Hsieh's Death Without Will Leaves His Estate, Downtown In Limbo
When Zappos founder Tony Hsieh died suddenly last year, he left a nearly billion-dollar estate — but no will.
He also left many questions in downtown Las Vegas. That’s where Hsieh spent most of a decade and $350 million buying real estate.
His family has already indicated they want to sell more than 90 of his downtown properties.
That could include old Las Vegas city hall, which Hsieh purchased last year for $65 million. Zappos, headquartered there since 2013, leases the bulk of the building.
“In recent memory, there is nothing of this magnitude, particularly, that’s going to be public through the entire process," said Kendal Weisenmiller is an attorney and estate law expert, "It is a significant estate. You will see a lot of parties appearing. There have already been news coverage of creditors, lawsuits, other things. There is going to be litigation to follow. It will be interesting to see what sells, what’s preserved and how the estate ultimately gets distributed.”
It usually takes 18 months for an estate to go through the process, but Weisenmiller has seen estates much smaller than Hsieh's stay open for years.
Weisenmiller told KNPR's State of Nevada that when someone dies without a will the state applies a default set of rules on their estate.
Under those rules, Hsieh's parents have an equal share of his estate. Once creditors, taxes and other debts are paid, the rest of the estate will be divided equally between them.
Weisenmiller said this is the very beginning of the probate process. A temporary special administrator will be appointed to the estate. That person will essentially step into Hsieh's shoes to get his affairs in order.
The estate will then go into regular probate court.
Weisenmiller said Hsieh's family's plan to sell his downtown properties is a primary statutory requirement under probate law as a precursor to selling the property in the future.
“I imagine that the estate published and filed those 90 something notices of sale to see what offers and interests are out there,” she said.
She explained that the properties can be sold even while the estate is still making its way through the probate process, but those sales might be subject to court approval, depending on where the process stands.
That means that, with special authority from a court, those properties could be sold right away.
Besides the Zappos headquarter, Hsieh had extensive holdings downtown.
“It’s a pretty big assemblage with the majority of that being East Fremont area,” said Dan Palmeri, senior director of Cushman & Wakefield in the Las Vegas market.
Palmeri said the most notable holding is the Gold Spike, but Hsieh also owned office buildings, apartment buildings, and the Container Park outdoor mall.
Perhaps the most important properties owned by the Hsieh estate are several city blocks further east on Fremont Street. Palmeri said it is difficult and expensive to buy entire city blocks, especially in downtown Las Vegas where parcels are broken up into 16th-of-an-acre lots.
“To have this amount of real estate coming to the market, or potentially coming to the market, is significant,” Palmeri said.
While the news of the potential sale is fairly fresh, Palmeri said there are developers who are extremely interested in acquiring property in the downtown area.
“I think there’s already people starting to take a look and identify certain parcels or specific properties that they may want to take a run at,” he said.
If the property does go up for sale and sells quickly, Palmeri believes it could speed up development in the area.
“I think what we’ve seen in the Arts District, along Casino Center and Main Street, over the last two or three years of much more organic, rapid growth is indicative of what you could see the East Fremont corridor,” he said.
With entire city blocks potentially on the market, Palmeri would like to see more residential buildings in the downtown core.
“The biggest issue with the core of downtown and driving business to the retailers is the residences that live in the area,” he said.
Palmeri said that is why there is no large grocery store in the area. Big retailers count rooftops before they decide to develop in an area and not enough people live downtown right now.
"You need to have the people who live there on a daily basis able to support the businesses that are going to open you can't depend on the tourist to flow that far east," he said.
Hsieh also owns the headquarters for his former company Zappos. Palmeri said he believes the company still has several years left on its lease of the space. If an investor buys the property, they should have an Amazon-backed entity leasing the space for several years.
Palmeri has not heard about any plans for the company to leave the space. He noted that there are not a lot of office spaces in Las Vegas that could accommodate a company that large.
While it will take several more years to sort out Hsieh's estate, his legacy is already well entrenched in downtown Las Vegas.
“I think his legacy is established in regards to really reinvigorating the energy of people wanting to be downtown," Palmeri said, "Prior to his entrance into the downtown market, very few locals ventured down there, and typically, it was the few who wanted to go to the Downtown Cocktail Room or the Griffin, but it was very infrequent.”
Palmeri said the opening of restaurants and bars downtown brought even people from the suburbs to the area because it really is the only place to bar hop in Southern Nevada.
“I think he truly was the spark that led the resurgence of downtown,” Palmeri.
Now, that baton has been passed and the energy needs to be carried forward by new development, Palmeri said.
Kendal Weisenmiller, attorney, estate law expert; Dan Palmeri, senior director, Cushman & Wakefield/Las Vegas market