Developer Ron Hakakian went to see Apex Industrial Park recently, intrigued by an auction offering hundreds of acres in the commercial district.
With Faraday Future planning a $1 billion auto factory in Apex, Hakakian figures the mostly empty North Las Vegas business park will come alive one day. But for now, he wasn’t sure whether to bid.
Mason Harvey owns property in Apex and drew up plans for a 365-acre industrial park, which hasn't materialized. Much of Apex is raw desert, but if companies could tap into a water grid, “we’d have a whole different picture” there, he said.
Meanwhile, investor Khusrow Roohani snapped up 800-plus acres in the area a few months ago. He’s bullish on Apex, but for now he has no plans for his holdings.
“It depends on what else comes into that area,” Roohani said.
Real estate brokers have fielded a surge of inquiries about Apex, and landowners have raised prices since news broke last year that Faraday, a Chinese-backed electric-auto maker, was eyeing the park as a possible development site. To ensure Faraday picked North Las Vegas, the state Legislature approved a $335 million incentive package for the Southern California-based startup company — whose ownership has been shrouded in secrecy — at a special session in December.
If all goes as planned, Faraday’s arrival would usher in thousands of jobs, yield newly-built utilities and possibly attract other development to the isolated industrial park, which for years has been largely bypassed as investors built industrial projects in other parts of North Las Vegas and the valley. The build-out of Faraday also would boost the image and coffers of North Las Vegas, which ran low on money during the recession and faced a state takeover.
But so far, Faraday’s widely cheered site selection hasn’t sparked a land-buying binge in Apex, or even more than a few sales, real estate pros say.
The biggest obstacle, a long-standing one, is that Apex is short on utility service, meaning businesses would run on, say, water-wells and septic tanks unless grids are installed, as planned in coming years.
And despite the excitement about Faraday — Gov. Brian Sandoval said its selection highlighted Nevada’s “limitless potential” and helped create a state “based on innovation, technology and entrepreneurship” — some people have questioned whether the 3.4 million-square-foot factory would be built.
Faraday “has created kind of a renewed fervor with Apex,” but “that in itself is a little perplexing,” said real estate broker Dan Doherty, an executive vice president with Colliers International.
Nearly three decades after its creation, Apex lacks infrastructure that could lure more developers, and little has changed over the years.
“The problem with Apex today is the problem with Apex 15 years ago,” Doherty said.
Real estate executives say Apex is a good fit for companies that need space for heavy industrial work or need to be far from residential areas, as the park originally was designed after Henderson’s PEPCON chemical plant — which produced a rocket-fuel enhancer — exploded in 1988, killing two people and injuring more than 300.
But if Apex had more to offer than ample acreage, it would look much different today, executives say.
“It would all be developed if there were utilities out there,” said Providence Commercial broker and former North Las Vegas mayor Mike Montandon, who led the city when it started annexing Apex last decade.
MDL Group broker Michael Campbell said there had been “a tremendous amount of interest” recently in the industrial park, located around the Interstate 15-Highway 93 intersection some 25 miles north of the Strip.
But the interest hadn't triggered a burst of land sales, he said, as a “seasoned investor” would know what to ask about before pulling the trigger: utility service and the “reality” of both Faraday’s factory and a planned, 50-acre test track for high-speed-transit startup Hyperloop Technologies, Campbell said.
Moreover, some land in Apex sold for about $50,000 or $75,000 an acre the past two years, but some owners now want $100,000 to $280,000 per acre, listings show.
“I just can’t imagine a developer who would pay those kinds of prices,” Campbell said.
If the car factory is built, developer Doug Roberts says more construction in Apex likely will follow. But, he says, the “biggest knock” for years has been “the lack of infrastructure.”
Roberts, a partner with Panattoni Development Co., pointed out that developers of the Tahoe Reno Industrial Center, or TRIC, installed utilities, removing a “fear of the unknown” from the 107,000-acre park and sparking a faster inflow of users.
Ownership of Apex is heavily fractured, and overall, Doherty says the park has taken a “completely opposite” approach than TRIC.
Some 130 companies operate at TRIC, whose developers — including Lance Gilman, a cowboy hat-wearing brothel owner and county commissioner — spent $100 million on roads, sewage and water service, a freeway interchange and other infrastructure, project manager Kris Thompson said.
Perhaps the most notable company in TRIC is Tesla Motors. Backed by $1.25 billion in state incentives from a 2014 special session, the Silicon Valley electric-auto maker is building a $5 billion battery factory in the park.
Apex initially was designed as a 21,000-acre industrial park, and it seems about 10 businesses operate in or just outside its borders, including two NV Energy power plants; 154-acre and 146-acre solar arrays; a medical-marijuana cultivation facility; a rock quarry; a landfill; and a Love’s truck stop and convenience store.
Love’s, which is expanding, built its store in 2010, Clark County records show. According to MDL’s Campbell, when the store opened, it supposedly operated on a generator, propane and septic tanks and well-water.
Love’s spokeswoman Kealey Dorian said she was “unable” to answer questions about the store.
Overall, Apex has “an enormous amount of raw power” but needs substations so electricity can be routed to local users, said Gina Gavan, North Las Vegas’ economic and business development director.
And Gavan says that despite a perception that Apex is parched, the industrial park has ample ground-water — just no underground network of pipes.
Utilities, however, are slated to be installed.
As part of the December special session, lawmakers authorized the state to borrow up to $175 million to build out Apex’s sewage and water systems, emergency services and other infrastructure, according to Gavan. Plans are being designed and budgeted, she said.
Also, NV Energy has developed plans to support new customers in Apex with at least four new substations, spokeswoman Jennifer Schuricht said.
Gavan said Apex’s rising land prices were inflated, but that big users likely would negotiate smaller price tags. She also said she wasn’t worried by the dearth of land deals in Apex, saying there’s been a “lot of skepticism” about the industrial park over the years.
“I think the real serious people are cautiously waiting to see some action,” she said.
Faraday has started clearing its project site and ordered construction trailers, said Gavan, adding that she expected the company would start taking ownership of its roughly 900-acre project site in the next 30 days.
A ground-breaking date hasn’t been confirmed, she said, but city officials have aimed for April.
“It’s sort of all in motion,” she said.
A Faraday spokesperson, who did not provide his or her name, confirmed in an email that the company has started site work and that it already owns one of its parcels. The spokesperson also said the company planned to start selling cars "in the next couple years."
Faraday says online that its factory, once operational, would have 4,500 on-site jobs. At the peak, it would produce up to 150,000 electric vehicles annually, according to the company’s incentive-package application.
The company — which unveiled a single-seat, 1,000-horsepower concept car at January’s Consumer Electronics Show in Las Vegas — has disclosed various executives and said it planned to have 500 employees by the end of 2015. It also lists dozens of job openings online.
But it hasn’t disclosed a chief executive officer. And while Chinese billionaire Jia Yueting, chairman of media conglomerate LeTV, has said he’s an investor in Faraday, little else is known about the company’s ownership.
The spokesperson said Faraday is a private company and doesn't discuss its ownership structure.
Former mayor Montandon says there are “still some questions” about whether Faraday will build its factory.
Trading of LeTV shares has been halted at times, according to media reports. State Treasurer Dan Schwartz, for one, wanted to investigate, to protect taxpayers and ensure Nevadans weren’t "all smelling roses," chief of staff Grant Hewitt said.
Schwartz is requiring Faraday post up to $75 million in collateral for state-issued bonds that would help finance Apex's infrastructure projects, Hewitt said. He added the collateral is allowed by the special session's laws and "would have always been requested."
The Faraday spokesperson did not immediately respond to a request for comment Tuesday night about Schwartz's decision.
No matter what happens with Faraday, the proposed factory is the latest twist in a long and at times volatile history at Apex.
Since the park's creation in 1989 on federal land, investors have bought and sold property there for years, including former Las Vegas Mayor Oscar Goodman and Utah investor Val Southwick. In 2005, Southwick agreed to buy 5,800 acres for $125 million from Goodman’s group, court records show, but he was sentenced to prison a few years later for operating a Ponzi scheme.
Other real estate projects haven’t materialized. In 2002, for instance, Apex landowners pursued plans to build a residential community — but officials with nearby Nellis Air Force Base strongly opposed it, saying the homes would be under the flight paths of bomb-carrying military aircraft.