Las Vegas Casino Market Not Saturated Yet, Says Analyst
Posted on: March 23, 2023, 12:52h.
Last updated on: March 23, 2023, 02:30h.
There’s no shortage of casinos in Las Vegas, and the US gaming hub can handle upcoming additions to the supply. But Sin City could be headed for an extended period in which no new gaming venues come online.
That’s the sentiment of CBRE analyst John DeCree, who, in a new report to clients, says the Fontainebleau Las Vegas and Red Rock Resorts’ Durango Casino & Resort, both slated to open later this year, are likely to be the last additions to the Sin City casino scene for some time. Fontainebleau will be the newest opening on the north end of the Strip, while Durango is opening in an underserved area of Southwest Las Vegas.
DeCree observed that while the city can absorb the additions of those venues, macroeconomic headwinds could put a lid on further new development for the foreseeable future.
Given the rising cost of construction and tight credit markets, we suspect development activity will cool off, at least for now. This means the projects slated to open this year could be the last wave of major developments in Las Vegas for a little while,” the analyst noted.
The $2.1 billion MSG Sphere is also expected to open later this year on the Strip. But that isn’t a gaming venue, though it could drive foot traffic to the Venetian and other nearby Strip properties.
Interesting Strip Signals for Development
Perhaps owing to macro challenges, such as persistently high inflation and rising interest rates, the current state of development affairs on the Strip isn’t outright sanguine.
Earlier this week, it was revealed construction on the Dream Las Vegas on the south end of the Strip was halted. That’s as the company behind the project looks to procure financing of up to $30 million to pay for work already completed at the venue.
Additionally, billionaire businessman Tilman Fertitta has yet to make a decision on 6.2 acres of land at Las Vegas Boulevard and Harmon Avenue that he acquired last year for $270 million. In this specific case, Fertitta may flip the land for a profit to potentially fund an acquisition of the NFL’s Washington Commanders or Wynn Resorts (NASDAQ: WYNN), two rumored transactions he’s been tied to.
Fertitta hasn’t publicly commented that selling the Strip acres for those purposes is possible.
Durango Should Be Fine
Durango, one of the centerpieces of Red Rock’s Las Vegas Valley expansion plans, isn’t likely to contribute to casino saturation in the market because of its favorable geography.
Durango is opening in a relatively underserved part of the Las Vegas locals market, with no other restricted casino supply located within a five-mile radius. Although some local casinos may experience some cannibalization, Durango should grow the market,” added DeCree.
Red Rock is one of the dominant operators in the Las Vegas locals segment. The company recently opened a Wildfire casino in downtown Las Vegas and has other projects on tap in the area beyond the Durango opening.
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