It’s not like it was six or seven years ago: Boyd Gaming’s Corp.’s recent sale of the former Stardust/Echelon site to purchaser Genting Group for $350 million (which amounts to about $4.02 million per acre) indicate that land values on the Las Vegas Strip are still a staggering 90 percent below their peak almost a decade ago.
That’s according to industry analyst and Newmark Grubb Knight Frank executive vice-president John Knott, who was personally involved in several key Strip deals back in the day. That was when the old New Frontier was snatched up from owner Phil Ruffin by the New York Plaza’s hotel group for $1.2 billion (about $34 million an acre) for what was essentially a tear-down. Tear it down they did (via implosion), but by that point, the economy was heading further south than Antarctica, and plans for a $5 billion Vegas version of the New York iconic landmark hotel were shelved.
Another example is the former and not-too-swanky Klondike Casino towards the south end of the Strip, whose site was once valued at $15 million an acre but which only pulled in $1.5 million on the auction block recently. But despite the low purchasing figures, Knott is optimistic about the future for the Strip. “I think we go up from there,” he noted about the rock-bottom liquidation prices per acre. “There are just a limited number of sites out there.”
Strip Purchases Still Valuable
Prime Strip purchases over the past seven years have varied in their per-acreage charge, as well as their finished products. For example, Harrah’s Entertainment (which has now morphed into Caesars Entertainment) bought the raggedy old Westward Ho site for $18.4 million an acre, then turned that real estate over to Boyd Gaming in exchange for the Barbary Coast, the only tacky old-school casino left at the prime corner of the Strip and Flamingo. Caesars then renamed the Barbary, calling it Bill’s Gamblin’ Hall; then mercifully shut the whole thing down for a future planned remodel.
Then there was SBE Entertainment and Stockbridge Real Estate, who shelled out about $19.7 million per acre for the now-imploded Sahara back in 2007. The new SLS Las Vegas is currently going up on that site. The former MGM Mirage, (now renamed MGM Resorts International) paid $17.2 million per acre across the street from the Sahara site for a vacant spot that held 25.8 acres. That site is still vacant, but no doubt something will go up there in the not-too-distant future, given its location.
Finally, Harrah’s paid $20.1 million per acre for the ineptly named Imperial Palace back in 2005, rebranding it The Quad. In ’06, Columbia Sussex let go of $30 million an acre for the Tropicana, but later lost the property, which has since had a minor facelift anyway, in a bankruptcy reorganization.
So, would you like Door #1, or the cash?