Business And Market Fundamentals of Downtown Las Vegas

Bob Ratliff - Las Vegas REALTOR

http://www.las-vegas-homes.biz

Population/Employment/Demographics

• The current residential population in the downtown redevelopment area is

• Downtown employment estimates for 2005 were 60,652; state, county and

• The city of Las Vegas’ current Standard & Poor’s bond rating is AA, which

reflects an expectation that the city will continue to prudently manage its

significant capital needs and development plans, while maintaining good

financial reserves. Fitch Ratings affirmed the AA rating, and Moody's

Investors Service added a “positive” outlook to the city’s AA- rating.

Moody's changed the city's outlook to positive from stable, based on robust

tax base growth citywide including significant development within the

3,200-acre redevelopment area of downtown Las Vegas and an ongoing

Residential

• Over 1,950 residential units are completed or under construction downtown.

• Approximately 16,000 units are planned for development over the next

several years.

• A total of 54 condo projects are proposed, approved or under construction

in the downtown redevelopment area.

Retail

• Seventy percent of the street-level development in new, mixed-use buildings

planned within the Downtown Centennial Plan boundary is required to be

oriented toward retail, entertainment or commercial activities.

• The Las Vegas Premium Outlets mall offers 435,000 square feet of shopping

with more than 120 outlet stores; a 104,000 square-foot expansion is

• Plans are to create 500,000 square-feet of walkable, urban storefront retail

as part of a 61-acre, mixed-use downtown development called Union Park.

Office

• There is currently 1,326,190 square feet of office space in the downtown

area with a 6.4 percent vacancy rate. Medical, government and owneroccupied

• The current asking rent for Class B, full-service office space is $32.40 per

• An additional 20,000 square feet of office space is under construction.

• The new four-story, 90,000-square-foot Internal Revenue Service office

building brings 500 to 600 people per day to the city’s central core. An area

adjacent to the IRS building currently under construction is the Molasky

Corporate Center, a 290,000-square-foot building complex that will house

the Southern Nevada Water Authority and other tenants.

• The Regional Justice Center, which opened in 2005, provided the

opportunity to locate four different court systems - district, justice,

municipal and supreme courts - as well as a future appellate court, within a

single facility. The 717,000-square-foot, 17-story building has spurred

development of a technologically-efficient justice environment with 5,000

Hotels

• A number of new casino operators have entered the downtown market

through acquisitions. They include the Henry Brent Company, MTR

Gaming, Majestic Star, Landry’s and Tamares Group.

• Hotel/casino owners/operators are breathing new life into the downtown

casino district with remodeling and expansion projects. These include the

$300 million Golden Nugget expansion, the Lady Luck Casino and Hotel

renovation, the Fitzgerald’s headquarters development, the Plaza expansion

and the Western Hotel Casino redevelopment.

Tourism/Gaming

• Fremont Street Experience has drawn, on average, 21 million visitors annually

to downtown since it opened in 1995. The five-block Viva Vision lightshow

canopy underwent a $17 million upgrade to LED technology in 2004, creating

• According to an independent Fremont Street Experience guest satisfaction

study, 91 percent of visitors were very likely to recommend the Fremont Street

• The city of Las Vegas, joining with the property owners association, is

developing the Fremont East District, an eclectic mix of entertainment, dining

and drinking establishments in downtown Las Vegas targeted at a wide range of

age groups and demographics. In the past 12 months, 15 new venues have been

recruited and opened in and around the district area.

Infrastructure

for the I-15 corridor from Sahara Avenue to the I-515/U.S. 95 interchange

commonly known as the “Las Vegas Spaghetti Bowl.” The estimated

completion date for the city of Las Vegas components is 2015. Project Neon

will consist of:

• I-15 freeway improvements and widening

• Local access improvements to the Las Vegas downtown redevelopment area

• Operational improvements for the I-15 Charleston Interchange

• An Industrial Road/Martin Luther King Boulevard connection

• A grade separation of the Union Pacific Railroad tracks and Oakey

Boulevard/Wyoming Avenue, so that vehicle traffic and rail commerce do not

Luther King Boulevard to Rainbow Boulevard. U.S. 95 will be widened to six

lanes from Rainbow Boulevard to Craig Road. The completion date is estimated

bus service. It connects downtown Las Vegas with key areas such as the Las Vegas

which will eventually connect Henderson, Las Vegas and North Las Vegas with the

Las Vegas Strip resort corridor. This system will make use of non-rail rapid transit

similar to the Metropolitan Area Express (MAX) on a dedicated pathway. The

MAX alternative provides the flexibility to adjust the route according to demand,

while a rail option does not. The Downtown Connector will be the first phase with

service expected to begin in late 2008/early 2009. The connector will travel north

from Sahara Avenue along Paradise Road, Imperial Avenue, Third Street, Casino

Key Projects

Market Center was completed in 2005 in the heart of downtown Las Vegas.

The center’s second phase, comprised of 1.6 million square feet, will be

open for the semiannual home furnishing marketplace in January 2007.

Groundbreaking for the third phase, which will provide over 2 million

square feet of showroom space, was held September 2006. When fully built

in 2012, the home furnishing and design center will include 12 million

square feet in eight buildings; it will be the largest trade show facility in the

significant portion of the $87 million, 15-story Molasky Corporate Center is

being devoted to the Southern Nevada Water Authority. This complex is

downtown real estate called Union Park. This development will include the

Smith Performing Arts Center, the “Keep Memory Alive” Lou Ruvo

Alzheimer’s Institute, 2.2 million square feet of Class A office space,

469,000 square feet of ground-floor retail space, 3,600 high-rise residential

units, 15,800 parking spaces contained within vertical structures, 1,750

hotel rooms and a new city hall.

spaces including a state-of-the-art, 2,200-seat, multi-purpose hall. The

theater will be appropriate for first-run Broadway shows and other major

touring attractions as well as orchestra, opera and dance performances.

will be dedicated to the fight against Alzheimer's, Parkinson's and

Huntington's diseases as well as other related disorders associated with

the aging of the brain. It is being designed by world-famous architect

Frank Gehry. The 50,000-square-foot institute will include offices for

health care practitioners and researchers, a “Museum of the Mind” and a

international gem and jewelry companies with a gallery of retail shops

offering broad public appeal. The project calls for 100,000+ square feet

of retail space, 800,000 square feet of office space and 175,000 square

feet of residential construction. In addition, the center will offer on-site

parking and may incorporate food and museum components.

entertainment district, an eclectic mix of entertainment, dining and drinking

establishments in downtown Las Vegas targeted at a wide range of age

groups and demographics. The city and property owners have committed

$5.75 million through a public-private partnership toward a major

streetscape installation for the district. The streetscape will include

pedestrian-friendly street redesign, landscaping and retro neon signage. This

installation is scheduled for 2007.

building in the Las Vegas Enterprise Park will house approximately 230 fulltime

employees.

built and planned for downtown. The following are under construction:

The following are in sales and could move into construction

in 2007:

Downtown Advantages

Central Location

• The downtown core is located at the intersection of U.S. 95 and I-15

allowing easy access throughout the Las Vegas area and to other regions in

the U.S. Southwest.

Land Value

• Land in the downtown core is valued at $6 million-$12 million per acre,

while land on the Las Vegas Strip is valued at $20 million-$30 million per

Government Programs

downtown commercial buildings, enhancing the physical appearance of the

area, and improving the overall economic viability of downtown. Since the

programs’ inception, the Redevelopment Agency has approved

improvements for thirteen businesses, leveraging more than $2 million

dollars in private investment.

clients with a seamless and uninterrupted process for project approval and

initiation. Over 30 mixed-use and commercial developments are currently

being assisted.

of visitors and locals.

generated due to new development on a site. The TIF program uses tax

money from the difference in the originally assessed property value and the

new, enhanced property value to pay for eligible qualified expenditures. Up

to 41 percent of the tax increment can be rebated annually to a property

developer for eligible qualified expenditures to a construction project.

Eligible projects must be located within the Redevelopment Plan Area.

Projects eligible for consideration of tax increment financing assistance

include, but are not limited to, office, high-rise residential, retail, hotels and

mixed-use projects.

The north end of the Las Vegas Strip leading to the downtown area is a hot

growth area. Projects announced are: