The weak economy is forcing many Southern Nevada resort operators to revisit their master plans. Not too long ago the trend was to acquire land on the Strip and almost anywhere else in town with idea of building more hotel rooms, casinos and luxury condominiums because the traffic seemed to be there. Now the focus has shifted rather dramatically away from further expansion to just being able to survive this nasty downturn.
MGM Mirage wants to do just that by seeking to unload some or all of the raw land it owns here. It has several choice Strip lots to offer, in addition to multiple parcels elsewhere in the valley and in the entire state. These sales proceeds would go a long way in shoring up its depleted bottom line and in turn help in the completion of the massive CityCenter project that has encountered some financing issues. Actually, that seems to be the main reason to the exercise.
How much will the land sales bring? Right now potential buyers might be scarce because to get funding today for something like that is nearly impossible. Some developers could have the cash but then they wouldn't want to pay anything close to market price. Applied Analysis, a Las Vegas research firm, advises that median undeveloped land price was $524,725 per acre at the end of September, around 74% decrease from a year earlier. MGM Mirage could get its money back on some of the land if it was acquired several years ago, but any recent purchases would likely result in a loss. Still, just to generate some cash might be all they want.
Who would be interested in buying land here now? The Strip certainly doesn't need any more luxury high-rise condos. There are hundreds, if not thousands, of unsold and vacant units on and off the Strip that are difficult to market in this economy. Besides, no developer would find money for construction even if he wanted to take on a gamble. The same can be said about new resorts. As it is the present room count far exceeds demand and it's going to stay that way for the foreseeable future. The likely candidates would have deep pockets and long-range plans. Firms that can afford to sit on the land for some time until the market conditions improve. Selling today for a top dollar is going to be a challenge.