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Best of Liz Benston

Gaming Guru

Liz Benston
 

High-Rise Developer Brings Strengths to Vegas

17 January 2005

By Liz Benston, Las Vegas Sun

LAS VEGAS -- In the 15 or so years that Ellis Island Casino & Brewery executive Karen Dorsey has worked for owner Gary Ellis, several developers have approached the casino with plans to redevelop the 36-year-old property.

But it wasn't until Ellis met with Michael Peterson, an owner and developer of restaurants and condominiums in Chicago and Wisconsin, that the property decided to get into the high-rise business.

"We really felt that he had the strength and integrity to make this project happen," Dorsey said.

Peterson, a relative unknown in Las Vegas, is building two major condominium high-rises at Koval Lane and Flamingo Road. Both are condo-hotels -- a relatively new concept in Las Vegas that has been gaining popularity in other vacation markets in Florida and the Midwest. Such units are owned like condos but can also be put into a rental pool for a certain number of days each year, earning rent money for owners and managed by a hotel company.

Unlike many recent transplants participating in the high-rise boom, Peterson says he has a track record of condo-hotel projects stemming back more than a decade. Those projects, with names like Timber Ridge Lodge, Mill Creek and Harbor Cove, are rustic-looking waterfront developments at Lake Geneva, Wis., and a world away from the modern glitz of the Las Vegas Strip.

"He is one of the most informed condo-hotel developers in Las Vegas," said Maryann Haberman, a commercial real estate broker with Coldwell Banker Premier Realty in Las Vegas. Haberman helped secure the site for the Platinum and has worked with Peterson for the past couple of years.

"He's done it before, he knows how to do it and he's doing it again. That's a tremendous selling point," she said. "And his attention to details is unsurpassed with any other developer I've worked with in 31 years."

Peterson also has a trump card in basketball star Michael Jordan, a friend and colleague who has signed on to license a namesake athletic center and two restaurants in one of the towers.

Perhaps the most unusual aspect of the project is the partnership with Ellis Island. The nondescript building, down the street from low-budget apartments and across Koval from vacant lots behind the Strip, seems an unlikely neighbor for an ultramodern high-rise. The locals casino has a loyal following among area casino workers and is known for bargain meals, dollar drinks and homey entertainment like karaoke.

By contrast, the 800-unit Platinum, at 211 E. Flamingo Road, has sold units from the $300,000 range to just over $1 million. The 825-unit Aqua Blue, which will be built where the Super 8 Motel stands next to Ellis Island at 4178 Koval Ln., sells units from $399,000 to $1,125,000.

McCartney Construction Co. representatives say they expect to begin construction on Platinum this month, while Aqua Blue is expected to start in the fall. Platinum, which sold out in six weeks, is anticipated to open in spring 2006. Aqua Blue, which has sold more than 200 units so far, is expected to be open by fall 2007.

While the Super 8 will be torn down to accommodate the tower, Ellis Island will remain standing and operate as normal, Dorsey said. The outside of the casino will be reshaped to match the sleek look of the tower next door and will feature a walkway leading to the condo-hotel. The interior will remain the same save for a few cosmetic changes, she said.

The property doesn't want to abandon its loyal following, Dorsey said.

"We're still going to have $4.95 steak and dollar drinks," she said.

Peterson's track record, rather than his relationship with Jordan, sold Ellis Island on the partnership, Dorsey said. Jordan signed on after the deal was struck, she said.

Gary Ellis will continue to own and manage the 40,000 square-foot Ellis Island casino in addition to a 12,000-square-foot casino that will be located inside Aqua Blue. The parking garage at Ellis Island is expected to grow with the changes to accommodate more traffic, Dorsey said.

Peterson is ready to defend himself in a city known for fly-by-night developers and plenty of failed resort projects.

"I've never filed for bankruptcy. I've never even been sued," he said. "What I fear most is someone coming here, doing things the wrong way and then ruining it for everyone else."

He has so far impressed a few local real estate experts.

Rich Worthington, president of commercial developer Molasky Cos., represented nearby residents of the Park Towers condominiums when they protested the design of the nearby Platinum.

Peterson tweaked those plans, including setting the building farther back on its parcel, to ease traffic flow, Worthington said.

"I think he's a perfectly competent developer and has an impressive track record," he said. "He's conscientious and seems to have a unique business plan. In Las Vegas, that's half the battle."

Aside from capitalizing on the condo-hotel concept, Peterson said he expects the Michael Jordan-brand restaurants and 65,000-square-foot athletic center will attract interest from jaded locals and tourists alike.

The athletic center, which will feature two basketball courts, tennis court, running track and aerobic rooms, among other features, appeals to area casino workers seeking a conveniently located and well-equipped gym, he said.

"You've got 180,000 employees within one mile of here who work in casinos and can't patronize casino facilities," he said.

Jump Higher LLC of Chicago, which is part-owned by Michael Jordan and manages several Jordan-branded restaurants across the country, will manage a Michael Jordan's Steak House and Michael Jordan's 23 Sportcafe at Aqua Blue.

Peterson and Jordan have known each other for several years, though this is their first business venture together, Jump Higher Chief Executive David Zadikoff said.

The time is ripe for redeveloping the down-in-the-heels Koval Lane corridor behind the Strip, Peterson said.

"It's going to be the activity area because there's no more Strip left," to develop, he said. The area is close to the airport and affords views of the Strip, he said.

The condo-hotel experiment has worked for Mary Lou Marcin, who will be among those taking the plunge in Las Vegas.

Marcin, a retired teacher, said she has made a significant profit over the years by buying and selling about 20 condo-hotel units that Peterson has built in the Lake Geneva area. She now owns and rents out five units.

"A lot of developers keep changing their name and leave a lot of people hanging when things go wrong," Marcin said. "When I heard (Peterson) was doing a project in Las Vegas I said, 'Hey, count me in.' He does follow-up after the project is done and doesn't cut corners."

Condo-hotels are a way for people who aren't tremendously wealthy to have a vacation home that makes money when they are away, she said. Las Vegas is appealing for investors because it's a year-round vacation hub as opposed to the Midwest, which tends to be seasonal, she said.

The Chicago resident intends to buy a unit at Aqua Blue and stay in Las Vegas more often.

"I used to go to Vegas about once a year but this will make it more affordable for me," Marcin said.