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TMCNet: Las Vegas Review-Journal Nevadan at Work column

[October 01, 2008]

Las Vegas Review-Journal Nevadan at Work column

(Las Vegas Review-Journal Via Acquire Media NewsEdge) Sep. 29--Having spearheaded a number of million-dollar projects in Las Vegas, Michael Nigro has thorough knowledge of the thousands of things that can thwart construction.

A key challenge to real estate development now is financing, the president of Nigro Construction said.

"You can have a great project that makes financial sense and still have trouble securing a loan to construct the project," Nigro said. "There are fewer banks lending, less available funds and an environment where the ones that are lending do not want to have another bad loan in the future.

"This makes it harder, but not impossible (to build). We just make sure we have a strong equity position, a good track record and a business plan that makes sense today, not six months ago."

Nigro and his brother, Todd, gained experience working for their father's company, Nigro Associates. Along with childhood friend, Charles Hansen, they founded Nigro Development in 2000.

The company has developed two Fairfield Inn and Suites, a Hampton Inn and the 600-room Sienna Suites on Boulder Highway. Most recently, Nigro completed Remedy's Tavern on St. Rose Parkway. It is building a second tavern in Henderson.

Nigro oversees all aspects of commercial real estate development and construction, including land acquisition, project-cost estimate, project design, construction management and field supervision.

The single father of 6-year-old twins Abby and Jared and 9-year-old Brooke lives in Summerlin and enjoys spending time with his children and watching and playing sports.

QUESTION: We hear about a shortage of skilled labor in construction. Has that changed with the layoffs in the construction industry?

ANSWER: As a construction company, we do not see a shortage of skilled labor in this market. In my opinion, the shortage is gone and we now have a surplus. The industry has seen a major slowdown and the layoffs are a result of the decrease in the amount of work available.

Question: How have the layoffs affected your business?

Answer: I believe the layoffs are a direct result of lack of work and consumer spending. The prices from our subcontractors are coming down. People are looking for work. This helps us lower our costs to perform the work. The unfortunate part is I have seen many of our friends struggle or go out of business.

Question: Have you been forced to lay people off?

Answer: As a developer, we have not had to lay off anyone because we have some exciting projects that we are working on. In our construction company, we minimally reduced our work force, but they were mainly project-related positions.

Question: What will it take to turn this market around?

Answer: That's a tough question. Without a doubt, solving the financial crisis and the ability of companies like ours and consumers to borrow money. With jobs available, people will always find a place to live. It's when the economy is shrinking and the jobs are not available that it's tough on everyone.

Question: Anything else?

Answer: Reinvestment in our economy and lowering taxes.

Question: Why are so many projects in trouble these days? How are your projects doing and how have you been able to avoid these pitfalls?

Answer: I believe many projects are in trouble because they either over-leveraged themselves or were too aggressive. By too aggressive, I mean they purchased the land at a high price and tried to do a high-rise condo, large mixed-use or office high-rise development -- a project where a heavy initial investment is required to purchase the land and build a large building.

If this project sells or leases only 50 percent to 60 percent or the absorption takes longer than expected, the entire project goes under because of the large debt service to pay. There is almost no chance to recover if the market goes soft like it is today.

We've been extremely lucky in that most of our projects are majority leased and we didn't over-leverage. We took a more conservative approach, which helps in times like this. It's something we learned from our father.

Question: What do you have going now?

Answer: Some of our current projects are a 50-acre office park at the Las Vegas Beltway and Russell (Road) called Desert Canyon Business Park, a 60-acre Wal-Mart-anchored retail center in Pahrump that we plan on breaking ground on in the first quarter of 2009 and two Marriott Fairfield Residence Inn and Suites totaling 211 hotel rooms.

Question: How can you grow revenue?

Answer: As a construction company, we are trying to expand our presence in design-build and general contracting work for new and existing clients.

Question: How much of your success would you attribute to your dad, Ed?

Answer: My father was an inspiration to my brother and me. He taught us the meaning of integrity, to always treat your people and business partners with respect and to do what you say you're going to do.

I have to mention my mother (Judy). She's the best cook and always gave us a happy home.

Question: What's the business relationship like with your brother?

Answer: I've been blessed with two great partners. My brother and my longtime friend, Charlie Hansen. Todd is the president of Nigro Development and oversees the financial, hotel, development and leasing. I run the design, development and construction as well as our Remedy's Tavern brand with Charlie, who is also the vice president of Nigro Construction.

It works because we each do our part and support each other. We're also not afraid to close the doors to settle our differences. We try to have fun in what we do.

Question: What was your biggest revenue year and how much has it fallen off?

Answer: In construction, our biggest year was 2006. Loved that year. We've had a small decline. However, the economy today has given us the opportunity to look at our businesses differently and develop targeted plans to ensure growth. For example, we are now pursuing construction work beyond our own developments. We are expanding our Remedy's brand. We are venturing more into the hotel market and looking for new opportunities.

MICHAEL NIGRO

Occupation: President, Nigro Construction

Quotable: "We've been extremely lucky in that most of our projects are majority leased and we didn't over-leverage."

VITAL STATISTICS

Name: Michael Nigro

Position: President, Nigro Construction

Family: Daughters, Abby and Brooke; son, Jared (Abby's twin)

Education: Bishop Gorman High School, 1985; University of Southern California, Bachelor of Science, business administration

Work history: Formed a marketing company with a college friend in Los Angeles; moved back to Las Vegas in 1990 to work for his father, Ed Nigro, as superintendent of construction for Nigro Associates; took over the company with brother, Todd Nigro, in 2000, splitting it into Nigro Construction and Nigro Development

Hobbies: Sports (particularly football), mountain biking, golf, raising his children

Favorite movie: "Shawshank Redemption" (1994)

Hometown: Las Vegas

In Las Vegas since: 1977

Nigro Construction's office is at 9115 W. Russell Road and can be reached at 247-1920.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

To see more of the Las Vegas Review-Journal, or to subscribe to the newspaper, go to http://www.lvrj.com.

Copyright (c) 2008, Las Vegas Review-Journal
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

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