Big Growth Pushes Las Vegas
Beyond 'Strip' and City Boundaries

(See Corrections & Amplifications item below.)

Casinos and hotels in Las Vegas have about $16 billion in development projects planned or under way, many of them along the legendary Strip. While all of the construction will add 23,000 hotel rooms in the region by 2009, along with a small city's worth of shopping, entertainment and condominiums, a subtler though profound change is taking place in the desert beyond the neon lights.

The draw of plentiful jobs in the casino industry, combined with housing costs that remain slightly more affordable than neighboring California, makes the Las Vegas region the country's fastest-growing major metropolitan area. Its population rose 83% from 1990 to 2000, according to the U.S. Census Bureau, and the most recent estimate stands at 1.7 million, according to Economy.com.

Construction is slated to begin in several weeks on Molasky Corporate Center, a high-end office building near the Union Park project in downtown Las Vegas.

"The city is changing from a gaming community into a metropolis," said Richard Lee, vice president of First American Title Co., which provides real estate consulting to the local hotel industry. Though Mr. Lee said he believes casinos will always be a core part of the economy, "the new Las Vegas is not just about casinos."

The housing market has experienced some of the region's most astounding growth. The median home price almost doubled in three years to $300,100 in the second quarter from $159,800 in 2002, according to the National Association of Realtors. That's just below the median of $312,600 in the high-cost western U.S.

Some 120 mid- to high-rise condominium projects are planned in the region, while conversions of rental apartments into condos helped lower the apartment vacancy rate to 4.1% in the third quarter, the lowest in 54 major markets surveyed by Property & Portfolio Research Inc., a Boston-based real estate research firm.

With land prices rising at annual double-digit rates and 80% of the region's land under federal government ownership, home builders are focusing on higher-density projects and are pushing beyond the mountains that ring the valley into former farm towns such as Mesquite and Pahrump, says Monica Caruso, a spokeswoman for the Southern Nevada Home Builders Association.

Las Vegas Mayor Oscar Goodman, a former criminal-defense lawyer, also is working to revitalize the city's downtown, which he sees as a place where locals can live and work. He says he has gotten tougher on crime and encouraged the revitalization of the older buildings and casinos along Fremont Street, the city's main drag. "People euphemistically called it mature, but it was seedy," Mr. Goodman said.

He also says he hopes to expand downtown's boundaries with a project called Union Park that will include a performing-arts center, an Alzheimer's research clinic and a new city hall on 61 acres of former rail yard just west of the existing downtown. Mr. Goodman's ambitious vision has had some setbacks lately. Long-running negotiations with Related Cos., one of the country's biggest developers, broke off recently, and the city has decided to act as its own developer.

A booming job market, especially in tourism, construction and services, increased employment by 7.7% in the 12 months ended in June, the fastest growth rate of any major city, according to PPR. Office buildings have also benefited from the job growth, with vacancies declining almost three full percentage points to a below-average 13.6% in the third quarter from the year earlier. Developers are responding. Work is set to begin this year on a 265,000-square-foot downtown office tower near the proposed Union Park project, and Qualcomm Inc. plans to begin construction by the end of this year on a facility on 32 acres in North Las Vegas.

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Corrections & Amplifications:
An earlier version of this article incorrectly said that construction on Qualcomm's new facility in North Las Vegas would begin in 2007. Construction is slated to begin by the end of this year.