by Chris O’Sullivan
Work. And lots of it! That’s the story all around northern Nevada these days. Development with no end in sight. It’s very exciting, and at the same time it creates a ton of back-filling work to be done. At T•A•C we are constantly working to bring skilled talented people into the area for our rapid growth. Others are working hard to create housing for the employees we are bringing. In my opinion, great problems to have, but problems just the same.
Panattoni recently completed a 2.23 Million sf project in the North Valleys, all completely leased. And just this week, announced another 1.3MM sf in the same NVCC area that is scheduled to be completed in one single phase over the next 18-22 months! Northern Nevada Health System announced another hospital being built in south Reno. The list goes on. This type of ambitious growth has been, until now, unheard of in the Reno market.
Now, in no way do I wish to be construed as an alarmist, or anti-growth, because I’m not. I love a robust economy and growth is good. I believe that EDAWN and GOED are doing a great job of letting companies know about Reno and the opportunities here. At the same time, these companies need to understand the constraints to growth that are inherent to the area. Tight labor markets and higher housing prices will be a reality for the foreseeable future, and as long as these employers have their eyes open coming in, I think we’ll be fine.
From my perspective, the biggest issue that we will have to address is wages and salaries (Not minimum wage, that’s another issue entirely). Northern Nevada Household Income is currently $52,106, 10% BELOW the US median HH income of $57,652. People not familiar with our economy may think that’s pretty good for a town like Reno. But compare that to our Median Home Price of $420,000, which is 58% HIGHER than the US median home price of $266,000! To put that into perspective, the US average home price is 4.6x the US average annual salary. The Reno average home price is 8.0x the Reno average salary!
Compared to the rest of the country, Reno residents would need have household income of over $90,000 to afford an average home. That is a 72% increase from where we are currently! How do we get there? Well, the good news is we are already doing it. Attract and grow businesses that make stuff here and sell it out of state. In other words we need to have a robust export economy to bring money into the Reno area. The bad news, it needs to happen faster.
The message to Reno employers is clear. If you want to attract the best people to grow your business, it’s time to loosen those purse strings. But how do we move from this position of fear and a scarcity mindset to an abundance mindset? I know it’s extremely difficult, especially given where we were just 10 years ago. It’s hard to trust the numbers. I think it starts by believing in one another and taking small steps forward, together.
I’d love to hear your thoughts and comments.