Site selector sees bright future for the area
May 12, 2016
"This is an exciting time for the area," Dennis Donovan, partner at Wadley Donovan Gutshaw Consulting, emphasized.
Donovan is one of the top site selectors in the country. He spoke to members of Economic Development Authority of Western Nevada (EDAWN) on April 28, sharing his observations and analysis of the region as a destination for attracting new businesses.
Donovan shared his expertise regarding the progress made in the area in the four years since he provided a similar outside assessment of the community. He also recommended additional improvements to enhance and foster the area's current economic development efforts.
"The biggest difference in a nutshell, is the acceleration of economic transformation," Donovan stated. "That is the biggest."
“The biggest difference in a nutshell, is the acceleration of economic transformation.”Dennis Donovan, partner at Wadley Donovan Gutshaw Consulting
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The recession is still fresh to many in the northern Nevada region. Distressed real estate and struggling construction combined with an unemployment rate over 13 percent take time to bounce back from. While still high, unemployment is now under 6 percent.Companies like Tesla, Switch and many others are moving to the area, aiding the diversification of the economy and improving the image of Reno too.
"When I first came here, the transformation was in the first inning and now it is in the top of the sixth." Donovan compared. "It is a good story."
Looking forward, the economic growth of the area still faces major challenges. These include work force — human capital — to sustain the needs of existing and new businesses, particularly as their skill requirements become more pronounced. Most companies are up-scaling and bringing in new technology, which means higher skillsets are required all the way down to the factory floor.
"Fulfilling those skilled requirements can be particularly challenging, especially when you have rapid growth," he said. Maintaining population growth not just organically but also via migration demands the area to provide a quality of life that appeals to people relocating, which also brings the need for affordable housing to the forefront.
"These are good challenges to have because they are solvable," Donovan said.
"If you are making $75,000-plus a year, you are in pretty good shape; if you are making over a $100,000 you are in great shape. If you are below that level it is getting more difficult to find affordable housing."
He went on to say that a third of the households in the area make less than $35,000 a year. "(You) have to do something about affordable housing. Both apartment and single family," he advised.
"Everybody benefits," he elaborated, adding that leadership has recognized the the affordable housing problem.
If the affordable housing issue isn't resolved, it will slow down the types of companies the area wants to attract that hire skilled workers. It has to be a give and take for everybody, he explained.
Compared to his visit four years ago, workforce, investment, infrastructure, growth and improvements have all seen positive development. He stated that Downtown revitalization is critical and that the changes in Downtown will continue accelerating,
"Again, it is really important, Downtown — and I include Midtown in that too — are the center piece of the region. It is the identity of the region. It brings togetherness and a sense of place to the area," Donovan said.
Companies, like Samba, are now leaving San Francisco to relocate to northern Nevada and, according to Donovan, four years ago people didn't believe the workforce talent was here. This movement of companies to the area shows that the human capital does exist and companies are recognizing that.
"Reno is just not well recognized outside of northern California and maybe the intermountain region," he noted.
The growth of the area's image has a major impact on public relations with the rest of the country. Arts and culture as well as entrepreneurship improve the image of the area and increase West Coast and possibly national recognition.
As he explained the importance of maintaining a diversified economy in the region, Donovan highlighted other economic ecosystems that can nurture and grow in the region, such as aerospace, drones and unmanned aerial systems. He added that the area, "may be becoming a national innovation hub."
Another ecosystem is the metal working industry as advanced manufacturing. "They are going to need skilled labor, and those are good jobs," he added.
Advancements in technology have made back office jobs, like insurance processing, and middle-office jobs like fraud compliance, upscale. He thinks, back- and middle-office jobs have a tremendous talent pool here along with information technology and software support opportunities. A bootstrap academy, like Denver's, can train more people to transition into these fields.
"There are not many projects more impactful than Tesla coming to northern Nevada," Donovan stated.
Data centers have turnd the image of the area around. They require a skilled workforce and the industry is continuing to grow. Services and lodging will follow.
That that growth and process is of great importance to the area, he said. Big names moving to northern Nevada gains national publicity, which brings attention to the area and drives more companies to come to northern Nevada.
As companies look at the area for expansion or relocation, air travel to the East Coast becomes important. It opens up business recruitment and allows company's access to their headquarters. Donovan saw this access improving aas new flights from Reno-Tahoe International Airport are announced.
People from California and other more accessible places are also looking at northern Nevada and Donovan categorized it as good because it brings talent and financial resources. He noted that every area that has rapid growth faces these challenges.
"If they are not moving in, there is not economic vitality," he explained.
In sum, northern Nevada does not face the same vulnerability is experienced in the past. Donovan noted that area no longer is based on one industry and that lessens the bubble-and-burst threat.
"The growth has been diversified that's the beauty of it," Donovan enlightened.