Brad Bonkowski and Andie Wilson: What factors does a manufacturer consider before relocating to Northern Nevada?
As much as we like to complain about the new commerce tax, the truth is Nevada still competes well against other states in terms of taxation and business-friendly climate, transportation, etc. The local economic development authorities, NNDA and EDAWN, won’t hesitate to verify they’re busier now than they have ever been, working with new companies to expand or relocate them to our region. Yet, we still often hear local citizens wondering why MORE companies don’t locate here. The truth is, this is a great region to run a business from, but it isn’t perfect for every business. Here are the considerations most manufacturers and distributors consider before making a move:
Transportation: Northern Nevada has a unique geographic advantage in that 11 western states are within two days truck transport distance. However, most large distributors choose to be on the Interstate 80 corridor for improved highway access, which is why the largest industrial park in the world, Tahoe Reno Industrial Center, is located east of Sparks, on I-80. Although it’s less than an hour from us in Carson City, time matters to the large distributors, especially those businesses who ship using rail, as we don’t have rail locally either.
Labor/workforce: Historically, our region competed well in the labor game. However, with unemployment below 7 percent, and wages climbing locally, this is no longer the case. Many manufacturers say labor has now become their No. 1 challenge. Large employers in Carson City tell us finding quality, drug-free staff is a daily challenge. This is the top issue that must be addressed if we want to remain competitive with other states.
Schools/education: While Nevada overall typically ranks low, or lowest, among all states for education, those numbers are largely skewed by Southern Nevada. Particularly in Carson City and Douglas County, our local school are actually superior, and executives often choose to live here even if their companies are based in Washoe or Lyon County. However, there’s no doubt the challenges Washoe County School District faces will affect our region’s ability to attract new business. If Washoe County’s Question 1, dubbed “Save Our Schools,” doesn’t pass, this will not bode well for our currently expanding manufacturing base. Executives won’t be willing to move their own children, or their employees’ children, to a community with split school days, which is what Washoe County is now facing. The schools will offer two daily sessions: One from about 6 a.m. to noon, and a second from about 1 to 7 p.m. Neither shift is optimum for kids, and yet this double tracking is unavoidable at this point if Washoe’s Question 1 doesn’t pass.
Business friendly/ low taxes: Nevada consistently ranks in the top 10 as one of the best states to do business. In particular, compared to our neighbor to the west, the costs of doing business are exceptionally low. We have no corporate or personal income tax, no inventory, unitary, estate or gift taxes, and no franchise, inheritance or special intangible tax.
Environmental regulations: The rural counties, including Carson, Douglas, and Lyon, aren’t large enough for their own environmental regulatory boards, so they rely on the Nevada Dept. of Environmental Protection (NDEP), which uses only federal regulations. That makes our area easier to work with, simply because we don’t have additional levels of county and city environmental regulation.
Utilities: Our utility rates in Nevada are in the highest 1/3 of all the states, so this isn’t a consideration where we necessarily compete well. However, the immediately surrounding states’ rates aren’t much better, so this is usually not the deciding issue, because Nevada does well in most of the other considerations, and if a western location is desired, western utility rates are unavoidable.
Cost of space: Industrial land in this area can be purchased in the $1.50-$5.00/SF. Industrial buildings may be purchased approximately in the $40–$65/SF range, and industrial space is leasing at about $0.40-$0.45/SF. Our feedback from clients is these rates are competitive with other areas in the western region. However, we don’t compete well with states who will give land to a manufacturer in order to woo them to their area. Nevada is constitutionally prohibited from doing this, so if a company wants free land, they won’t get it here.
So while we have our challenges, we have a competitive advantage in several arenas. Carson City is still the manufacturing center of the state, with a 12 percent manufacturing base. As we’ve shared in previous articles, this is great for the ongoing strength of our little local economy. When industry makes up the backbone of the economy, it means we’re pulling more new dollars into the community, instead of just moving existing dollars around.
There’s no debating that we boast an unparalleled quality of life which is often the real reason business owners and executives choose this region to relocate their families.
Brad Bonkowski and Andie Wilson are Broker/Owners of NAI Alliance Carson City, a commercial real estate brokerage. They may be reached at (775) 721-2980.