Fancy owning a slice of the Las Vegas Strip? Well, now you can, provided you have deep pockets. Very deep. $800 million deep.
Investment group Spectrum Group Management is selling that prime piece of real estate that currently houses Walgreens, Fatburger, the Hawaiian Marketplace, a Travelodge, and a bunch of parking lots. It may not sound like the most glamorous chunk of the Strip now, but, as every homebuyer knows, it’s the development potential that counts.
Listing broker John Knott of CBRE Group told the Las Vegas Review-Journal this week that the 16 acre-plot was the last developable piece of land on the central Strip, and its location — right in the middle of Las Vegas’ busiest area, across from CityCenter — justifies the price tag.
Market Picking Up
But does it? Spectrum put the same plot on sale three years ago for just $500 million but failed to find a buyer. Back then it also included the former Smith and Wollensky building, which was acquired by the owners of the adjacent Showcase Mall in May last year, for $59.5 million.
Knott notes that the market has picked up since. “We’ve already had some meetings with people who don’t think we’re crazy,” he assured the RJ. But have prices really risen 62.5 percent in just three years?
The economic downturn that began in 2008 stalled land sales on the Strip and many development projects ran out of money and were abandoned. Sales have been slow ever since, but the market has undoubtedly picked up in the past three years. Room rates and gaming revenues are growing and that decreases the risk of a major investment.
Last year, the Fontainebleau, one of those projects doomed by the recession, was acquired for $600 million and is currently being redeveloped into The Drew Las Vegas. Meanwhile, Wynn Resorts recently struck a deal to acquire the 38 acres of land on which the New Frontier once stood, and which, for several years, was destined to be the now-abandoned Alon project. The company paid $336 million and appears to be warehousing the land for future use.
The Spectrum plot, itself, was also once earmarked for a development that stalled in the financial crisis: a multibillion-dollar Elvis-themed resort.
The former Fontainebleau and Alon plots are further up the Strip, but the selling prices were nowhere near the $50 million per acre Spectrum is demanding.
Still, any plot of land is only worth what someone is prepared to pay for it, and should Spectrum receive close to the asking price, it would represent a huge vote of confidence in the Las Vegas economy.