The SLS Las Vegas, which opened in 2014 as the renovated former Sahara on the far end of the north Strip, hasn’t instilled hope in the area. The casino has struggled financially since the day it opened, with investors alleging in a recent lawsuit that it’s on the “verge of bankruptcy.”
Resorts World Las Vegas, just north of the Alon site, is a prime example of the area’s struggles. It initially was supposed to open in 2016. After several years of promises but minimal progress, construction finally picked up this summer. It is now slated to debut in 2020.
The Alon site also has a rocky past. Israeli investors bought the New Frontier for $1.2 billion in 2007 and imploded the hotel with plans to develop a luxury resort called Plaza Las Vegas. But the economy crashed, and they never built the project.
Australian billionaire James Packer’s company, Crown Resorts, acquired the site through foreclosure in 2014. His group filed plans for the 1,100-room Alon Las Vegas, but Packer reportedly had trouble raising project funds, and Crown bailed on the project late last year.
Crown was Alon’s main financial backer and put the site up for sale in May for $400 million.
Overall, investors have been largely ignoring the Strip’s empty parcels. Michael Parks of CBRE Group, a listing broker for the Alon site, confirmed that the last vacant land to trade in the corridor was the Alon site itself three years ago.
Parks said he and partner John Knott received “a decent amount” of interest in the Alon site, adding that the buyer pool for a deal of that size was small.
Wynn Resorts is taking control of the Alon site but not full ownership. It is buying 18.4 acres from Crown and renting 16.2 acres from the Elardi family, which leased its parcel to Packer’s group.
The other, smaller property that Wynn is buying as part of the 38-acre transaction is being sold by Treasure Island owner Phil Ruffin, Wynn spokesman Michael Weaver said.
North Strip comeback?
Visitor levels are forecast to grow in coming years as convention sizes expand and more space is built to hold them. The Strip also generated $5.4 billion in gambling revenue this year through October, up 2.6 percent from the same period last year, and its average daily room rate, $142, was up 3.6 percent, according to the Las Vegas Convention and Visitors Authority.
Still, the north Strip has plodded along in recent years with lighter foot traffic, delayed projects and sprawling, vacant lots. There has been talk for several years now about a revival, and while that hasn’t happened yet, big projects in the neighborhood are showing signs of life.
The LVCVA plans to start construction of a $1.4 billion expansion of the Las Vegas Convention Center next year to add 1.4 million square feet of space by 2021, potentially creating greater hotel demand nearby.
In addition to Resorts World moving ahead, New York developer Steve Witkoff and Miami investment firm New Valley bought the long-mothballed Fontainebleau hotel for $600 million in August. They haven’t yet announced plans for the site.
“Many operators are likely sensing the potential for pent-up demand,” said Brian Gordon, co-owner of Las Vegas research firm Applied Analysis. “There is limited opportunity for Las Vegas Strip frontage in the balance of the resort corridor. In the absence of a wholesale redevelopment project, future activity will be forced to migrate to the north and south portions of the Strip.”