Zappos' new headquarters in old Las Vegas City Hall will open in a few weeks, welcoming 1,500 employees to a multimillion-dollar renovated building and introducing many of them to downtown.
But despite the shift from their current headquarters in Henderson to the city's urban core, few Zappos workers appear to be looking to buy or rent homes downtown, according to real estate agents.
Brokers who focus on downtown speculate that home prices have risen high enough to price out many potential buyers.
Downtown real estate agent Jack Levine said the recent rise in interest rates coupled with the fact that downtown home values have shot up has led to fewer interested buyers. He said he hasn't sold a single home to a Zappos employee.
"The Zappos story makes people want to live downtown near Fremont Street and all the excitement, but I imagine the bulk of their employees are priced out," Levine said. "Where you could have bought a three-bedroom, two-bath house two years ago for $90,000, it's $150,000 now. And you can't buy $150,000 if you're making $14 an hour."
Also, few Zappos workers are seeking rental homes, condos or apartments downtown, real estate agent Steve Franklin said. The reasoning is twofold: Quality rentals, on average, are more expensive downtown, and there are very few places to rent.
Franklin looked at 24 condo or townhouse rentals in Green Valley and compared them with the seven condo or townhouse rentals available downtown, north of Charleston Boulevard, south and east of the highways and west of Maryland Parkway. Most of the available downtown units either were in the Newport or Soho lofts, two relatively new high-rises less than a mile from Zappos headquarters.
The average rent in Green Valley was $1,335 a month; downtown, $1,731 a month.
Franklin said people might find cheaper rentals downtown farther away from Zappos, but he senses most employees want to live within walking distance of work.
“My thinking is that Tony (Hsieh, Zappos CEO) is doing all of this redevelopment downtown for his employees, and they want to be right, right, right there at Las Vegas Boulevard and Fremont Street,” Franklin said.
Indeed, recent talk of developing homes, condos and apartments downtown has focused on the areas closest to Zappos.
And the need for more residences downtown is a common theme these days. On Facebook, the developers of the Soho and Newport lofts are advertising "micro" apartments. "Pricing and official photos of our project will be released soon," one post reads.
The developers could not be reached for comment.
At a public gathering of businesspeople three months ago, Molasky Group of Cos. President Richard Worthington talked about the need for affordable living units downtown. He said his company is looking into building a few blocks west of Zappos.
The Downtown Project also is getting into the act. Zach Ware, who has overseen much of the City Hall renovation for Zappos, said a number of hotel rooms at the Gold Spike, bought earlier this year by the Downtown Project, are being renovated into semi-permanent living spaces.
“Some Zappos employees will move into (them) as an experiment,” Ware said. “For the employees, it offers an opportunity to test living downtown. For Downtown Project, it offers an opportunity to test small-format, residential living.”
The Gold Spike includes 112 hotel rooms. The Downtown Project also bought the adjacent Travel Inn Motel, which has 58 rooms.
Drawing employees downtown not just to work but to live is an important part of downtown redevelopment. The success of Hsieh's $350 million investment will be determined by how self-sufficient and propagating the area becomes.
Hsieh has said that more than 100 people per acre are needed to create a self-sustaining economic ecosystem downtown.
Perceptions about the neighborhood, however, need to change before huge numbers of people will decide to live there, Franklin said.
“There are still plenty of people who think downtown is scary and a ghetto,” he said.
But there also are a growing number of people who see opportunity in the area.
"Three years ago, I'd have people looking here who I would call 'downtown curious,'" Franklin said. "I'd give them tours, tell them what's coming. But here's what's happened: It's really rare that I have to do that now. People come in right away saying, 'I want to live close to the Arts District, Fremont East and the arts in general.'"