Las Vegas Review-Journal (Sunday)
Billions in development planned for Strip and beyond
28.5 million visitors in August 2017. At the same time in 2016, Las Vegas had had over 28.8 million visitors, according to the LVCVA.
Analysts who track the finances of Las Vegas casino companies are expecting a short-term dip in visitation in response to the Oct. 1 mass shooting at the Route 91 Harvest festival, where 58 people were killed and hundreds injured.
Parks said he didn’t think the shooting would have an “adverse effect on new building or development in the Las Vegas resort corridor.”
Also potentially in play is the Fontainebleau.
The building sold to investment firms Witkoff and New Valley in August for $600 million, but they have yet to announce plans for the site, which also came to a halt in the recession.
Billionaire Carl Icahn purchased the property out of bankruptcy during the recession for $150 million.
The steel structure is still in good shape, as Icahn paid for the upkeep over the last several years, Parks said.
The property on the site of the Alon project, which Australia-based Crown Resorts pulled out of last year, is another big-ticket item still up for grabs on the Strip. Parks said it’s on the market for $400 million.
Other Strip potential
There could be new construction activity around the Strip, as Caesars emerged from Chapter 11 bankruptcy in October.
The company is looking at several acres it owns in the Strip area: 7 acres in front of Caesars Palace and 40 acres the company holds east of Bally’s and Paris Las Vegas.
Caesars has already started nearly $100 million in projects across the Flamingo, Harrah’s and The Cromwell.
Raiders stadium
The planned-65,000-seat, $1.9 billion Raiders’ stadium at Russell Road and Polaris Avenue, which sits just west of Interstate 15, is expected to be ready in time for the 2020 season of the NFL.
The stadium project is expected to break ground in November, though it’s not been formally announced.
Just the knowledge of where the stadium is going to be has led to a bump in land sales in the surrounding area.
A property that was once home to Southwest Gas Corp.’s corporate office and servicing facility drew $18.5 million, or $1.25 million per acre, said Ray Germain, first vice president investments at Marcus & Millichap’s Las Vegas office, who announced the deal in early October. That’s more than 30 percent higher than was being asked for about two-and-a-half years ago.
At that time, he was seeking closer to the range of $700,000 to $900,000 per acre. That changed after the official announcement of the stadium, he said.
“I think that’s a great sign of things to come, and investors are more confident in infill Las Vegas,” said Germain, who represented the seller of a 14.8-acre site at 4300 W. Tropicana Ave., adjacent to The Orleans and just over a mile from the Raiders’ stadium site.
The West Tropicana property, which was being used for an industrial space by Southwest Gas, is likely not going to be used for that in the future. The property does sit in a zoning region that allows for high-density, mixed-use developments, with unlimited height restrictions, according to a release from Marcus & Millichap.
“From the sounds of it, they’d like to do a mixed use, possibly hospitality and retail concept of some sort,” Germain said.
That allows for the higher price on the property to pencil out, he said.
“To develop a high-rise or a hotel or a mixed-use concept, it makes a lot more sense,” Germain added. “If you go vertical, you’re going to get a lot more square footage. Paying a little bit more for the land makes sense in that scenario.”
A 2.5-acre parcel in the area also went for a premium. The parcel, which sits just north of the Raiders’ site on Hacienda Avenue, was acquired by Global Trust Group for roughly $2.9 million an acre in August, with a total price of $7.25 million — about four times what Doherty quoted as the average industrial parcel in the region.
Brenden Graves, director of client sales and services for the Las Vegas market at Xceligent, said the smaller the parcel, the higher the premium that a piece of land could go for.
“I thought it was encouraging to see the sale because I thought it was going to be kind of a land lock for a while until the stadium was actually was built, because right now you’re building for a potential,” Graves said.
That’s because the stadium’s completion is still a few years off. Prices will likely go higher as the completion date nears, he said.
Jay Heller, the 2017 NAIOP Southern Nevada president, said industrial properties, and others looking to sell their properties in the region, could take some time.
“I think there’s a lot of industrial in that area,” Heller said. “But it’s not going to happen overnight, because there’s a lot of multitenant suites and units there.”
There’s a lot of factors that property owners will have to consider if they want to sell, according to Heller.
Loans may have some type of prepayment penalty, he said.
“It just depends on when those loans come due and the leases come due as well,” Heller said. “A landlord may not want to buy out a lease.”