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Beltway business boom5 March 2008
LAS VEGAS, Nevada -- Crown Ltd. is the latest in a handful of gaming companies that have purchased or leased office space along the Las Vegas Beltway in the southwestern Las Vegas Valley, creating a core development totaling about 1 million square feet.
Crown, controlled by Australian billionaire James Packer, has committed to taking 5,000 square feet at LaPour Corporate Center near Russell Road and the Beltway. The company invested more than $400 million in Las Vegas with minority stakes in Harrah's Entertainment and Station Casinos, and plans to build a resort on the former Wet 'n Wild site.
Las Vegas-based Boyd Gaming Corp. bought a four-story, 110,000-square-foot office building at Rainbow Sunset Pavilion, a 25-acre retail and office development by Plise Cos. on Rainbow Boulevard, a half-mile from the Beltway.
Station Casinos moved its corporate offices from Palace Station on Sahara Avenue to a new 150,000-square-foot, $18 million building at Red Rock Resort. Wynn Resorts took 12,000 square feet of office space at Centra Point.
Golden Gaming, which operates casinos throughout Nevada and Colorado and all PT's pubs, built its corporate office at the Beltway and Jones Boulevard. Pinnacle Entertainment and Cannery Casino Resorts also have offices in the southwest valley.
CB Richard Ellis office broker Jayne Cayton said she remembers seeing Golden Gaming's building on a bus tour of office development a couple years ago and nobody knew what it was. "It was in the middle of nowhere. There was nothing around it," she said.
Back-office operations such as accounting, marketing, and research and development were often housed on casino property. But the dynamics of Strip real estate today dictate that almost every square foot be used to generate revenue, developer Jeff LaPour said.
Land values on the Strip are about $20 million an acre, a fourth-quarter report from Applied Analysis, a Las Vegas financial consultancy, shows.
The southern Beltway provides easy access to the Strip and McCarran International Airport, LaPour said. Many gaming executives also live in the area, he added.
"Nobody wants to deal with the congestion on the Strip," he said. "What's cool is that gaming is our computer industry. I think it's kind of exciting to see them cluster along the Beltway."
The southwest office submarket has nearly 6.8 million square feet of office inventory with a 17.3 percent vacancy rate, higher than the 12.5 percent overall vacancy, Salt Lake City-based real estate brokerage services company Commerce CRG reported in its year-end market overview. Another 2 million square feet are under construction.
Reno-based slot manufacturer International Game Technology is building a 600,000-square-foot facility at Buffalo Drive and Sunset Road, consolidating from nine buildings the company now occupies in Las Vegas.
The 12-acre campus consists of 300,000 square feet of manufacturing and warehouse space, 230,000 square feet for offices and 70,000 square feet of accessory space. It will house manufacturing, engineering, sales and casino services.
IGT expanded operations in Southern Nevada with the acquisition of Acres Gaming and Anchor Gaming and needed to bring various departments under one roof, IGT spokesman Ed Rogich said.
"At the time, it was one of the few areas where we could accumulate the land," he said of the decision to locate along the Beltway.
IGT was leasing 440,000 square feet, including four different offices and warehouse space for refurbishing games at Hughes Airport Center.
The new facility will employ about 1,000 people, Rogich said.
Average asking rent for office space in the southwest submarket is $2.43 a square foot a month, Commerce CRG reported. LaPour said he'll be asking about $2.50 a foot when his three-story, 70,000-square-foot office building opens in June. The building is LEED (Leadership in Energy and Environmental Design) certified.
"I think what you're going to see now is a flight to quality," LaPour said. "Tenants are going to have choices. They're going to pick the highest quality with the best amenities. You're also seeing the maturing of our office market. We really didn't have that before."
Median sales price of office property increased 4.5 percent last year to $230 a square foot, Palo Alto, Calif.-based real estate investment services company Marcus & Millichap reported.
CB Richard Ellis' Cayton said the southwest market has a lot of the same office offerings at the Beltway Business Park, The Arroyo, Rainbow Sunset Pavilion, LaPour Corporate Center and The Park at Spanish Ridge. Lease rates range from $2.25 to $3.25 a foot, she said.
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