CoStar Group's Andrew Burr has dubbed this the year of the casino. The story is a good run-down of all the development occurring on the Las Vegas strip, much of which includes the involvement of big-time retail real estate names like Taubman Co. and General Growth Properties.
But now, even that time-tested formula is becoming more complicated. A scarcity of available land coupled with a new wave of Las Vegas Blvd. development has meant an exponential increase in the value of Strip-front property, and the effects are trickling down.The result is a surge of massive, multi-billion dollar projects on the Strip, each more extravagant than the last, as developers seek to offset the cost of land by targeting higher-end customers to draw better returns. In short, Las Vegas is a place that is very literally being transformed from the ground on up.
"Land prices are escalating at such a pace that developers need to develop large mixed-use resorts to make sure they're getting a return on every square foot," says Parks. "Developers are catering to the higher-end demographic out of necessity."
Sin City's ongoing transformation was punctuated last month in a deal that sent 34.5 acres of Strip land currently occupied by Phil Ruffin's New Frontier casino to Israeli billionaire Yitzhak Tshuva's Elad Group for about $1.2 billion, or more than $30 million per acre. Elad, which owns and operates New York City's Plaza Hotel, is planning to spend another $3.5 billion to develop a resort-style replica of the famed hotel on the Strip.
"The land rush reflects scarcity," says John Knott, executive vice president of the Global Gaming Group. "The quality of the customer that is necessary to support the new developments has never been higher. That trend will continue."