The incredible shrinking Vegas Strip
March 26, 2008 | 1:17
pm
The last few days have made painfully
clear that even a fantasy land like the Las Vegas Strip exists in the real world. And the troubles with
the real estate market and credit crunch seem to be imperiling a significant amount of the next wave of
Las Vegas development. Three major Strip projects seem to be suffering various degrees of crisis.
Cosmopolitan is still being built next to MGM-Mirage's City Center. But the project is in major trouble, as a lender has begun foreclosure proceedings against developer Bruce Eichner.
Meanwhile, Business Press is reporting that the super-sized version of New York's Plaza, planned for where New Frontier once stood, may be delayed because of the credit crunch. That project was to have cost $6 billion.
Cosmopolitan is still being built next to MGM-Mirage's City Center. But the project is in major trouble, as a lender has begun foreclosure proceedings against developer Bruce Eichner.
Meanwhile, Business Press is reporting that the super-sized version of New York's Plaza, planned for where New Frontier once stood, may be delayed because of the credit crunch. That project was to have cost $6 billion.
Finally, today comes news from the Sydney Morning Herald that the land on
the Strip that Australian billionaire James Packer had once proposed to build
the world's tallest building on as part of a $5-billion Towers resort is up for
sale. Packer's company Crown, according to the Sydney Morning Herald, remains
connected to another major Strip project, "funding the Fontainebleau Hotel
Casino in Vegas with U.S. group Turnberry."
And as Fontainebleau's continued construction hints, "slowing down" in
Vegas still has development going at a rapid pace. Dubai's partnership with
MGM-Mirage on City Center assures the completion of the biggest project in town.
MGM has already opened its Signature property. Also, the Venetian's Palazzo
expansion recently opened. And George Maloof is in the process of opening his
Palms Place tower. Wynn's Encore expansion is set to open soon, and Echelon
Place is being built at the location of the imploded Stardust.
So, even conservative estimates have about 20,000 new rooms set to open by
2010. Locals are counting on those rooms to generate the jobs to keep the local economy humming and especially to salvage the devastated residential real estate market.
In any other city people might worry: Will more tourists arrive in Vegas to fill all those new rooms and pay for all those new jobs and justify all this construction?
While Las Vegas may have some short-term economic issues, locals long ago stopped sweating that big issue. It seems no matter how many hotel rooms get built on the Strip, more tourists come to play here.
Is it possible that this time will be any different?
In any other city people might worry: Will more tourists arrive in Vegas to fill all those new rooms and pay for all those new jobs and justify all this construction?
While Las Vegas may have some short-term economic issues, locals long ago stopped sweating that big issue. It seems no matter how many hotel rooms get built on the Strip, more tourists come to play here.
Is it possible that this time will be any different?
From what you wrote it sounds like the Las Vegas strip is expanding not shrinking. The only project actually on hold is the worlds tallest building, most likely halted by the FAA. My sources tell me the plaza is on track, the Cosmopolitan is moving forward without a hitch, the problem being one with the developers credit rating not the project.
All of the 20,000 rooms are on schedule and moving forward, not exactly a slowdown.
Posted by: Dan | March 27, 2008 at 02:49 PM
Thanks for reading. As I write in the item, slow is a relative thing in Las Vegas. We will see about the Plaza being built. But, for the short term, the rooms that were available as part of the New Frontier, imploded to make room for Plaza, are gone. Also, while what is going on at Cosmopolitan may not be fatal, it is still very serious.
But my main point in writing this item was that 20,000 new hotel rooms, until recently, was the very low end estimate. Last month, for example, the Sun ran an article that had some predicting more than 40,000 new rooms:
http://lasvegassun.com/news/2008/feb/16/how-many-new-rooms-lets-just-say-lot/
Obviously, now we are talking about less than half that number of rooms. Yrs., Richard
Posted by: Richard Abowitz | March 27, 2008 at 04:08 PM
Just as important as the number of rooms is the type of projects being built. Certain Casinos have changed the business in Las Vegas such as Mirage, Ex Calibur, Bellagio, Wynn and more. Each of those properties ( and other casinos as well ) brought new kinds of customers and new types of entertainment, dining, resort amenities.
Project City Center, Echelon, Fountainbleau, M Resort and the Viva Station project that was just announced this week are projects that have a mix of condos and hotel rooms and other aspects to the complex that have never been done before in Las Vegas.
Also these new projects are so huge they are bound to have an effect on existing casino hotels, most likely making places like Mirage, Paris, Mandalay be more affordable and return the city to the time when customers got good value for their rooms. Customers who are willing to pay premium room rates will almost always want to stay in the newest places.
Also the city is benefitting from a very low US dollar which is attacting customers from around the world.
All of these probable trends do not sound like a "shrinking city."
Posted by: John King | April 24, 2008 at 07:16 PM
Sixteen people have died on construction sites on the Las Vegas Strip in the past three years. This is outrageous. Most of them were because we have General Contractors pushing for faster more dangerous work with no regard for safety. OSHA should be ashamed for not crackind down on these guys. vegasstripdeaths.com
Posted by: Doc Holiday | June 10, 2009 at 02:14 PM