The largest commercial project in history is for leisure & entertainment, but not not manufacturing and health care. The banks must be out-of-their-minds.
Las Vegas is going to wish it could be a Detroit when this fails.
CityCenter Las Vegas
The $9 billion development named CityCenter was conceived as the centerpiece of a thriving Las Vegas -- one of the world's most expensive building projects that would bring back glamour to the Strip and cap an unprecedented three-year economic boom. But in order to complete the project, millions more are needed to access a $1.8 billion credit facility.
The construction site of the CityCenter project in Las Vegas, Nevada
But trouble is brewing beneath the surface. In March, Dubai World, the development arm of the United Arab Emirates, sued MGM Mirage, claiming mismanagement and wanting out of further financial commitments. The U.S. company hired bankruptcy counsel, setting off alarms about solvency. And the company was forced to inject an emergency $200 million to keep construction going.
"The events of the last six months have been our Pearl Harbor, economically,“ said Bill Thompson, gaming expert and professor of public administration at the University of Nevada, Las Vegas. "CityCenter might be too big to fail. If it opens, it's a dramatic gesture that says we're winning, we're not defeated, we're on the way back.“
"If it fails, it would be like a second Pearl Harbor.“
It's City Center, or Bust
The few operating cranes in town are scattered among the 9,500 construction workers still crawling over CityCenter, an $8.4 billion, five-skyscraper, ultra-luxury project that is the largest privately financed development ever in the U.S. Although the company has managed to keep the project going through a desperate battle for financing deals with Dubai World, a number of people who signed up for condominiums are looking to bail. So MGM Mirage, which owns the most properties on Las Vegas Boulevard — the Strip — ducked and weaved around bankruptcy for six months earlier this year by pumping $140 million, almost a quarter of its monthly revenues, into the project. MGM sold off Treasure Island at a bargain price: Phil Ruffin, the buyer, paid the equivalent of $225,000 for each room on the property; CityCenter's rooms cost about $1.5 million each to build. Even if CityCenter is a big success and people want urban density as a part of their Vegas experience, experts like Bill Lerner, a gaming analyst at Union Gaming Group, figure it will be five to 10 years before Vegas needs more than the 150,000 or so hotel rooms it will have when CityCenter's 6,000 and the Cosmopolitan's 800 are completed. And if CityCenter tanks, Vegas will be holding some very bad cards.
It now needs $800 million more to access a $1.8 billion credit facility to let it complete the project, but funding prospects look bleak in a global recession.
You need a helicopter to get a view--and an understanding of--Las Vegas's CityCenter, that shiny architectural jambalaya opening this month. There are six properties, but the anchor of the $8.5 billion project is #2 on the map aka the Aria Resort & Casino. You can't buy a condo in that building, but you can purchase a condo in three other buildings. Meanwhile, with all the hotel rooms and condos coming on the market, some news outlets are betting that the MGM Mirage/Dubai World-funded CityCenter "will make or break Las Vegas." Such pressure. Who'd want to be responsible for breaking Vegas. After the jump, an explanation of each building.
Las Vegas is going to wish it could be a Detroit when this fails.
CityCenter Las Vegas
The $9 billion development named CityCenter was conceived as the centerpiece of a thriving Las Vegas -- one of the world's most expensive building projects that would bring back glamour to the Strip and cap an unprecedented three-year economic boom. But in order to complete the project, millions more are needed to access a $1.8 billion credit facility.
The construction site of the CityCenter project in Las Vegas, Nevada
But trouble is brewing beneath the surface. In March, Dubai World, the development arm of the United Arab Emirates, sued MGM Mirage, claiming mismanagement and wanting out of further financial commitments. The U.S. company hired bankruptcy counsel, setting off alarms about solvency. And the company was forced to inject an emergency $200 million to keep construction going.
"The events of the last six months have been our Pearl Harbor, economically,“ said Bill Thompson, gaming expert and professor of public administration at the University of Nevada, Las Vegas. "CityCenter might be too big to fail. If it opens, it's a dramatic gesture that says we're winning, we're not defeated, we're on the way back.“
"If it fails, it would be like a second Pearl Harbor.“
It's City Center, or Bust
The few operating cranes in town are scattered among the 9,500 construction workers still crawling over CityCenter, an $8.4 billion, five-skyscraper, ultra-luxury project that is the largest privately financed development ever in the U.S. Although the company has managed to keep the project going through a desperate battle for financing deals with Dubai World, a number of people who signed up for condominiums are looking to bail. So MGM Mirage, which owns the most properties on Las Vegas Boulevard — the Strip — ducked and weaved around bankruptcy for six months earlier this year by pumping $140 million, almost a quarter of its monthly revenues, into the project. MGM sold off Treasure Island at a bargain price: Phil Ruffin, the buyer, paid the equivalent of $225,000 for each room on the property; CityCenter's rooms cost about $1.5 million each to build. Even if CityCenter is a big success and people want urban density as a part of their Vegas experience, experts like Bill Lerner, a gaming analyst at Union Gaming Group, figure it will be five to 10 years before Vegas needs more than the 150,000 or so hotel rooms it will have when CityCenter's 6,000 and the Cosmopolitan's 800 are completed. And if CityCenter tanks, Vegas will be holding some very bad cards.
It now needs $800 million more to access a $1.8 billion credit facility to let it complete the project, but funding prospects look bleak in a global recession.
You need a helicopter to get a view--and an understanding of--Las Vegas's CityCenter, that shiny architectural jambalaya opening this month. There are six properties, but the anchor of the $8.5 billion project is #2 on the map aka the Aria Resort & Casino. You can't buy a condo in that building, but you can purchase a condo in three other buildings. Meanwhile, with all the hotel rooms and condos coming on the market, some news outlets are betting that the MGM Mirage/Dubai World-funded CityCenter "will make or break Las Vegas." Such pressure. Who'd want to be responsible for breaking Vegas. After the jump, an explanation of each building.
The age of excess is coming to an end.
