South side has its own struggling stretch of Strip

A concrete pad is all that remains of the Laughing Jackalope Motel on the south end of the Strip Tuesday, July 15, 2014.

When Larry Pittman started working at the Desert Oasis a few years ago, he knew the blighted apartment complex on the south Strip was out of place. The former motel, built in the ’60s, stands rusting across the street from the gleaming Mandalay Bay.

“I’ve always thought this place was an anachronism. It shouldn’t be here, it shouldn’t be in the shape it is,” Pittman said.

The Desert Oasis is a head-scratcher on this part of Las Vegas Boulevard, and it’s not the only one. The southern edge of the resort corridor is a run-down, sparsely developed stretch that lags behind the rest of the Strip. The west side of the street is built out with attractions and resorts, but the east side has a history of bulldozed motels, foreclosures, plunging property values, vandalism and grandiose development plans that fizzled.

The mile-long area, from the “Welcome to Fabulous Las Vegas” sign north to Reno Avenue, is marked by large swaths of empty land — boarded, busted properties; a pair of decades-old motels, including one whose lobby has a strip club promotional sign featuring two porn stars; a small strip mall with a McDonald’s, Winchell’s doughnut shop and liquor store; and a mothballed observation wheel project whose developer built little more than two giant, concrete pillars that look like factory smokestacks.

South Strip

Real estate broker Ric Truesdell is seen outside the shuttered Laughing Jackalope on the south end of the Strip Tuesday, July 15, 2014. Launch slideshow »

Not all is lost. Harley-Davidson dealers are building a sales and rental shop on the former Klondike casino site. The Little Church of the West, a wedding chapel, performs 300 to 400 weddings a month. And although foot traffic is thin, visitors trek to the area to be photographed at the “Welcome to Fabulous Las Vegas” sign.

But unlike the blighted north Strip, poised for a revival with the SLS Las Vegas set to open Aug. 23 and a Chinese-themed megaresort in the works, the south Strip is not expected to get built out or cleaned up anytime soon, leaving the valley with a massive missed opportunity to boost the economy, and a colorful history of greed, decay and wrecking balls.

“There are a lot of great stories in some of these parcels,” said real estate broker Michael Parks, of CBRE Group.

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There is no shortage of reasons behind the shoddy appearance and dearth of activity in the area. Resort construction has all but stopped on the Strip amid limited funding, and most new development is retail-focused. But with few businesses and no tourist spots on the east side of the south Strip, investors have little incentive to build.

Some visitors walk there from Mandalay Bay or the Luxor, but mostly to buy fast food or booze to bring back to their hotel rooms, said Josh Smith, of real estate brokerage Colliers International.

The area also drew several development proposals during the boom years, but nothing materialized.

“It has been (bad) timing,” said real estate agent Dave Johnson, of NewMarket Advisors.

Much of the land there is owned by two investors, Howard Bulloch and Tom Gonzales. Gonzales is trying to sell 27 acres of empty land for $111 million, but Bulloch, who owns the Desert Oasis, the stalled SkyVue wheel and undeveloped parcels, doesn’t appear to want to unload anything.

In the meantime, other investors who own eyesore real estate in the area have refused to sell, according to people familiar with the situation.

The decaying, boarded-up White Sands Motel, built in 1959, for instance, sits across the street from the Luxor. The bottom of the drained swimming pool is filled with trash, and the main sign is rusted and falling apart. Owner Spartaco Cilleli closed it 15 years ago and rejected an offer to sell it for “a ton of money,” a source said. Cilleli could not be located for comment.

Other damaged properties nearby include the Laughing Jackalope, a shuttered tavern with boarded windows, smashed signs and graffiti. It’s listed for rent, with a faded, tattered broker’s sign on the building.

A few blocks south is the Diamond Inn Motel, built in 1940 and purchased in the ’70s by Sam Aldabbagh, who also owns the Can Can Room, a strip club. Aldabbagh advertises the club’s “porn stars and cover girls” in his motel lobby. “We are the oldest, but still the best,” reads a flier, while a sign outside touts Diamond’s “comfortable family lodging.”

A pink elephant sits in front of the motel, its trunk broken in half and barely hanging together.

At the peak of the bubble, Aldabbagh was offered $23 million for his 1.4-acre property but turned it down, a person familiar with the matter said. Aldabbagh did not respond to a request for comment.

“It looks kind of like it doesn’t belong — one of these is not like the others,” Little Church of the West General Manager Lisa Boeres said. “But people stay there.”

She added, “I’d be a little afraid.”

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Years ago, the Strip’s south edge had a string of roadside motels, many dating back to the mob and Rat Pack days. There was the Klondike, Pollyanna, Casa Malaga, Miami Beach, Happi Inn, Glass Pool Inn. Two remain in business — the pink and light-blue Diamond Inn and the white-with-teal-trim Motel 8, built in 1961.

The Glass Pool Inn was a classic, old Vegas lodge. It opened in the 1950s as the Mirage, but the owners changed its name in the late ’80s after Steve Wynn paid them a reported $350,000 so he could use the name. Known for its above-ground swimming pool with porthole-style windows, the Glass Pool was featured in such movies as “Casino” and “Leaving Las Vegas.”

Bulloch and his partners bought the motel and surrounding property, including the Casa Malaga and Miami Beach, around 2000. They unveiled plans in 2001 for World Port Resorts, a London-themed project with a casino, hotel, fine-arts facility and convention center.

Motels were bulldozed, but the resort was never built.

During the boom years, other investors bought land in the area and laid out plans for a 493-unit condo tower and a 1,800-room hotel with casino. But their plans flopped, and they lost the land to foreclosure.

Bulloch, still itching for a project, announced plans in 2011 to build several amusement rides, including a 500-foot observation wheel, as well as convention, retail and office space. Work crews poured the foundation for the SkyVue wheel in March 2012. The ride, designed to have 32 gondolas and a 50,000-square-foot LED sign in the wheel’s center, was scheduled to open in July 2013. But construction stopped in October 2012 as Caesars Entertainment Corp. built its own observation wheel, the world’s tallest, a few miles north.

Rumors are swirling that Bulloch plans to resume work this month, but his project sits untouched. Neither he nor his business partner David Gaffin responded to requests for comment.

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Despite the failed projects, investors haven’t given up on the south Strip.

MGM Resorts International owns 15 acres there and has used the land for concerts, auto races and food festivals. And workers broke ground on the Harley-Davidson 50,000-square-foot dealership in December. It’s slated to open in October.

Owners Tim Cashman and Don Andress bought the 5-acre property in fall 2012 for $8 million, a fraction of the almost $24 million that Florida developer Daniel Kodsi, who pitched the 1,800-room hotel and casino, paid for the parcel. The motorcycle dealers had wanted to be near the Strip for years but couldn’t build before now because of outrageous land costs.

Their spot on the boulevard isn’t nearly as congested as the heart of the Strip, making it easier for bikers to get in and out. And, they figure, tourists at the welcome sign will end up capturing the 75-foot-high, 30-foot-wide Harley sign in their photos.

Cashman and Andress realize the area is blighted but assume others will develop there eventually.

“Where else you gonna build on the Strip?” Cashman asked.