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Gaming Guru

Hubble Smith
 

Workers applaud as redevelopment work begins on Downtown Grand

21 November 2012

By Hubble Smith

LAS VEGAS -- Electrician Marshal Mann stood among more than 50 construction workers Tuesday applauding the launch of redevelopment for the Downtown Grand hotel, formerly the Lady Luck.

The project means 10 months to one year of steady employment for Mann, who spent the past 1½ years searching for work out of state.

"I'm excited to be at home with my wife and newborn, especially for the holidays," he said during a ceremony on Third Street that featured the Valley High School marching band.

Fifth Street Gaming and Breslin Builders have started construction on the Downtown Grand, including renovating 650 rooms, adding a pool and spa and building 50,000 square feet of casino floor and 20,000 square feet of retail stores.

Demolition work began a year ago, and the Lady Luck's pink neon lighting has been removed.

Downtown Grand is scheduled to open in late 2013 with 600 slot machines, 35 table games and 650 employees. It's seen as an anchor for Downtown3rd, an emerging district that includes Hogs & Heifers Saloon, Triple George restaurant and the Mob Bar. The area around Third Street and Ogden Avenue will eventually be home to 18 bars and restaurants.

"It's happening," Fifth Street Gaming CEO Seth Schorr said. "We're creating a neighborhood, not just a hotel-casino. Las Vegas doesn't have a true pedestrian center, something that's authentic, which complements the bars and restaurants on East Fremont."

Schorr, the 35-year-old son of Wynn casino executive Marc Schorr, said the latest round of renovations will cost more than $100 million.

Property has been idle since 2006

The Lady Luck was built in 1964, with 26-story and 18-story hotel towers added in the 1980s, connected by a walkway above Third Street. It became well-known for inexpensive rooms and promotions that included a Mad Money keychain and footlong hot dogs.

Isle of Capri bought the property from Lady Luck founder Andrew Tompkins for $14.5 million in 2000.

In 2002, it was sold to Steadfast AMX, which converted two floors into time shares.

Henry Brent Co., led by real estate investor Andrew Donner, acquired the property in 2005 for $24 million, announcing plans for a major renovation and expansion. It was closed for remodeling in 2006 and 700 employees were laid off. It was expected to be closed for nine months, but financing for the redevelopment collapsed.

When Los Angeles-based CIM Group acquired the property in 2007 for $20.4 million, the City Council approved a development agreement for a mixed-use project that would incorporate the hotel-casino along with 100,000 square feet of retail on city land around the Mob Museum.

Fifth Street Gaming now has a management agreement with CIM Group, and Schorr said CIM had already spent about $100 million on the property.

In 2007, the idea was to leverage the Fremont Street Experience as part of a plan to revive Third Street with new retail and entertainment venues and as many as three new hotel towers.

But CIM kept missing development deadlines. Las Vegas Mayor Oscar Goodman called the dormant property a "carcass" in downtown Las Vegas. In 2009, he told city staff to inspect the property for code violations, and threatened to cancel the land agreement if renovation didn't start by late that year. With the recession in full swing and financing tight, the deadline was extended.

Mayor Carolyn Goodman, who won election in 2011 after her husband's term limits expired, said she hopes the development will revitalize a downtown core that was once vibrant and then fell into deterioration.

"What this means is the city of Las Vegas is healthy and we're coming back," she said. "Everything that was envisioned years ago is coming to be."

Redevelopment makes economic sense

Gary Schade, general superintendent for Breslin, said the project currently employs about 120 workers and will increase to 250 to 300 workers in the next few months.

"It's exciting to see these guys get back to work," Schade said of construction workers who have gone two to three years without work. "For years, you went from one job to another, sometimes literally right next door. They're excited, and I've got the A-Team, so to speak."

Schorr, who founded Fifth Street Gaming with business partner, Jeffrey Fine, developed a reputation for reinvigorating dated properties with new technology, systems and enhanced amenities. The company will own and operate seven Las Vegas gaming properties, including the Opera House, Silver Nugget and Gold Spike casinos. Principals of Fifth Street Gaming also control, through affiliates, the LEV Restaurant Group, a company that owns and operates more than 35 restaurants in the Las Vegas Valley with combined revenues exceeding $25 million.

Keith White, an independent business adviser, said casino owners are recognizing the economics of renovating existing infrastructure, as opposed to tearing down buildings and starting from scratch.

That's happening with the Tropicana and Sahara on the Strip, and D Las Vegas, formerly Fitzgeralds, on Fremont Street, he said.

"You're seeing fewer large properties and more midsize properties, which gives managers and owners the opportunity to experiment and be more creative," White said. "The challenge those guys face is while they have partnership with hotel chains, they don't know their customers' gaming habits like MGM [Resorts] and Harrah's [Entertainment]."