a wholly –owned subsidiary of Fulcrum BioEnergy, is utilizing a game-changing process for converting municipal solid waste (MSW) that would otherwise be landfilled, into renewable transportable fuels. Phase 1 of the Sierra BioFuels Plant, located in Storey County, will process MSW into feedstock with construction scheduled to begin in January 2015.
Jobs created: 30
Located from: California
Eaton’s B-Line Business Manufacturing
Eaton’s B-Line Business offers a broad range of support systems, seismic bracing solutions, electrical enclosures and wireways designed to help save time for a lower total installed cost. The B-Line business serves customers in the commercial construction, oil and gas, mining, solar, communications and data centers, and other markets.
Jobs created: 49
Located from: Nevada
BeaverFit USA Manufacturing (headquarters)
BeaverFit USA is an institution of strength and conditioning equipment. Founded by former US Navy Riverines and British bridge builders, we have a unique appreciation for the community we build to serve, and the expertise to design and deliver world class training equipment. No matter your challenge or obstacle, we will provide an innovative solution to enable you to achieve your goals.
Jobs created: 25
Located from: United Kingdom
CustomInk enables customers to design and order custom T-shirts for every occasion. Since 2000, the company is dynamic, forward thinking and has been recognized for workplace excellence. CustomInk strives to treat customers, vendors, and co-workers as it would want to be treated and has a strong sense of innovation and individual responsibility.
Jobs created: 261
Located from: Nevada
Eco Windows LLC Manufacturing
Eco Windows LLC is among the most energy efficient window companies in the country specializing in custom manufacturing and installation of the highest quality windows and doors with excellent long term value designed to save energy and reduce costs. Our commercial window and door products are of the most advanced technology and performance.
Jobs created: 17
Located from: Nevada
Aircraft Manufacturing Industry
In the 20015 Nevada Legislative session, SB93 was passed, which is an incentive package for aircraft manufacturing companies.
Directly related to SB93’s passage is an absolutely incredible, lifestyles of the rich and famous type company that I am dying to tell you about, but I can’t!! I promised Stan Thomas of EDAWN that I will not say a word until their press release, which should be any day now!!!
With Tesla and this company here, we are the epicenter of off the Richter Scale Cool manufacturing companies!!!
But the aircraft company that I can tell you about is Whisper Jet.
Whisper Jet, Inc. Service
Whisper Jet, Inc. manufactures a quiet technology helicopter aircraft for the military and emergency responders, and recently opened a local transportation service that serves passengers in the Reno-Tahoe area. Our single engine helicopters are designed with a proprietary technology that greatly reduces engine noise, hence the name ‘Whisper Jet’.
Jobs created: 18
Located from: California
The Biotec Industry
Northern Nevada has recently acquired some amazing biotec companies.
CuCo, LLC Manufacturing (headquarters)
CuCo, LLC designs, manufactures and distributes innovative products that address the unmet need of countering harmful effects of bacteria in three specific areas: Diabetic Health, Outdoor/Activity Wear and Institutional/Facility Care. By utilizing the intrinsic bactericidal properties of copper in our innovative product designs we will positively affect the lives of consumers.
Jobs created: 15
Located from: California
Gensano R&D Manufacturing
Gensano is a medical device and biologics manufacturer with an emphasis in regenerative medicine using stem cell therapies. Gensano’s vision is to create innovative biological products that optimize patient outcomes. The company is dedicated to the development of new technologies that will benefit surgeons, hospitals, and most importantly, patients.
Jobs created: 150
Located from: Nevada
NeoBiotec was informally announced by EDAWN at a private gathering a few week ago, and their public press release will be in the next few weeks. Neobiotec relocated to Reno from Koera, and has entered into a business partnership with DRI & UNR.
What the arrival of NeoBioTec, Gensano, and CuCo prove is that Northern Nevada has the desirable infrastructure to attract the most sophisticated high tech biotec companies here. We have UNR and UNR’s School of Medicine, and we have Desert Research Institute. More importantly we are only three hours away from Stanford University, UC Davis, & Silicon Valley but we are in an alternate universe of friendly taxes, regulations, and MOST IMPORTANTLY medium home prices of $240K instead of $1.8 million for a two bedroom loft. We have the necessary infrastructure, and companies can afford to be start ups here that cannot afford the Bay Area.
The Data and High Tech Industry
In the 20015 Nevada Legislative session SB170 was passed, which is an incentive package for data centers and companies that use servers or other computer equipment in their centers.
In addition to SWITCH, the following are some amazing data and high tech companies that have made Northern Nevada their home:
Koch Industries IT Applications Center
Announced March 12, 2015
Koch is a privately-held company headquartered in Wichita, Kansas with a presence in 60 countries and employs more than 100,000 people worldwide, which includes approximately 60,000 employees in the United States. Koch companies are involved in refining, chemicals, grain processing and biofuels; forest and consumer products; fertilizers; polymers and fibers; electronic components; process and pollution control equipment and technologies; commodity trading; minerals; energy; ranching; glass; and investments and holds 9,500 patents. They have invested close to $70 billion in acquisitions and other capital expenditures since 2003 to make life better around the world by efficiently converting resources into products and services that people depend on every day.
The Reno location will primarily serve as a satellite office focused on providing Koch Industries IT capabilities in the areas of Applications (Development, Analytics, Support, Databases, etc.), Cyber-Security, Global Networks (Architecture, WAN, LAN, Voice, etc.), and Computer Platforms (Cloud, Virtual, Converged). The new facility will also serve as an innovation and creative space for meetings with strategic vendors and will allow the company to host discussions and brainstorming pertinent technology in support of the Northern Nevada IT community. The company plans to fill approximately 20 positions in the first year.
Jobs created: 20 (in year 1)
Located from: Kansas
BlackRidge Technology Advanced Technology (Headquarters)
Announced February 5, 2015
BlackRidge Technology, a cyber-security company from Santa Clara, California announced the relocation of its headquarters and operations to Reno, Nevada. The company plans to initially hire 30 full-time employees and is constructing a new cyber security solutions lab. BlackRidge Technology cloaks and protects enterprise networks and cloud resources from unidentified and unauthorized users. Their patented Transport Access Control (TAC) technology changes the protection game, protecting against unidentified and unauthorized users and devices. TAC is a new and more fundamental way to protect against advanced and unknown threats, versus protecting against threats, one vulnerability at a time. This technology results in immediate and tangible reduction in the malicious unwanted traffic that poses the bulk of cyber threats today. The company was founded in 2010 and recently leased space in the South Meadows area of Reno where construction on the new cyber lab has commenced and is scheduled to be operational in the second quarter of 2015.
Jobs Created: 30
Located from : California
Ghost Systems Service/Data Center (Headquarters)
Ghost Systems’ SafePlaceTM Ecosystem is a complete cyber security solution that directly protects anything connected to a network, using future-proof “perfectly secure” technologies to create an impenetrable electronic network mesh – the electronic equivalent of Kevlar – which overlays onto existing public and private networks to prevent cyber theft of digital information.
Jobs Created: 150
Located from: California
When you combine TRIC, SWITCH, the incentives of SB170, Northern Nevada’s proximity to Silicon Valley, and our lack of insane taxes, barbaric regulations and astronomical housing prices, these factors alone amplify significant growth in our region. But in addition to these prodigious economic enhancers is one more gargantuan game changer that will make Northern Nevada the gravitational center of the tech industry.
It is the Super Loop.
The “Super Loop”, a 500 mile fiber line connecting Northern and Southern Nevada with Northern and Southern California will make Nevada the most digitally connected State in the US.
For high tech companies that depend on the fastest and highest capacity data transmission, economic development experts predict Reno will become the most desirable port on the Super Loop with its unrivaled tax advantages and strategic geographic location.
With companies like Switch and Tesla, Panasonic and Solar City, with us being a major hub on the Super Loop, with 5% growth and 55,000 new jobs conservatively projected for our region for the next few years, we are not in a bubble.
We are the main player in the West Coast distribution and logistics industry. We are the new epicenter of the western manufacturing industry. We are the Detroit of Drones. We are the Eastern Suburb of Silicon Valley. We are the Cradle of Innovation.
We are the best place to invest in Real Estate right now, right here in Northern Nevada.