Onward and upward

High-rise boom possible for Vegas

August 27, 2004 - What started as a trickle of proposed high-rise projects has quickly turned into a flood as land owners and developers think of ways to cash in on the latest Las Vegas building boom.

There's plenty to buzz about with 50 high-rise projects, totaling 82 towers, announced or on the drawing boards:

Thirty condominiums totaling 44 towers.

Seven condo-hotels totaling 11 towers.

Eight time-share projects totaling 22 towers.

Four hotel towers, including those at Wynn Las Vegas, Caesars Palace and Bellagio. A second resort by Venetian owner Sheldon Adelson is planned on the Strip.

One high-rise office tower.

With 50 high-rise projects planned, even a 50 percent success rate would represent a high-rise boom by Las Vegas standards. If all are built it would double the number of existing high-rise towers.

A combination of factors is driving the sudden interest in what is being called the Manhattanization of Las Vegas.

A shortage of available property has sent land prices soaring, forcing developers to maximize densities. Las Vegas also has become a more popular destination for tourists and is growing in popularity as a second-home site.

And a new urban class is demanding the convenience and amenities offered by condos such as Park Towers and Turnberry Place, which are near the Strip.

There might even be a market for moderately priced high-rise condos near the Strip to be occupied by thousands of casino workers who now commute from the suburbs.

Thomas Schoeman, president of JMA Architecture, said the unique makeup and growth of Las Vegas make it a prime candidate for high-rise living. JMA Architecture has been at the forefront of the high-rise boom, planning and designing several buildings for developers.

"We do have an urban center core - downtown (Las Vegas) and the Strip - and 60 percent of our employment base is in that core. It makes all the sense in the world to provide housing in that core," he said.

As Las Vegas becomes a "more mature and sophisticated community," people will want more choices in housing beyond single-family detached homes, he said.

And Las Vegas has become a desirable place to own a second home, Schoeman said.

Mostly talk

Despite all the talk and plans, construction is under way on only a handful of time shares and hotels and just one condo. And it's unclear how many of the proposed high rises will actually be built.

This wouldn't be the first time luxury high-rise condominiums caused a buzz in Las Vegas, only to be quietly canceled after pre-sales didn't pan out.

Good examples are Versailles at Peccole Ranch (announced in 1998, but put on hold and now revived as the proposed Queensridge Towers), twin towers The Great Masters (announced in 1998, but later dropped), and a Donald Trump condo that was announced in 2002, but didn't pan out. Trump is now promoting a revised condo plan with local partner Phil Ruffin, owner of the New Frontier.

High-rise condo developers must have a certain level of commitment, often reflected in contracts for units, before lenders will fund the projects.

Development tracker Richard Lee, vice president/director of public relations at First American Title Co., believes all the projects are viable, but he said they will most likely be in phases.

"If everybody started on every project at the same time, there would not be enough contractors and there would be too many (condos) on the market at the same time," he said. "Some will start earlier, some down the road and all will watch each other on the velocity of sales."

Analyst Brian Gordon, a principal with Applied Analysis, wasn't as optimistic.

"From a market demand and financial feasibility standpoint, half will come online, half will be delayed or will be deferred forever," he said.

Developer Lorenzo Doumani said many of the projects announced won't ever break ground.

"A lot of them are b.s., with no real plans or anything," he said. "It's amazing all that's been announced, but nothing has happened."

Some experience

While the recent rush to build up is unprecedented in the Las Vegas Valley, the area has some experience with buildings more than 12 stories, considered the high-rise threshold.

Just four years ago, there were about 75 high rises in the Las Vegas Valley, including:

Two 28-story condo towers - the 30-year-old Regency Towers at the Las Vegas Country Club - and two decades-old apartment towers, the Country Club Towers and the 15-story Mark 1 Apartments.

Eight time-share towers 12 floors or more, including the Polo Towers, the Jockey Club and Hilton's time shares at the Las Vegas Hilton and at the Flamingo Las Vegas.

More than 60 hotel towers and structures such as the Stratosphere and the Empire State Building tower at New York-New York.

At least four office towers 12 floors or more, including downtown's 16-story Bank of America Plaza, built in 1975; the 17-story Wells Fargo Tower at Hughes Center at Paradise and Flamingo roads, built in 1986; the 12-story 101 Convention Center Plaza, built in 1980; and the 12-story Nevada Financial Center at Interstate 15 and Sahara Avenue, built in 1987.

There are also some 10-story apartment and condo buildings that opened in the 1970s near Flamingo Road and Swenson Street, including the 10-story Wimbledon Tennis Club condo tower and the 10-story Vegas Towers apartments. And there are several office buildings eight to 11 stories around town.

Two high-rise luxury condominium projects set the stage for the current potential boom. Park Towers opened in 2001, and Turnberry Place opened the first of its towers the same year.

Park Towers has two 19-story, 84-unit towers at Howard Hughes Parkway and Flamingo Road. It was built by Irwin Molasky, who also built the valley's first high-rise office building, Bank of America Plaza, downtown.

Molasky hasn't built a high rise since Park Towers, but he said the future is in high-rise buildings.

"We believe the future is in vertical living, and we are looking into residential opportunities at this time," Molasky said.

Many credit Turnberry Place, developed by Florida-based Turnberry Associates, with showing the real estate and development industry that there is a market for such a product in Las Vegas.

Turnberry Associates, which recently completed its third 40-story Turnberry Place tower at Paradise Road near Sahara Avenue, is working on a fourth tower there.

"Turnberry started this whole trend, and suddenly it became very popular," said Chris Bentley, principal/broker of the Bentley Group, which focuses on multifamily development.

Since the opening of those two projects, a few high rises have opened:

Time shares - The Fairfield Grand Desert Resort's two towers, 12 and 15 floors, on Harmon Avenue, and Hilton's 26-story project on the Strip near Sahara Avenue.

Hotels - The Hotel at Mandalay Bay and a tower at The Venetian.
And since then the 50 residential and commercial projects have been proposed throughout the Las Vegas Valley, and more are announced almost every week.

Estimates of the number of residential units in high rises in different planning stages range from 11,000 to 15,000.

"We're talking to experienced people from Chicago, New York and London. They look at this market and say it is just ripe, it is perfect, and it is next," Lee said.

Track records

A condo-hotel unit is different from a time-share unit because of the way it is owned. A condo-hotel unit is purchased by a single owner, who can use the condo at any time. When the owner is not using the unit, he or she can put it into a rental pool, and it will be rented out by the night, like a hotel room. Some condo-hotels limit the amount of time owners can use the units.

Some of the high-rise condo and condo-hotel towers that are most promising, based on the developers' track records here and in other markets, include:

Krystle Sands, a planned 510-foot, 45-story, 568-unit condohotel on the site of the Algiers Hotel on the Strip, just north of the Riviera. The Algiers will close by Sept. 3.

Krystle Sands is being developed by Florida-based developer F.W. "Freddie" Schinz, who has been developing residential properties - everything from high-rise towers to town houses - for 30 years in Florida. He currently has one of four high-rise towers under construction in Orlando, about a mile from Walt Disney World, as part of Schinz's Blue Heron Beach Resort.

Majestic, a planned 617-foot, 45-story, 158-unit condo tower on the La Concha Motel site, across from the Stardust and south of the Riviera. Developer Lorenzo Doumani's family has owned land in Southern Nevada for a long time, and Lorenzo Doumani's father, Ed Doumani, is the former landlord of the Tropicana Hotel.
The sales center is expected to open by mid-September and construction is scheduled to begin in January, Lorenzo Doumani said. Existing buildings will be demolished in the next two weeks, he said.

The tower will be built in conjunction with a luxury resort property that includes a Conrad hotel by Hilton.

Metropolis, a 212-foot, 20-story, 71-unit condo tower on Desert Inn Road, just west of Paradise Road near the Las Vegas Convention Center. The tower is under construction and is expected to be completed in 2005. Developer Randall Davis has built and renovated buildings in Texas for more than 10 years.

Panorama Towers, a planned 420-foot, 33-story, 324-unit condo tower that includes some town homes, at the southwest corner of Harmon Avenue and Industrial Road. Demolition work has begun. A second tower is approved and, a third is planned by nightclub and restaurant owner Andrew Sasson and developer Laurence Hallier.

Sky Las Vegas, a planned 500-foot, 42-story condominium tower with 350 units on the west side of the Strip, just north of Circus Circus and south of the Hilton Grand Vacations Club time shares.
The tower is planned by Nevada Development Partners, a partnership of Aaron Yashouafar, chief executive of Milbank Real Estate Services Inc., a Los Angeles-based real estate company, and David Pourbaba and Neil Kadisha, both developers from Southern California.

Following the success of Turnberry Place, that company is working on two future Las Vegas projects. Turnberry's The Residences at MGM Grand is a condo-hotel behind MGM Grand that recently sold out its first tower and will eventually have three towers with the possibility of more. Construction on the first 38-story tower is expected to begin this month.

It is also moving forward on its Madison Towers condominiums at the northeast corner of Karen Avenue and Paradise Road, postponed after Sept. 11, 2001. The company plans to open a sales office at the 11-acre site later this year, with construction starting in the spring.

Plans currently call for two 40-story towers and more affordable prices than the nearby Turnberry Place.

Prices have not been set, but they will most likely start at $300,000, said John Riordan, vice president of sales.

"We think there's a big market for that, for people who work on the Strip," he said.

While numerous midrise condominium projects have been built since Molasky finished his two towers in 2001, and as Turnberry continues to build, no other developer has built a high-rise condo tower in the Strip area since - although dozens have been approved. Only one, Metropolis, is under construction. Others are in preliminary construction stages.

But with increasing land prices - recent sales for residential land ranged from $154,500 an acre in the northwest valley to $1.5 million an acre at Lake Las Vegas - and a push toward more urbanized living, the high-rise condo-tower trend appears to be for real.

"Land pricing is going to make it more financially feasible. With people looking to get the highest densities possible, you can spread the costs across more units," Gordon said. "Second is land availability. Finding large enough contiguous parcels to develop single-family homes is more difficult."

Policymaking

The flurry of potential high-rise development has prompted Clark County to work on a policy on what heights are appropriate in different areas of the valley and what types - and how much - of different commercial uses should be mixed in with residential properties.