CityCenter already expandingCondo-hotel project to cost $6 billionBy Liz Benston Adding roughly $1 billion to what already is the biggest and most
expensive construction project ever attempted on the Strip, MGM
Mirage plans to expand the number of hotel rooms and residences at
its massive Project CityCenter development. The increase also means taller buildings that would tower 40 to 60 stories above the Strip as well as building condos above a Manhattan-like retail streetscape to be built on the former Boardwalk site, south of Bellagio. CityCenter, which will include a 4,000-room resort hotel and more than 500,000 square feet of retail space, is now expected to cost about $6 billion. The original $4 billion price estimate had been pushed up to about $5 billion by rising construction costs and earlier design changes. With construction on the main resort expected to start in April, the designs are close to becoming final, officials say. CityCenter is expected to open in phases starting in 2009, with the entire project scheduled to open in 2010. The bold expansion plans come as other developers, unsure of the demand for condominiums amid stiffening competition in Las Vegas and attempting to control rising construction costs, are considering scaling back or have even scrapped their condo towers. However, CityCenter's estimated 6,800 hotel and residential units will open amid an unprecedented building boom on the Strip that is expected to add more than 10,000 hotel and condominium units within about the next five years. Over the past year, MGM Mirage and other developers have watched the national real estate market and especially the red-hot resort condo market slow down. But rather than pulling back, MGM Mirage sees opportunity as competition falls by the wayside. "Demand went down but not as much as supply," said Tony Dennis, executive vice president of CityCenter's residential division. "Our forecasts tell us there's enough growth in the market. What we understand about Las Vegas is that it's going to grow." Dennis is a former hotelier and condominium developer in Toronto, a city known for its urban skyline and mature condo market. "The ebb and flow of the real estate market is a natural thing," Dennis said. "The slowdown was very well predicted and hasn't been cataclysmic. We don't have a crisis. "I think the shrewd real estate people understand it. People looking for a home in Las Vegas can see through the noise and are looking for the right offering. We believe we have that." CityCenter's condo expansion is not a response to competitors such as Boyd Gaming Corp., Dennis said. Boyd recently announced plans to build a similar multihotel concept called Echelon Place that will begin construction next year on the Stardust site. That project, which also will boast more than 5,000 hotel rooms, is estimated to cost $4 billion. Unlike CityCenter and other projects under development on or near the Strip, Echelon Place was not planned with condominiums because of concerns that market is overbuilt. "We take them very seriously," Dennis said of Boyd. "Competition is a good thing." But CityCenter's builder said would-be competitors will be hard-pressed to attempt large-scale projects. There are not enough qualified, experienced builders that are not already scheduled to take on Strip projects, he said. "Anything that's announced right now is just going to have to wait in line," said Dick Rizzo, chairman of Perini Building Co. "There's just not enough people -- contractors and subcontractors." CityCenter's resort and retail areas have not changed much from the original plan, Dennis said. The condominium units will be spread among various buildings designed to appeal to different kinds of customers, from resort customers to younger, working professionals, he said. "It's not a monolithic thing," he said. "There's going to be options for people. It's been very thoughtfully segmented as to what customers aspire to (own)." The previously announced Mandarin Oriental hotel at CityCenter will include 400 hotel suites as well as more than 200 condominium units designed to appeal to an "international crowd of trophy homebuyers," Dennis said. By contrast, two 400-unit condo towers, located in the middle of the CityCenter site and above several floors of retail space, are designed for younger people who want to live in an urban environment, he said. The other condo buildings include a condo-hotel with about 300 apartments and a bigger tower with about 1,500 condo-hotel units. A who's who list of urban architects will be designing specific buildings on the 66-acre site, which will re-create a walking neighborhood resembling the urban environments in the country's biggest cities. Two additional architects recently have signed on to build out the project, executives say. Amid a new wave of development on the Strip that will bring at least six major resorts, MGM Mirage still views its project as a trendsetter that will transform the Strip and influence future development for decades. "Our buildings will be coming out of the ground within a year," Dennis said. "I think we'll be way ahead of the curve." The choice location near the center of the Strip and the "dream team" of architects and designers is unmatched in the gaming industry, he said. Unlike other projects under way, MGM Mirage will have begun construction on CityCenter's core before the company begins selling residential units. Many developers sell units before they build, which gives buyers less confidence, Dennis said. "Most companies don't have the resources or don't want to deploy them to that level," he said. "These are not just schematics. We will go to market when (the design) is materially complete." The company expects to begin selling the condos in the fall, he said. Prices for the units have yet to be determined. "Our credibility is everything," he said. "In a market where credibility can be suspect, that's even more important." More about the
Las Vegas City Center
project |
