Office and industrial real estate are featured in two special supplements this month for the National Association of Industrial and Office Properties (NAIOP). Coupled with the cover story on retail development, this issue of Nevada Business Journal covers all three segments of the commercial real estate industry. As regular readers know, we also devote a separate section each month to real estate construction, development and related fields in “Building Nevada.”
Why all this interest in real estate? Aside from the fact that I have been a commercial developer for many years, its importance to the state’s economy cannot be denied. Without residential real estate, Nevada would have no place to house all the people fleeing here from other states, and without commercial real estate, those new residents would have no place to shop or to visit their dentist or CPA, and businesses would have no place to warehouse their goods. Although rapid growth in both ends of the state causes congested freeways, urban sprawl and concerns about clean air and available water, it is a vital component in our quest for economic diversification, which will help insulate Nevada against future downturns in gaming or tourism. We need growth for our continued success.
As the November election approaches, it is a good time to consider how your vote affects this important segment of the state economy. The most basic political tie-in is property tax. Higher property taxes make it more expensive for an owner to hold land for development, more difficult for a landlord to make money without raising lease rates, and more expensive for a family to own a home of their own. Higher property taxes can slow down the engine that is driving our booming economy. Make sure the person you support for the Nevada Legislature in November plans to control property-tax increases. If you don’t know his or her position, find out.
On the local level, the business community needs to support efforts to control the increase in taxes, fees and assessments that are making it more difficult for real estate developers to bring new projects on-line. In addition, delays at the city and county level in getting permits have owners, developers and contractors waiting months for approval. Meanwhile, they are paying taxes on undeveloped land, paying interest on land and on construction loans and watching prices of raw materials skyrocket.
The over-all business-friendly climate is often listed as a major reason for companies to come here from other states. If people can move their companies here for economic reasons, they can certainly move them back out again if the state Legislature starts changing its stance. In the last legislative session, we made a little bit of progress against frivolous construction-defect lawsuits. Further efforts to control the rising tide of frivolous lawsuits are needed to keep insurance rates down for construction-related companies, which includes everyone from architects and general contractors, to developers, to subcontractors and suppliers. Take the time to see how the incumbent in your district voted during the last session – did he or she support or oppose construction-defect reform?
Other issues that will be discussed in the 2005 legislative session will affect the way business is conducted and have the potential to change our future, for better or for worse. Find out where the candidates stand on such issues as: placing a cap on the modified business tax; accountability for schools and teachers (Nevada’s educational system once again received a failing grade in a national assessment); tort reform, so our doctors can afford to practice in Nevada; limiting areas in which government competes for business with the private sector; and many others. I hope the 2001 legislators got the message that Nevadans are adamantly opposed to a gross receipts tax, but you never know when some version of it may reappear again – be on the lookout.
On the national level, consider the capital gains tax, which is a very important consideration in any real estate transaction. A higher tax paid to the government means less money available to invest in the next project, which slows growth. President Bush supports a 15 percent cap on capital gains, while Kerry is pushing for an increase to 38 percent. Find out where your candidate for Congress stands on this issue.
Taking time to find out candidates’ positions may be time-consuming, but it is an investment in your future that must not be ignored. Remember to vote on November 2nd, and encourage your business associates to vote. Remember the words of George Jean Nathan, a 20th-century American editor who said, “Bad officials are elected by good citizens who do not vote.”
