Updated March 16, 2021 - 1:09 pm
With his extensive collection of vacant lots, boarded-up motels, retail buildings and other sites, tech mogul Tony Hsieh died as one of downtown Las Vegas’ biggest property owners.
And with his family looking to unload his holdings, new investors are swarming to potentially get a piece of the action.
Casino owner Derek Stevens said that lately he has been hearing almost every night from people interested in Hsieh’s properties. “It’s kind of exciting to hear all the different ideas,” he said.
Developer Sam Cherry said he has heard from multiple people who think they can buy right away, and Spiegelworld founder Ross Mollison, whose productions include “Absinthe,” indicated he might be interested in one of Hsieh’s shuttered motels in the Fremont Street area as lodging for visiting acts, and he would like to build a performance venue downtown.
“You could imagine this being a really unique global attraction,” Mollison said of the motel-lined corridor.
Downtown still grapples with blight and other issues but made big strides under Hsieh. Local officials and businesspeople say a sell-off could open the door for new investors and ideas, let developers build on what the former Zappos boss started and help downtown improve even more.
“I’m excited to see what the next step is for us all,” Carson Kitchen owner Cory Harwell said.
The neighborhood has come a long way and still has a long way to go, but I see so much greatness in the future of downtown Vegas— Cory Harwell, owner of Carson Kitchen
Hsieh’s father, Richard Hsieh, and brother Andrew Hsieh, co-special administrators of his estate, filed more than 100 notices in District Court in a two-day span last month, disclosing plans to sell dozens of his properties in Las Vegas. Sales are subject to court confirmation at a hearing March 19 or within a year of that date, the filings said.
The notices did not provide minimum bids but said that the properties will be sold “to the highest and best bidder” and that each deal has the same terms: “Cash.”
It’s too early to say how the sales effort could affect downtown, including what it means for the people who live or work at Hsieh’s properties. His family can always keep the plots, but if they sell, the deals could generate a fortune in proceeds and put huge portions of downtown in new hands.
“What Tony did was amazing … but at some point, you have to have more voices at the table,” said Uri Vaknin, a partner with real estate investment firm KRE Capital.
What Tony did was amazing … but at some point, you have to have more voices at the table.— Uri Vaknin, a partner with real estate investment firm KRE Capital
‘It was all Tony’
Hsieh, who died in November at age 46 from injuries suffered in a Connecticut house fire and did not leave a will, assembled the portfolio through a side venture, originally called Downtown Project, that he launched in 2012 to pump $350 million into the Fremont Street area.
He wasn’t known for selling. As outlined in his probate case, his real estate holdings included office buildings, apartment complexes, dirt lots and shuttered motels, and featured high-profile sites such as Downtown Container Park and Zappos’ headquarters, which he acquired for $65 million the month before he died.
Megan Fazio, spokeswoman for the side venture, now DTP Companies, said the business “isn’t going anywhere and has the full commitment of the estate.” She declined further comment.
Attorneys for the Hsieh family did not respond to a request for comment.
Their lawyer Dara Goldsmith said last month that the notices were filed “to allow for a possible future sale,” that the estate may retain some or all of the properties and that her clients will “consider reviewing serious, written offers.”
Local observers don’t expect one buyer to pick up everything, and while they praised Hsieh’s accomplishments, they don’t think downtown needs another dominant landlord.
Harwell of Carson Kitchen said an influx of competing developers would bring energy and creativity, and he noted the downside of having one main owner is that the properties “become a little of the same thing.”
If new investors and money came downtown, he said, it would be “a wonderfully healthy thing for the area.”
Public policy consultant Terry Murphy said she views the potential sale as an opening for people who have been waiting to invest, and she expects Hsieh’s momentum to carry on with any new buyers.
I don’t know if we’ll find another Tony.— Las Vegas City Councilwoman Olivia Diaz
“I don’t see it at all as a negative,” she said. “I see it as an infusion of new capital.”
Cherry, who built the new Share Downtown apartment complex in Las Vegas’ Arts District, noted the sales effort is a process that takes time. But it could give “new people a chance” to buy property downtown and “improve upon the foundation” that Hsieh built, he said.
City officials are “closely monitoring the situation” and, once sales are triggered, will reach out to buyers to encourage responsible development, according to Bill Arent, Las Vegas’ deputy director of economic and urban development.
As Arent sees it, Hsieh proved the market downtown with projects such as upscale apartment complex Fremont9 and the Container Park open-air retail hub. Plus, he added, Hsieh largely did it with little to no city incentives.
“It was all Tony and his private investment that made all those projects work,” Arent said.
Councilwoman Olivia Diaz, whose ward includes the area where Hsieh invested heavily, also believes the sell-off could spark a catalyst downtown.
“I think that this is a newfound opportunity to do sort of a ‘Tony Hsieh 2.0’ because I think his fingerprints will always be on that part of town,” she said.
Diaz said her optimism stems not from thinking there could be another investor like Hsieh but from her belief that the momentum he created can keep going.
“I don’t know if we’ll find another Tony,” she said.
Hsieh, the son of Taiwanese immigrants, was born in Illinois, grew up in the San Francisco Bay Area and made a fortune in the tech industry.
He sold online marketing firm LinkExchange to Microsoft Corp. for $265 million in stock in 1998 and was an early investor in Zappos, founded in 1999 as ShoeSite.com. The online shoe seller moved from San Francisco to Henderson in 2004 to better build its customer service operations, and Hsieh sold the company to e-commerce giant Amazon in a $1 billion-plus deal in 2009.
Hsieh also was a one-man redevelopment engine for a stretch of Fremont Street — east of its canopy-covered casino district — that had grappled with drugs and prostitution and had limited offerings.
He moved Zappos to the former Las Vegas City Hall in 2013 and launched Downtown Project the year before. He allocated $200 million of the venture’s funding for real estate and development, though he also bankrolled tech startups, restaurants, bars and other concepts.
At one point, he rented about 90 units in downtown’s Ogden condo tower and put residents and visitors there, said KRE’s Vaknin, whose firm previously owned the majority of units in the high-rise with other investors.
“It was exciting,” he said.
Longtime downtown resident Brian “Paco” Alvarez, a fixture in Las Vegas’ arts and culture scene, said Hsieh provided a “desperately needed” boost after the Great Recession toppled Southern Nevada’s economy.
Hsieh’s group probably overpaid for real estate and drove up property values, said Alvarez, who also contends that Hsieh didn’t understand the neighborhood’s demographics, backing restaurants that in some cases are too expensive for existing residents.
He figures a real estate sell-off could be chaotic at first but in the long run will be positive for downtown.
“If I had the money, I would buy some of these properties,” Alvarez said.
Harwell said that Hsieh affected “so many lives for so many years,” including Harwell’s. Hsieh was his landlord and an investor in Carson Kitchen, and Harwell recalled that when he toured the restaurant’s future home, feces had to be cleaned off the door.
“The neighborhood has come a long way and still has a long way to go, but I see so much greatness in the future of downtown Vegas,” Harwell said.
‘There was just nothing’
After the coronavirus pandemic abruptly ended his once-regular stream of interactions, events and good times in Las Vegas, Hsieh, who was unmarried, emerged in the wealthy Utah ski town of Park City.
He bought several houses there last year, was surrounded by new people and hosted plenty of parties. He also seemed to display erratic behavior, and reports of his drug use sparked concern, people familiar with Hsieh’s life in Park City have told the Review-Journal.
He was replaced as CEO of Zappos last summer without a formal announcement from the company he had led for two decades.
As part of his probate case, Hsieh’s family filed nearly 20 notices March 5 to sell his real estate holdings in Park City. They include multiple homes on Aspen Springs Drive, including a mansion that was known as a frequent party spot last year and protected by security guards.
The future of Hsieh’s fortune is shaping up to be decided through a potentially lengthy, complex court battle. Since his death, Hsieh’s former longtime friend and associate Jennifer “Mimi” Pham has filed lawsuits alleging contracts she had with Hsieh weren’t being honored and more than $93 million in creditor’s claims against his estate.
The biggest claim by far, $75 million, represents “the anticipated profit” from Hsieh’s venture in a documentary-movie streaming service, Documentary+, which launched in late January.
For now, the possible real estate sell-off in Las Vegas has not only sparked interest among potential buyers but let locals imagine a new look downtown.
The view from downtown
Here are some reactions to the news that the late Tony Hsieh’s family is looking to sell his Las Vegas real estate holdings.
“When you unload that many properties at once, there are a lot of other people who have been waiting on the sidelines.”
– Globe Salon co-owner James Reza
“Tony’s passing will open the door for new investors in downtown who will benefit from Tony’s hard work and investment.”
– El Cortez
“We are hopeful that the momentum created by Tony Hsieh continues through this opportunity for potential new investment and business creation in the heart of our city.”
– Downtown Vegas Alliance Executive Director Carolyn Wheeler
“The biggest threat to future development is what has happened to small businesses in the past year. If that gets fixed, I think the right investors and developers will continue with Tony’s vision for a vibrant city center.”
– Downtown Cocktail Room owner Michael Cornthwaite
“I look forward to new ideas, new people. … I think it can only be a bonus for the neighborhood.”
– Evel Pie managing partner Branden Powers
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Cathy Brooks, founder of the Hydrant Club, a dog-training facility and social club at the corner of Fremont and Ninth streets, wants to see more residential development downtown and hopes it doesn’t become laced with chain stores.
DTP is her landlord and an investor in the business, said Brooks, who moved to Las Vegas in 2013 and noted how far downtown has come in the past several years.
When she visited downtown in 2012 at Hsieh’s suggestion, she went for an early morning walk. There were no people or cars around but plenty of trash in the streets — like a cross between a post-apocalyptic movie set and a demilitarized zone, she recalled.
“There was just nothing,” she said.
Contact Eli Segall at firstname.lastname@example.org or 702-383-0342. Follow @eli_segall on Twitter. Contact Shea Johnson at email@example.com or 702-383-0272. Follow @Shea_LVRJ on Twitter. Review-Journal staff writer Subrina Hudson contributed to this report.