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Strip forecast sees $1.5 billion invested over next two years26 December 2012
Colliers International issued the upbeat forecast to introduce its new gaming division. Already a well-known player in the office, industrial and retail sectors of the commercial real estate business, the firm brought in veteran Las Vegas-based analysts and brokers to create the Colliers International Gaming Group. Mike Mixer, head of the gaming group, said the new division will provide asset valuations, advice on strategic acquisition and sales, and tax services. The gaming group includes Gabe Telles and Josh Smith, who both recently worked at CB Richard Ellis Global Gaming Group. Mixer and his team are bullish on Las Vegas, especially when it comes to large-scale renovations of Strip properties. He said the $1.5 billion figure is a calculation of the projects either under construction or planned for next couple of years. "Investors who have been sitting on the sidelines for several years are starting to see that uptick," said Smith The investments include the $500 million renovation of the Sahara into the SLS Las Vegas and the redevelopment of Bill's Gamblin' Hall. There's another $750 million to complete transformation of Imperial Palace into the Quad, the construction of the Linq and Skyvue projects. A rumored sale of the LVH coupled with other possible deals brings that total to $1.5 billion. The gaming analysts were optimistic about reinvestment in Hooters, and a possible sale of the foreclosed New Frontier parcel across from Wynn Las Vegas. "We are cautiously optimistic about the Strip in 2013," said Telles, commercial real estate consultant with the gaming division. "We do see growth albeit nominal growth in the 2 percent to 4 percent range." Telles expected the Strip "will transition into a slow and steady growth rate" next year. He attributed the growth to impressive visitor volume and convention business figures. That modest growth is expected to benefit different areas of the Strip in different ways. Mixer said the Sahara project is "crucial" for the northern end of the Strip, which has struggled with the Echelon and Fontainebleau sitting there unfinished. "The remodel of the Sahara into the SLS Las Vegas is very crucial," Mixer said. "Sam Nazarian is bringing new blood and investment to the area. It will help energize the area." Nazarian is CEO of SBE Entertainment, a Los Angeles-based company that owns SLS-branded hotels in Beverly Hills, Calif., and Miami. SBE and Stockbridge Capital announced in April they had secured $300 million in financing to transform the Sahara. On the south end of the Strip, Mixer expected more dense development of underused parcels. He said half-acre Strip lots could be repositioned as three-story retail developments, with the hope that visitors will "stay longer and spend more money." Mixer didn't expect anything to happen in the "short term" with the Fontainebleau, Echelon or former New Frontier site. "The Sahara project will be highly scrutinized," he said. "Any success it has will boost other properties in the neighborhood." Smith, a commercial real estate consultant with the gaming division, said both the Fontainebleau and Echelon "present a nice opportunity" down the road, but the economy has to show sustained growth before moving forward with either project. Neither Smith nor Mixer expected any developments with the Strip's two largest unfinished resort projects in 2013. Mixer said he also expects the former New Frontier, which was foreclosed with defaulted debt of $625 million, to remain vacant for a while. At LVH, Mixer expected to see a significant level of investment from a new owner. The property is run by American Casino and Entertainment Properties LLC, which is owned by an affiliate of Goldman Sachs & Co. "It's a noncore asset for Goldman Sachs," he said. "There is potential for a deal to close in 2013. The LVH is functioning, but that's all. It's an asset that is in need for fresh investment." Colliers International's Gaming Group is also excited about the changes in downtown Las Vegas. Smith said the area has seen some strong redevelopment with what Derek Stevens has done at the D Las Vegas and Golden Gate. He expected the Downtown Grand to be the last hotel redeveloped, although more restaurants and retail were expected on Fremont Street and Ogden Avenue. He credited developer Seth Schorr and his company, Fifth Street Gaming, with growing the downtown Las Vegas market by offering new experiences. "It's about new blood and energy coming into the market," Smith said. "There is a new energy … and a nice mix of gaming and commercial. We are very strong on downtown." Copyright GamingWire. All rights reserved. Related Links
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