The opening of SLS Las Vegas this weekend signals better prospects for development on the Strip, although it probably won’t usher in a pre-recession craze.
That was one message delivered Wednesday by the commercial real estate team that brokered the 2007 sale of the property that would become SLS.
After enduring a “substantial fall” from its peak, the local market is now starting to see some land-price appreciation, said John Knott, executive vice president and global head of gaming at CBRE.
“I’m not sure we’re gonna have another boom, but we certainly are well on the way to recovery,” he said in a roundtable discussion with local media.
CBRE officials used the SLS opening as an opportunity to reflect on the state of development and the gaming industry in Las Vegas. Here are some of the areas touched on:
More Strip development
Much of the available land in the Strip area will be built out, Knott said. That would have seemed impossible when the market crashed a few years ago.
He pointed to upcoming projects like Genting Group’s Resorts World Las Vegas and Australian billionaire James Packer’s plans to develop the former New Frontier site, both on the north Strip, as positive signs.
Knott expects the land that will host the Rock in Rio festival next year will likely be kept active on a “semi permanent” basis, either by MGM Resorts International or somebody else. He also highlighted the county’s recent approval for building a 22,000-seat arena on the north Strip, among other projects.
The appeal of SLS
Brent Pirosch, director of gaming consulting for CBRE’s Global Gaming Group, said SLS is well positioned to target crowds that are more interested in nongaming activities.
Growth in gaming revenue hasn’t kept pace with nongaming revenue, he said, “so something like SLS really hits that sweet spot of where the customer’s been going.”
Learning from Atlantic City
Unlike Las Vegas, Atlantic City doesn’t look like it’s opening up new casinos any time soon.
It’s actually closing them.
Knott said a couple factors have prevented Las Vegas from suffering the same fate, including a more friendly property tax climate. Atlantic City officials may be “taxing themselves out of business,” he said, and the area has more competition from neighboring states.
“The evidence is in the lack of interest in buying properties at any price,” he said. “The competition has eaten into that market and I’m not sure that, without significant help from the government, that market’s going to be able to recover.”