The EconomistFebruary 10th 2018 Business 612 dustrial conglomerate, and Anbang, an in-
surance firm (whose boss has not
reappeared since his detention in June).
Last year an allegation surfaced that one of
its shareholders was a relative of Wang
Qishan, who led an anti-corruption cam-
paign until last year (HNAdenies this).
As recently as December, eight big state-
owned bankspublicly pledged their sup-
port forHNA. A longtime observer of Chi-
na says that the lenders must trust that the
company still has some worthwhile ties to
the Communist Party to do so. Mr Chen
was invited to attend a promotional event
for Hainan province last week, alongside
China’s foreign minister.
Some muse on the possibility of a more
profound restructuring—a government-
sponsored decision to hand its aviation
empire to one of China’s national carriers,
perhaps. The most likely outcome for now
is thatHNA is forced to sell a string of easy-
to-offload assets to domestic buyers, in ar-
eas such as transport and logistics, as Wan-
da did last year. Mr Chen’sambition, to
propel HNAinto the ten biggestfirms in the
ranking of Fortune 500 companies by 2025,
seems a faint prospect. 7P
AST the neon lights of Reno and the
cookie-cutter homes of neighbouring
Sparks, the I-80 highway winds through a
thinly populated expanse of arid hills and
lunar valleys in Storey County. On one side
of the road flows the Truckee River; on the
other bands of wild horses forage for
parched grass. Signs of civilisation are re-
stricted to electricity pylons and the odd
rundown farmhouse. The Wild Horse Sa-
loon, a dark and smoky room connected to
a legal brothel, is the only sit-down restau-
rant for miles. It is not an area that immedi-
ately seems conducive to hosting a busi-
ness park. Yet Storey County in Nevada is
home to the world’s largest by some mea-
sures: the Reno Tahoe Industrial Centre
(TRI). The park spans 104,000 acres in to-
tal—three times the size ofSan Francisco.
Near its eastern border hulks Tesla’s
“gigafactory”, a gargantuan white struc-
ture where the company hopes to produce
batteries for 500,000 electric cars a year. It
already has nearly 5m square feet of opera-
tional space; when complete, the firm’s
founder, Elon Musk, expectsit to be the
world’s largest building. In February 2017
Switch, a provider of data centres, opened
the biggestin existence on its “Citadel
Campus” in TRI. A few months later, Goo-
gle snapped up 1,210 acres of land—enough
to fit nearly 100 American football pitches.
One executive whose company owns land
in the park muses that no other bit of in-
dustrial America has a higher level of in-
vestment per square foot.
Demand for industrial property is ris-
ing nationally thanks to the strength of the
economy and the boom in e-commerce.
Long the ugly duckling of commercial
property, warehouses and distribution
centres are now emerging as “beautiful
swans”, according to a recent report byJones Lang LaSalle (JLL), a commercial real-
estate firm. The proportion of industrial
property in America that is vacant has
plunged from 10.2% at the start of 2010 to an
all-time low of 5% at the end of 2017, notes
CraigMeyerofJLL. Almost all new space is
being built in parks that are pre-planned
and pre-zoned, he says. Companies can get
up and running quickly—standalone sites
are rare. One ofTRI’s anchor tenants calls
TRIan “industrial wonderland” for the
speed at which firms can move.
Yet the park might have served a rather
different purpose. Along with a partner,
Lance Gilman, an affable businessman
whose uniform consists ofcowboyhats,
crocodile-skin boots and turquoise jewel-
lery, purchased the land that now forms
the TRIfor $20m from Gulf Oil in 1998. The
oil company had planned to stuff it with
big game and use it as a luxury hunting re-serve before the price of oil plummeted
and such indulgences were judged inap-
propriate. Mr Gilman’s idea was to pre-ap-
prove the land for industrial uses and sell
tracts of it to firms wishing to build swiftly.
He recalls looking out at the park after
the purchase, and thinking that it would
take three generations to sell it all. He sold
plots to small firms and some big ones, like
Walmart, but during the Great Recession of
2007-09 sales dropped precipitously. Dur-
ing the lean yearsTRIrelied in part on cash
from another of Mr Gilman’s businesses:
the brothel, called Mustang Ranch, that
houses the Wild Horse Saloon. “Without
Mustang Ranch, there might not be TRI,”
Mr Gilman says from a red, faux crocodile-
skin chair in an office at the bordello.
Things turned around in 2013. Repre-
sentatives from Tesla flew in for a meeting.
They had been scouring the country for a
site fortheir batteryplant but had not
found anywhere that would allow them to
build fast enough. How long would it take
to get a grading permit (required when to-
pography is significantly altered), they
asked? In jest, Storey County’s community
development director pushed a permit
across the table and told the visitors to fill it
out. The reality was not much slower: Tesla
got its permit within a few days.
That initial deal raised TRI’s profile.
Switch, Google and eBay soon followed.
Not long afterwards Mr Gilman began re-
ceiving cheques from companies wanting
to buy land in the park without even tour-
ing it. They are often technology firms; a
quarter of leasing demand for American
industrial space comes from e-commerce
companies wanting to expand operations.
In January a firm deploying blockchain
technology purchased 67,125 acres ofTRI
land. Out of the 104,000 acres, only a few
hundred acres are still available. Gazing
out at a cluster ofbusy warehouses from a
hilltop in the park, Mr Gilman chuckles: “I
guess I sold myself out of a job.” 7Industrial propertyEverything’s bigger in Nevada
RENO
How a brothel owner created the world’s biggest industrial parkLance Gilman, tech-titan whisperer