Just over ten years ago, in early March 2013, Malaysia-based Genting Group purchased the plot of the troubled Echelon resort project—which has since transformed into Resorts World Las Vegas—from Boyd Gaming for $350 million, a price that equated to about $4 million per acre.
A decade later, and in spite of an unprecedented pandemic, that now looks like a bargain, as land in and around the Las Vegas Strip has continued to fetch top dollar despite increased competition and new fears of recession.
The Genting-Boyd deal, as noted by Michael Parks from the brokerage firm CBRE Group to the Las Vegas Review-Journal, marked a unique inflection point, as it represented a valley between two peaks—one was just before the 2008 financial crisis, and the other, some would argue, is the current market.
This phenomenon can be highlighted by a few deals: the first was from 2007, when casino mogul Phil Ruffin sold the New Frontier for a whopping $1.2 billion, or $30 million per acre. The new owners came in with big plans to implode the hotel and develop a newer, bigger one , but that came to a halt alongside the economic downturn.
And the other came last year, a full decade and a half following Ruffin’s deal, when Houston-based entrepreneur Tilman Fertitta shelled out $270 million for just 6 acres smack dab in the middle of the Strip, which equates to nearly $45 million per acre.
Fertitta has touted similar plans to clear the plot and rebuild, but appears to be having a bit more luck than the New Frontier buyers, in that work has already started.
The significance of the analysis is that patterns can be hard to break, which has led some to wonder whether or not a similar peak-and-valley cycle may be upon us, especially given the increased fears of recession now that consumer discretionary spending looks to be trending down for the rest of the year.
If the good times continue to roll, however, it would appear that the north end of the Strip is the most ripe for high-profile purchases and developments.
At its lowest point, the area represented a “glaring example of how hard the Strip, and Las Vegas, was hit as a result of the recession,” Parks told the Review-Journal, due to the large number of canceled or struggling projects.
Now, things appear to be gaining momentum, as the long-delayed Fontainebleau is set for a fourth-quarter opening. The new West Hall extension of the Las Vegas Convention Center and nearby Resorts World have also sparked interest in the area.
And there are more deals potentially still to come for the region, as the Las Vegas Convention and Visitors Authority will be looking to relist a 10-acre plot it owns in the coming weeks, after a $120 million deal fell through at the last minute with Chilean developer Claudio Fischer.
