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Nat Levy
Real Estate Reporter

May 21, 2015

Real Estate Buzz: What can Seattle learn from Vegas project?

Real Estate Reporter

One of my favorite things to do when I go to Las Vegas is to go downtown to visit Fremont Street Experience: a multi-block shrine to Sin City's past, and a bit of an escape from the sensory overload that is the Strip.

Fremont Street actually stretches for blocks, with old casinos, outdoor bars, a large canopy lit by LEDs and a concert stage. Look up at the right moment and you'll see someone fly by on a zip line or catch a light show set to tracks by The Beatles.

But Fremont Street Experience eventually ends. Most tourists turn around and head back toward the Strip and multi-billion dollar casinos for which the city is known.

On my last trip, I decided to explore what lies beyond Fremont Street Experience. About two blocks away, I saw it: A 35-foot-tall praying mantis made of steel at the entrance to something called Downtown Container Park. As I went closer to inspect the metallic mantis, he raised his head and two streams of fire shot from his antennae. I jumped back in fear and exhilaration. Man, was it hot.

Photos courtesy of Emily Wilson [enlarge]
A fire-spraying, 35-foot praying mantis welcomes tourists to Downtown Container Park.

The open-air mall is filled with small retailers, restaurants, bars, a play area and a stage.

I went inside the open-air container park and stumbled upon something else I'd never seen before: dozens of shipping containers linked together and filled with restaurants, bars, toy shops and bakeries.

A 33-foot-tall treehouse — big enough to fit kids and adults — rises from the center of the park. On this night, a 1990's cover band called Empire Records played on stage to a small audience, many sipping craft cocktails while their kids played on a slide or with giant building blocks.

It's easy to imagine something like that container park in Seattle — maybe with a cover for the rain — in a place like Interbay or Georgetown that's changing and still looking for that signature piece.

The container park is part of the Downtown Project, a plan to redevelop downtown Las Vegas. Tony Hsieh, CEO of the online retailer Zappos, spearheaded the $350 million effort.

Zappos moved its headquarters and 1,500 employees from the nearby suburb of Henderson to downtown Las Vegas in 2012, and Hsieh saw an opportunity to pump up the struggling neighborhood.

Like Amazon.com in South Lake Union, the arrival of Zappos has spurred development. (Amazon of course bought Zappos in 2009).

The Downtown Project is centered around three “Cs”: collisions, co-learning and connectedness.

Creating a place where people want to walk is the core of the Downtown Project. Fremont Street Experience is a walkable area, with the main drag closed to cars and filled with thousands of people roaming around. The Downtown Project is aimed at extending that walkability. Several new bars and restaurants, renovated casinos, a market, and the container park now liven up the blocks beyond Fremont Street Experience.

Several Downtown Project properties have co-working spaces, which have become popular in Seattle, so people can interact and share ideas.

Zappos' headquarters is in the old City Hall, and during the planning phase Hsieh toured the campuses of some of the nation's biggest companies: Nike, Google and Apple. One place that got his attention was New York University's campus in Greenwich Village. Hsieh saw that a city can be a giant amenity and he wanted that for his headquarters. Zappos employees easily can walk to entertainment, and find great places to eat and work.

Maria Phelan, director of public relations for Downtown Project, said, “(Hsieh) could bring the type of businesses that you need to create a very fun live/work/play neighborhood instead of just having all the cool stuff on the campus.”

Sounds like what's happening in South Lake Union doesn't it?

Phelan wouldn't give the cost of the container park, but she said about $200 million in Downtown Project funding will be spent on new development and renovating existing properties. Downtown Project has about 60 acres around downtown.

The other $150 million will be invested in small businesses, technology, arts and education.

The Downtown Project has hit some bumps. Last fall, the company laid off 30 employees and several others left.

The container park was supposed to be a short term solution for a blighted corner. Downtown Project bought the site and knocked down an old hotel there. The first thought was to put up a few shipping containers, and open some bars and restaurants quickly and cheaply. But the idea became grander.

Downtown Project did most of the planning, and Breslin Builders of Las Vegas provided design-build services.

As people started thinking bigger, up popped the praying mantis. It was built by Kirk Jellum and his wife Kristen Ulmer, and was a fixture at Burning Man, a Nevada festival that Hsieh frequently attends. Hsieh bought the mantis and made it a centerpiece for the park.

Hsieh also hatched the idea for the big playground and family environment after visiting a Montana dude ranch. He liked the way kids there could roam and play while parents relaxed and socialized nearby.

“That struck a chord with Tony. It was just a really nice atmosphere,” Phelan said.

The container park initially was going to be all shipping containers. For more flexibility, Downtown Project started using Xtreme Cubes by Las Vegas-based Xtreme Manufacturing. Dave Duggan, Downtown Project's director of construction and property operations, said the modular cubes can be fabricated offsite in different sizes and pre-installed with windows, electricity, plumbing and other utilities.

Shipping containers and Xtreme Cubes sped up construction. The container park's soft opening was about 10 months after construction began.

Duggan said all the pieces had to fit together to work. Because metal shrinks and expands, no one knew if the cubes and containers would click.

“You are just hoping that everything is going to work,” Duggan said.

The park is made of 43 shipping containers and 41 Xtreme Cubes, and houses 38 tenants.

Most tenants are taking their first crack at business, so the spaces are small and the leases are short: six to nine months for some retailers and about a year-and-a-half for restaurants and bars. Some businesses have succeeded, while others have struggled.

“The idea is hopefully they will find that their idea works, and they can do some tweaking in the container park and they can move onto different brick and mortars or open second locations,” Phelan said.

Many of the retailers have local connections. The owner of one restaurant — Big Ern's BBQ — used to work for Hsieh at Zappos, said Doug McPhail, Downtown Project's director of retail operations. He often brought barbecue to work, and it was so good that Hsieh advised him to open his own place.

Duggan, who has been with Downtown Project since 2013, said the kind of work that Hsieh is doing is uncommon in Las Vegas. Duggan came to Las Vegas to build casinos, and worked on Bellagio and Mandarin Oriental. He said people move there from all over the world to build, operate and maintain casinos.

But Downtown Project is different, Duggan said, because Hsieh is looking out for all of downtown, not just his property.

“To rejuvenate a city that has been in such bad shape for such a long time, it has been pretty gratifying,” Duggan said.

Got some news for the Buzz? You can reach Nat at nat.levy@djc.com.

Got a tip? Contact DJC real estate editor Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.

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