The majority of the state’s activity can be found in Southern Nevada, which had $4.4 billion worth of construction during the first five months of 2008 – a 21 percent increase over the first five months of 2007, reports McGraw-Hill Construction. Active commercial developments are seemingly making-up for the sharp residential downturn. Many of today’s projects are being underwritten through innovative financing that includes joint-venture partnerships.
“Las Vegas’ long-term economic outlook is healthier than other cities of similar size due to our tourism and entertainment based industries as well as our steady immigration of new residents attracted by our warm climate and business friendly environment,” said John Restrepo, principal of Restrepo Consulting Group and 2008 president of the National Association of Industrial and Office Properties, Southern Nevada chapter. “Projects are still being underwritten but lenders are now returning to financing basics that focus on location, management, experience, planning and cash flow.”
Many of the projects still moving ahead are private undertakings in the leisure and hospitality industry, which has $32.7 billion worth of development underway between 2008 and 2011, reports the Las Vegas Convention Visitors Authority. The projects combine for 32,095 more hotel rooms, bringing the Southern Nevada’s total inventory to 165,042 rooms, while also adding 3.37 million square feet of convention space and 3,943 timeshare units. Another $46.3 billion worth of projects are tentatively planned for future development.
Southern Nevada’s largest single project is CityCenter – a $9.2 billion mixed-use complex on the Las Vegas Strip between the Bellagio and Monte Carlo resorts. The MGM Mirage development is not only the state’s biggest undertaking but it’s the largest privately financed project in U.S. history. Dubai World last year became a CityCenter partner by paying $2.96 billion for a 50 percent project stake. The cash infusion helped spread some of the company’s financial burden. Perini Building Co. is the general contractor; Tishman Construction Corp. is the construction manager, and Gensler is the master architect. The 76-acre, 18.67 million-square-foot complex of residences, hotels, casinos and entertainment space is larger than New York City’s Rockefeller Center, SoHo and Times Square combined.
The project consists of five distinctive high-rise buildings with 2,650 luxury condominium and hotel/condominium units. It’s anchored by “Aria” – a 61-story, 4,004-room skyscraper designed by Cesar Pelli, architect of the Petronas Towers in Kuala Lumpur, Malaysia, which held the world’s tallest building title from 1998 to 2004. The 6.5-million square-foot glass-and-concrete Aria has 300,000 square feet of convention space, a 150,000 square foot casino and a 1,800-room Cirque du Soleil theater that will host an Elvis Presley inspired production show. It’s flanked by “The Crystals” – a retail and entertainment mall designed by Daniel Libeskind, the master-plan architect for the World Trade Center site. CityCenter will also have two 400-room high-end, non-gaming hotels including Las Vegas’ first Mandarin Oriental. The mammoth undertaking will employ 7,000 construction trades, and create 12,000 jobs by its completion in November 2009.
The $3.9-billion Cosmopolitan Resort & Casino is rising-up across the street at the northwest corner of Harmon Avenue and Las Vegas Boulevard, South. It’s being built by 3700 Associates LLC – an investment entity headed by New York City-based developer Ian Bruce Eichner. Yet Deutsche Bank AG foreclosed on the project earlier this year. Eichner previously lost two Manhattan buildings to creditors in the early 1990s, including the 75-story CitySpire Center at 150 W. 56th St. and the 45-story Bertlesmann Building at 1540 Broadway Ave. Construction. However, the building is proceeding uninterrupted on the 2,998-room, 6.96-million-square-foot mega-resort. Deutsche Bank continues to negotiate with potential investors while underwriting expenses for the project.
The Cosmopolitan mirrors the edgy modern architectural style of its neighbor, CityCenter. It rests on 8.5 acres with near zero lot lines. Perini, once again, is the general contractor, with Arquitectonica as design architect and Friedmutter Group as architect-of-record. Cosmopolitan, which occupies some prime Strip-front real estate, maximizes its space by going down 75 feet to create a five-level, 3,800-vehicle underground parking garage.
The project consists of two 600-foot-tall twisting blue glass towers that rise from a crystalline-shaped podium with 265,000 square feet of boutique shops and restaurants as well as a 150,000-square-foot convention center and an 80,000-square-foot casino. The 52-story prism-shaped skyscrapers house 2,998 condo-hotel and hotel units with Grand Hyatt Corp. as hotel manager. Cosmopolitan will see 110 subcontractors, 100 superintendents and engineers, and 3,000 tradesmen on-site during the height of construction activity. It will finish in December 2009.
Rival gaming operators are pursuing similar construction plans, many of which were conceived and underwritten before the current residential market implosion occurred. Boyd Gaming, for example, is building the $4.8 billion Echelon at the site of the former Stardust hotel-casino. The 87-acre mixed-use development, like CityCenter and Cosmopolitan, uses several joint-venture partners to help shoulder the cost. Plans call for five hotel towers with a combined 5,000 rooms. Morgans Hotel Group, owner of the Hard Rock, is building the Delano and Mondrian hotels with 1,600 rooms.
The two hotels, designed by architect Chad Oppenheim, will cost $950 million to construct. Hong Kong-based Shangri-La Hotels and Resorts will construct a 353-room hotel, and Boyd will build two hotels itself – Hotel Echelon and the Suites at Echelon. The eight-building project, which has 22 acres reserved for future development, will have a 750,000-square-foot convention center and a 140,000-square-foot casino. There’s also a $500 million, 300,000-square-foot shopping center that is being co-developed with General Growth Properties, the firm behind the Fashion Show Mall. Echelon will additionally have a 4,000-seat and 1,500-seat theater operated by AEG Live and 30 dining and entertainment venues. Tishman is the construction manager, with Marnell Corrao Associates as prime concrete contractor. Echelon will debut in the third quarter of 2010.
Encore and Fountainbleu
Billion-dollar mega projects are commonplace on the Strip. Steve Wynn is building the $2.1 billion, 60-story Encore at Wynn Las Vegas. Tutor-Saliba Corp., a unit of Perini, is the general contractor for the 20-acre, 2,032-room addition at 3145 Las Vegas Boulevard South. The curving glass high-rise is scheduled to open in early 2009. Fontainebleau Resorts, LLC, meanwhile, is building the $3 billion, 3,889-room Fontainebleau Las Vegas at the northeast corner of Las Vegas and Rivera Boulevards. It’s situated on the 25-acre former site of the El Rancho hotel-casino. The 63-story, 725-foot-tall tower will have a 100,000-square-foot casino, 60,000-square-foot spa and a 3,200-seat theater. Las Vegas-based Turnberry West Construction is the general contractor, with Bergman Walls & Associates as architect-of-record.
Caesars Palace is undergoing a $1 billion expansion with a 23-story, 665-room hotel tower addition and a 263,000-square-foot convention center. Philadelphia-based Keating Building Corp. and Marnell Corrao are the joint-venture general contractors. The project is scheduled to finish in early 2009. Noteworthy Strip developments, less than $1 billion, include Westgate Resorts’ $750 million, 50-story timeshare towers at Planet Hollywood consisting of 1,228 units scheduled to finish later this year; and, a $103 million, 25-story hotel tower at South Pointe that will add 800 more rooms this summer. Tutor-Saliba and J.A. Tiberti Construction are the general contractors, respectively.
Marnell, meanwhile, is building the $1 billion M Resort on the far south Strip. Developed by Anthony Marnell III, the project has an 11-story glass hotel tower with 351 rooms and 39 suites. It, too, has a joint-venture partner to help spread the risk. MGM Mirage is investing $160 million into the project in the form of a subordinated convertible note that matures in eight years. The firm has the right to convert those notes into a 50 percent equity interest after 18 months if the debt hasn’t been repaid. M Resort is situated on 80 acres at Las Vegas Boulevard, South, and St. Rose Parkway. Plans call for a 90,000 square-foot casino, plus a spa, outdoor pool area and convention center. It’s expected to open in the spring of 2009. A future phase calls for a 1 million square foot shopping mall to be co-developed with Taubman Centers, and open in late 2011.
Beltway Business Park
Another active large scale commercial project developed under joint venture arrangements include Thomas & Mack Development Group and Majestic Realty Co.’s 425-acre Beltway Business Park along the Interstate 215 Beltway between Decatur and Jones boulevards. Plans call for 55 retail, office and industrial buildings, combining for 5.86 million square feet, with tentative build-out by 2012. Thomas & Mack/Majestic won a request-for-proposal solicitation from the Clark County Dept. of Aviation to develop the land under a 50-year ground lease. The county receives 50 percent of its rental revenue.
EJM Development Co. is developing The Arroyo under a deal on county land similar to Beltway Business Park. The 450-acre, 4.54 million-square-foot development located along both sides of the Beltway between Rainbow Boulevard and Buffalo Drive is scheduled for build-out by 2014.
City Crossing, a $2 billion mixed-use development in Henderson, recently became a victim of the tightening credit market. In June, the project filed for bankruptcy to reorganize $180 million in debt. The 126-acre, 6-million-square-foot complex by Plise Development & Construction broke ground last year at St. Rose Parkway and Executive Airport Drive in Henderson. Roughly $30 million in on-site improvements, including grading, utilities and roads, are now under construction. Chaparral Contracting, a Plise subsidiary, is the general contractor.
Phase one plans call for 175,000 square feet of retail space, an eight-story, 215,000-square-foot office building, 184 apartments and a 160-room boutique hotel. Vertical construction on the 50-acre first phase was originally expected to start this summer. That timeline will likely be extended by six months or more depending on the capital market’s response to the bankruptcy.
“We’ve been working to refinance the existing debt at City Crossing over the last several months,” said Mitchell Stipp, Plise’s chief operating officer. “We are not stopping development. We have sufficient capital to fund this work. We expect to have the debt reorganized within the next three to five months.”
Plise will self-finance the project’s remaining site upgrades from cash reserves. It still intends to build the 41-building City Crossing as originally envisioned. Plise has been negotiating with a national firm about becoming a possible development joint-venture partner. City Crossing is now expected to debut by early 2010, and reach build-out in 2015.
Northern Nevada, like its southern counterpart, is seeing much of its commercial activity concentrated in the entertainment sector. The Reno-Sparks area had $246.6 million worth of construction for the first five months of 2008, with $126 million worth of residential activity and $119.9 million in commercial work, reports McGraw-Hill Construction. It marks a 33 percent decline compared with the first five months of 2007.
One of the region’s largest projects is a $1.8 billion makeover of the 145-acre, 2,000-room Grand Sierra Resort and Casino at 2500 E. 2nd St. in Reno. The $90 million initial phase converting 11 guestroom floors into hotel-condominium units will finish this summer. The multi-phase project will also add restaurants and night clubs, as well as enhance the property’s meeting and exhibition space. Additional work includes an indoor water park, 500,000 square feet of retail shops, a 70,000-square-foot luxury spa, and a new four-level golf driving range.
Legends at Sparks Marina
Another notable project include RED Development’s $1 billion, 1,000-room Legends at Sparks Marina at Interstate 80 and Sparks Boulevard, which will have both a Hilton Garden Inn and a Marriott Residence Inn. The two hotels are expected to open in the second quarter of 2009. Sparks officials expect the eight building complex to begin opening in the fall, starting with the 88-foot-tall, 248,000-square-foot Scheels sporting goods store on Sept. 27.
The $50 million, 10,000-capacity Sidewinders’ Triple-A baseball stadium at Evans and East 2nd streets will pour concrete in August. Developed by SK Baseball and Nevada Land LLC, the stadium will open at the start of the 2009 season. Devcon Construction is the contractor. The project is using a consortium of developer members along with city assistance in order to move the stadium forward during an economic downturn.
Developers are planning an entertainment/shopping zone to connect the stadium on East Second Street with the casinos on Virginia Street; the city, as a result, has agreed to seek an agreement with the Reno-Sparks Convention & Visitors Authority to lease the first floor of the National Bowling Stadium for entertainment and retail uses. The developers also are assembling properties on their own for the entertainment district, which would cover all or part of four blocks.
Meanwhile, the 1,000-room Atlantis Casino Resort at 3800 S. Virginia St. is undergoing a $50 million expansion. The project consists of 27,000 square feet of additional meeting space, 20,000 square feet of added casino area, a larger spa and fitness center, and a $12.5 million pedestrian skywalk linking the property to the adjacent 500,000-square-foot Reno-Sparks Convention Center. It’s expected to finish later this year.