Real Estate:

Q+A: Houses popping up at long-dormant Skye Canyon development on valley’s northwest edge

Construction continues on the Skye Canyon development in Las Vegas on Thursday, July 9, 2015.

In the midst of the real estate bubble, developer John Ritter led a group that paid more than half a billion dollars for sprawling desert land in the upper northwest corner of Las Vegas, with plans for a massive community.

But Ritter, CEO of Focus Property Group, never built a thing, and his consortium lost the site to foreclosure in the early days of the financial crisis.

Skye Canyon Construction

Construction continues on Skye Canyon in Las Vegas, Nev. on July 9, 2015. Launch slideshow »

Today, new owners are in charge, and homes are sprouting at the valley’s edge.

The first phase of 1,700-acre Skye Canyon, at U.S. 95 and Horse Drive, is underway. Work crews are building roads, installing utilities and landscaping, and constructing around 15 homes, most of which are models. The first ones are expected to open Aug. 1.

Olympia Cos., led by founder Garry Goett, is developing the project. The Las Vegas-based company owns the site with New York investment firms Stonehill Capital Management and Spectrum Group Management. The trio bought the site out of foreclosure over the course of about a year and a half.

The group has sold roughly 120 acres — a fraction of the overall land — to Pulte Homes, Century Communities and Woodside Homes. The entire first phase will comprise 160 acres with about 750 homes.

Skye Canyon, however, is designed for 9,000 homes, and if all goes as planned, would take about 15 years to complete. But building that many homes seems highly unlikely, as Las Vegas’ housing market, while faring better than it did at the depths of the downturn, is a shadow of what it was during the bubble.

Click to enlarge photo

Chris Armstrong, vice president of development for Olympia Companies

“I don’t know if we’ll get to that,” said Chris Armstrong, vice president of development for Olympia. “Right now ... I’d say 9,000 is not likely, but we’re designing infrastructure to be able to support that.”

Ritter’s group, which boasted several homebuilders including Pulte and Woodside, bought the project site for $510 million at a U.S. Bureau of Land Management auction in 2005. The former Wachovia Bank, however, foreclosed on the untouched property in September 2008, less than two weeks after Lehman Brothers went bankrupt and helped set off the national financial meltdown.

Their envisioned master-planned community wasn’t the only mini-city in Southern Nevada that stalled during the recession — and Goett’s group isn’t the only one bringing one back to life.

Other projects that were derailed but got back in business in the past year or two include 2,200-acre Cadence, in Henderson; 2,700-acre Park Highlands, in North Las Vegas; and 1,900-acre Inspirada, in Henderson.

No one is expecting widespread construction anytime soon, as builders typically construct homes only after selling them, unlike during the bubble, when speculative development was all too common.

Still, Las Vegas’ homebuilding business is gaining speed after slumping in 2014 with plunging sales and volatile prices.

This year, local builders sold 2,360 new homes through May, a year-to-year increase of 9 percent, and the median closing price in May was $315,250, up 12.6 percent from a year earlier. Builders also pulled 3,289 new-home permits through May, a year-to-year jump of 23 percent, according to Las Vegas-based Home Builders Research.

Olympia, which developed the 2,750-acre Southern Highlands community off Interstate 15, at the southern tip of the valley, broke ground on Skye Canyon last year. Project plans call for schools, parks, retail, hiking and biking trails, and even a casino — but like the 9,000 homes, a big gambling den on the outskirts of town is unlikely to get built anytime soon.

Armstrong met with VEGAS INC at Skye Canyon this week to discuss the project. Edited excerpts:

What kind of homes will be here?

We’ve got some low-density residential and also some higher-density. A lot of it depends on the market, obviously. We’ll eventually have some rental product, but the first phase is all single-family detached homes. We’ve got a park in the first phase that’s centrally located with a basketball court, splash pad and tot-lot type facilities. Recreational amenities are very important to our project. If you look at where we’re located, it’s the great outdoors; that’s how we’re labeling ourselves.

Do you have any lingering concerns that this is too far, that it’s too far northwest and too removed from, say, the Strip or other parts of the valley?

I don’t think so. Being close to a freeway interchange makes a huge difference. When we were originally looking at the project, I looked at it on a map and thought, wow, that’s far away. But when you drive it from the central part of town, it’s not that bad. I drove up today from Southern Highlands and it took me 32 minutes. From the central part of town, it took me 16 minutes. If you talk to our owner, people told him that Southern Highlands was too far out there.

In general now, homebuilders are not breaking ground until they presell homes. Is that what’s going on here?

Woodside has models under construction now but also some production homes, and they haven’t opened their sales office. It looks like there are three or four homes under construction on spec. They’re jumping out in front of the curve.

But you’re not expecting waves of spec construction.

No. It’s not like it was back in the early 2000s. There’s a general sense of optimism from the builders, but it’s cautionary optimism.

What was the appeal of the site?

It’s an easy drive when you’ve got great freeway access. That’s a big deal. We’ve got a full interchange, Horse Drive, but we’re changing the name to Skye Canyon Park Drive, so the exit will be called Skye Canyon. We’ve already approved that through the city and are working to change the street and interchange signs. It helps in branding our project.

Your marketing materials seem to be pitching the community as an alternative to Summerlin — on the west side, next to Red Rock Canyon National Conservation Area. Howard Hughes Corp. is big on promoting and building outdoor amenities in Summerlin. It seems like you’re doing the same thing. Are you trying to get people here as a cheaper alternative?

You hit the nail on the head. We’re going to look out for any opportunities that we can seek, and one of those is definitely Summerlin. They do a great job of promoting the outdoors; we see that it works well for Summerlin, so we’ve taken that into consideration in the design of our project. We will be trying to capture some of that market that goes to Summerlin now. And you’re right: The prices will be a little lower.

Are you going to have a Ridges-esque section of megamansions like Summerlin has?

We’ve got a very nice custom-home area in Southern Highlands, and obviously the Ridges has theirs. We’ll have some executive homes; we’ve already got homes proposed upwards of 4,000 square feet. But right now, we’re not contemplating doing custom homes.

This isn’t the only master-planned community that was essentially left for dead during the recession. Why are these projects back on track?

Land prices went through the roof but are now at a level that can support growth again. At the end of the boom, we actually sold land at close to $1 million an acre in Southern Highlands for higher-end, executive homes. Typical suburban stuff was going for probably $700,000 an acre. Prices today are considerably lower but up from four to five years ago when they hit bottom.

How much did you sell the land for in the first phase here?

Generally around $350,000 to $400,000 an acre.

Do you have any land set aside for a possible casino?

On the originally approved project, there was a 35- to 40-acre site dedicated for a casino. We’ve kept those entitlements active. We’ve discussed it with casino companies. Obviously it won’t happen now, because the rooftops aren’t here, but there’s interest in the site, which we’re optimistic about.

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