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Best of Liz Benston

Gaming Guru

Liz Benston

'South Strip' Sees Resurgence

22 March 2005

LAS VEGAS -- When Michael Gaughan Jr. looks south of Mandalay Bay on the Strip, he sees a continuous line of new development fed by an influx of housing east of Interstate 15 as well as by frequent visitors driving in from Southern California.

"This will be the gateway to the Las Vegas Valley for Southern California," said Gaughan, the son of Coast Casinos' chief executive and the manager of the upcoming South Coast casino resort on Las Vegas Boulevard South. "I'd say 10 years from now most of the space will be filled in. I also see some (developments) torn down and built up at a greater density."

The $500 million South Coast, five miles south of Mandalay Bay, is scheduled to open early next year with 662 rooms, a 16-theater movieplex, seven restaurants, an equestrian center, 2,400 slot machines and 150,000 square feet of event space at Las Vegas Boulevard and Silverado Ranch Road.

What developers are now calling the "South Strip" is mostly desert stretching from Russell Road past little-known streets such as Cactus Avenue and Starr Avenue to St. Rose Parkway.

It's already home to a few condominium and timeshare complexes as well as the Las Vegas Outlet Center. And several new and expanding housing developments including Mountain's Edge, Southern Highlands, Silverado Ranch and Anthem, are bringing tens of thousands of new homes to the region.

But its status as an up-and-coming neighborhood anchored by as many as five large casinos has only surfaced more recently.

The Silverton hotel and casino, located at Blue Diamond Road and I-15 to the west of Las Vegas Boulevard, recently revealed plans to build a second casino on the southern end of its 100-acre site in addition to a timeshare complex with up to 2,000 units.

It's a continuation of a recent $150 million upgrade that involved renovating the casino and hotel, opening an outlet of major sporting goods chain Bass Pro Shops and adding new restaurants and amenities including a saltwater aquarium and "mermaid" show.

That's also on top of a previously announced expansion that will break ground this year including a hotel tower with up to 300 rooms -- effectively doubling the Silverton's available rooms -- as well as 30,000 square feet of meeting space and a parking garage.

Silverton General Manager Craig Cavileer, a former retail developer in Los Angeles, said the expansion "was always part of our master plan" but said the company only recently decided to accelerate the growth of the resort because of the "explosion of growth" on the south Strip.

"Who would have ever imagined residential high-rises south of the Belz Mall?" he said. "I've been out here eight years and nobody thought about that" until about a year and a half ago, he said.

"People thought you wouldn't want to buy a time share (or condo) in Las Vegas if you could get a room for $75."

Cavileer previously worked for Silverton's parent company Majestic Realty Co., one of Los Angeles' biggest commercial developers, and was involved in the development of the Staples Center arena.

Cavileer said he estimates at least 6,000 residential units are going up along Las Vegas Boulevard "with no restaurants, food and beverage and gaming" to serve them before South Coast gets built.

The second casino could cost $500 million and feature some 200,000 square feet of casino space and 1,000 hotel rooms. It would be part of an ambitious master plan for the 80 acres surrounding the Silverton that is expected to include five or more hotels as well as several restaurants and entertainment venues that would take shape over the next several years. The total investment could come to $2 billion and rival Lake Las Vegas in scope.

The Silverton's second hotel tower, part of a $75 million expansion including the garage and meeting space, will feature a more upscale, all-suite room product, Cavileer said.

Like the Silverton, the South Coast resort ended up becoming a larger project than originally anticipated.

A change in region's master plan allowing for high-rise condos in addition to lower-density homes has also boosted prospects for the project, which would be the first hotel and casino to be built on Las Vegas Boulevard south of Mandalay Bay, Gaughan said.

Three timeshare complexes are within a mile of the South Coast and a fourth is underway, while several condo projects are under development, he said.

"We definitely foresaw a lot of development around Las Vegas Boulevard but we were pleasantly surprised with the new plans for development west of I-15," he said.

The South Coast will cater to a mix of locals and tourists given its proximity to new local neighborhoods as well as becoming the first resort Southern California drivers see when they drive into Las Vegas, Gaughan said.

Coast Casinos, now a subsidiary of Boyd Gaming Corp., has more experience than many operators as its Orleans and Suncoast properties also serve two distinct markets.

"We feel it's going to be a lot like the Orleans," Gaughan said of South Coast. "We are a local property first and foremost. But at 1,900 rooms and eventually with 2,000 rooms, we also will be a destination resort."

"The developments coming in along the (south) Strip will probably share that concept as a resort-type destination but I don't know if they'll be able to deal with the locals as well as we can," he said.

The 419-room Suncoast, located in the affluent neighborhood of Summerlin, established a lucrative niche by drawing locals as well and regular, out-of-town visitors. The property is now one of the company's most profitable and charged an average daily rate of $86 per night last year -- the highest of any Boyd hotel including its Strip properties.

Las Vegas developer Garry Goett threw his hat into the ring this week, announcing plans for a second casino that would be built with retail and residential units at St. Rose Parkway and Las Vegas Boulevard. Goett, chief executive of Olympia Group, has previously outlined plans to build a casino, regional mall and residential units on the Boulevard between Cactus and Starr avenues. Indianapolis-based Simon Property Group is a partner in the mall, expected to be at least 800,000 square feet.

Developers have speculated that Station Casinos Inc. will eventually build its own version of the South Coast on 55 acres of land it owns at the northwest corner of Las Vegas Boulevard and Cactus Avenue, setting up another regional battle with locals casino rival Coast.

Station acted on an option to buy the property but hasn't yet decided whether to develop it, Station Casinos spokeswoman Lesley Pittman said.

Pittman said the company is focused on developing other parcels of land it owns across the valley. Station expects to start work redeveloping the Wild Wild West casino and motel at Flamingo Road and Interstate 15 after it opens the $800 million Red Rock Station resort in Summerlin next year, she said.

Landowner John U. Tippins IV, who represents owners of some 35 acres along the south Strip, said he envisions the region developing primarily into an entry-level market for locals rather than a tourist market because it is affordable relative to the Strip.

The southern end of the Strip is poised to become a haven for younger, upwardly mobile people who work on the Strip and want the convenience of a nearby neighborhood, said Tippins, whose company DBS Tippins is affiliated with developer Mark L. Fine and Associates.

The Silverton's upgrade from its roots as the cowboy-themed Boomtown Casino marks one of the best makeovers in Las Vegas and is aimed at more effectively tapping into the Southern California market, Tippins said.

"From 21 to 80 years of age, there's something for everyone there," he said.

Southern Californians -- already the biggest chunk of the Strip's tourist market -- are becoming an increasing percentage of the Silverton's business along with tourists from further afield who are coming from the Strip to check out Bass Pro Shops, Cavileer said.

"It's not just a value-oriented customer you're talking about," he said. "These are great candidates for anything you can build ... especially when you can give them something to do that's similar" to the Strip.