The long-anticipated report drafted from a community roundtable in 2006 paints a pessimistic picture of Las Vegas' ability to recruit companies to Southern Nevada and diversify its economy beyond gaming.

In addition to the perception of Las Vegas as Sin City, soaring land costs, higher rents than other Western markets, a lack of affordable housing, a poorly educated workforce, weak school system, and a lack of cultural amenities make corporate recruitment a challenging task. The results were included in a report on office and industrial development framed by a panel of developers, planners, business owners and executives, government staffers and elected officials.

"Another difficulty stems from the idea of perception," the report said. "The kind of marketing that brings all tourists to Las Vegas - basically, sin - is exactly the kind of market that keeps corporate headquarters away."

Whatever the industry, companies come to Las Vegas because they no longer can afford to do business without a Las Vegas location, the report said. Big companies come to Las Vegas "reluctantly," one of the roundtable participants said.

"Our cost of living is currently at 110% of the national average," one of the unnamed roundtable participants said. "Housing is more expensive than 40 other markets, and we don't offer anything in the way of cultural amenities, which makes us far less attractive to businesses. Our crime statistics have gone off the charts and our out-migration continues to increase. These are the kind of things that big corporations look at, and we don't look very attractive."

Wages aren't keeping pace with the rising cost of living and while executive salaries are competitive, those executives aren't going to alter their lifestyles to move here, the report said.

And when firms want to enter the market, housing prices and workforce education are deterrents to attracting companies, the report said. While some people expect that large companies will move regional headquarters to Las Vegas, that could be difficult for the market to achieve due to the lack of a highly educated workforce, the report said.

"Our lack of decent schools is an incredible barrier," a local businessman said. "The overall quality of our schools impedes all recruitment, but especially in the white-collar sector. Big companies can resolve some housing cost issues by offering allowances or loans, but they can't fix our schools."

"We have service employees coaching their kids to be valet parkers who can make $100,000 a year," one local executive added. "Employees with companies like IBM look at our schools, at UNLV, and they see problems."

The factors that make Las Vegas attractive such as no state income tax are significant but businesses weigh other issues such as quality of life, the report said. That means cultural amenities such as theaters and performing arts and a good quality of life.

"We have no income tax, which is attractive, but we also have no incentives," one participant said. "This is not an image issue, it is a reality issue. We can't keep talented people in the valley because there are no arts, no alternatives and no transportation."

One example is how local residents are fighting a plan to develop a mixed-use rail and bike route that would connect Henderson and North Las Vegas. That kind of project would be considered a huge amenity in any other community, one participant said.

The white paper said it's more likely that the growth in demand for office and industrial space will be fueled by internal expansion of the service industry, relocation of the hospitality sector's administrative functions and consolidation and expansion of data and even call centers, a sector that creates low-wage jobs.

"We can't afford to sit on land in the hopes that we can lure major outside firms," one participant said. "We'd love to have big corporations, and they'd certainly help to diversify our economy, but quality of life issues thwart this. It's difficult to attract college-educated professionals, especially in the 20-30 age bracket because they simply do not have a peer group in this area."

Large out-of-state developers aren't buying land in Las Vegas because the prices are too high and rental incomes aren't yet high enough to justify investment, the report said. There is too much perceived risk in local office development to lure high-profile national developers, it said.

The amount of land available for office development is growing scarce. Commercially zoned land in the Southwest costs $30 to $38 per square foot and $20 to $22 per square foot in Henderson, the report said.

The report said there is about 1,000 acres available for industrial development and some have suggested the region needs twice the amount of industrial space it currently has. With such a scarcity of land lost to residential projects and high cost to develop, vacancy rates have been running between 3 percent and 4 percent and rental rates have risen 36 percent over the past three years, the report said.

"Large corporate customers are not looking for space to lease," one roundtable member said. "Big customers are looking for land. A few cents difference in rent prices does not reflect what is really going on in the Las Vegas Valley. Big corporations look at our land prices and they just turn away “ our land prices make any deal out of the question, no matter what incentives we offer."

With a lack of land for commercial use, the roundtable broached the subject of the need for Congress to expand the disposal boundary of federal land that can be auctioned. In addition, federal land could be zoned for commercial use to thwart developers and speculators paying top-dollar for residential development.

"We're an island in a sea of federal ownership and most of our problems are political," one developer said. "We should push to expand the disposal area."

The needs of commercial development haven't been taken up by the gaming community, roundtable members said. As the economic engine, if the gaming industry doesn't see how they are affected financially by problems with industrial development, they won't pay attention.

"The gaming industry has never been interested in anything more than the gaming industry," one roundtable member said. "When we talk about diversifying our economy, they don't participate because they see diversification as being to their detriment."

Office market concerns: Subcontractors are as much as 20 percent overbooked, largely due to developments like Project CityCenter and the lack of quality labor. Material costs have increased 45 percent since 2004.

"The bottom line is that current trends can't sustain an expanding market," the report said. "The increased costs coupled with modest rent increases have led to decreases in the return on investment for three consecutive years."

Roundtable members attribute the problems with labor to the casino industry, which outbids all competitors when it needs contractors.

"That's a serious problem when developers are trying to plan projects with a 12-18 month horizon," the report said. "Delays become a major problem when overall construction costs are rising 1.2-2 percent per month. Time is money; increases in cost end up being built into rental rates."

Mixed-use development, while a hot concept, it difficult to do and overblown in its likely impact, the report said.

During the last two years, vacancy rates have declined nearly 4 percent and rents have increased 10 percent to 15 percent.

Rents for Class A office space are higher in Las Vegas than other competitive markets. They are 51 percent higher than Denver, 24 percent higher than Phoenix, 44 percent higher than Albuquerque and 18 percent higher than in California's Inland Empire.

The consensus among the experts is most of future growth might come from small businesses that are growing in size such as small law firms partnering with national firms or companies that are expanding pilot or test offices.

Industrial market concerns: Industrial rents are 20 percent higher in Las Vegas than Denver and Phoenix and 11 percent higher in Las Vegas than the Inland Empire, the report said.

"In terms of warehouse and distribution product, it seems inevitable that the current state of land pricing and availability will severely curtail further Las Vegas Valley construction in the near future," the report said.

Some observers suggest prices of products could increase if there isn't more distribution space and more goods have to be shipped in from out of state. Other observers said the local economy may not be impacted at all. Most of the industrial use supports the casino corridor and the industry has been willing to pay the prevailing rate and pass that increase to tourists who don't live here, the report said.

"Gaming is our 900-pound gorilla, as one participant said ... and anybody who does not supply them or can't compete with them will probably leave for different southwestern markets," the report said.