The unfinished Fontainebleau resort, which has sat idly on the north Strip for years, is now for sale.
The commercial real estate firm CBRE announced today that it has listed the Fontainebleau, which sits on more than 22 acres on the east side of Las Vegas Boulevard South near Circus Circus and the shuttered Riviera. The mothballed project has made no substantial progress since billionaire investor Carl Icahn bought it out of bankruptcy for about $150 million more than five years ago.
John Knott, executive vice president of CBRE Las Vegas, said in an interview that the firm expects a buyer to pay around $650 million for the Fontainebleau land and structure, though he admitted the final amount could be a bit higher or lower.
“It’s not an official asking price per se, but we’ve gone through and done the analysis and certainly that seems well within the confines of good taste,” he said. “We see that as a reasonable value of what’s there.”
The Fontainebleau’s most significant recent update came last week, when the Clark County Zoning Commission voted to require it to install a fabric-and-paint wrap that would cover up the exposed incomplete construction work.
County Commissioner Chris Giunchigliani, whose district includes the Fontainebleau, said the sale announcement should not change the wrap situation. The Fontainebleau still has a 90-day window to submit designs, then six months to get the wrap on, she said.
In its announcement of the listing, CBRE touted the Fontainebleau’s proximity to the Riviera, which the Las Vegas Convention and Visitors Authority plans to demolish next year and eventually replace with an expansion of its convention facilities.
As for the Fontainebleau structure itself, CBRE said it leaves room for “flexibility” and “can be reconfigured to meet a new investor’s vision.” The firm’s announcement also highlighted the Fontainebleau’s “iconic height” as a selling point: It’s one of the tallest structures in the valley, surpassed only by the Stratosphere for prominence on the Las Vegas skyline.
The Fontainebleau presents a huge opportunity for potential buyers — literally. It was originally designed to hold more than 2,800 hotel rooms and suites, about 930 condominiums, 300,000 square feet of retail, 543,000 square feet of meeting space, 155,000 square feet of gaming space and a 3,200-seat theater, according to CBRE.
Michael Parks, first vice president with CBRE Las Vegas, said he anticipates interest from a “wide array” of buyers, including casino companies, traditional hotel companies and international operators. He also said it’s “highly unlikely” that the eventual buyer would tear down the structure.
Knott agreed with that assessment.
“The structure has been maintained meticulously. We think someone will use that,” he said. “They may configure it a little differently on the inside than what was originally envisioned, but the structure will stay.”
According to Knott, others have estimated it would take $1 billion or more to finish the Fontainebleau as originally planned.
Icahn could not be immediately reached for comment. But in a 2010 interview with Reuters, he said the Fontainebleau reflected his philosophy of buying things that no one else wanted.
“There's no question Vegas is pretty stormy right now, but if you buy things when nobody wants them, you just buy them and hope the sun will come out,” Icahn told Reuters.
That storm has in many ways subsided in more recent years. Las Vegas hotels have generally made significant improvements in average daily room rates and occupancy since the depths of the recession, and the region reported a record number of visitors last year. Gaming revenue on the Strip, while still well below its pre-recession peak, is stronger than it was just a few years ago.
And the Fontainebleau’s north Strip neighborhood, long known for its vast plots of vacant land and unfinished projects, has begun to show signs of life. Most importantly, two big resort projects — Resorts World Las Vegas and Alon Las Vegas — are underway across the street, as is the convention center project at the Riviera site next door.