SoHo In Vegas?

[jtmbin]

SoHo in Vegas?

New Developments

Will Recast Sin City

By CHRISTINA BINKLEY

Staff Reporter of THE WALL STREET JOURNAL

November 10, 2004; Page B1

Two giant development projects, each of them conceived as a minicity with homes, shopping and gambling, are set to change the face of Las Vegas by the end of the decade.

MGM Mirage announced today that it will build a $4 billion "city" on the Las Vegas Strip. The company says the massive development is the size of New York's SoHo district, Times Square and Rockefeller Center combined.

At the same time, casino impresario Steve Wynn is planning to build a huge resort development behind his latest casino project, Wynn Las Vegas. According to the plans, described by several people familiar with them, the project would entail as many as a dozen resort hotels surrounding a vast lake that would be built behind the copper-colored Wynn Las Vegas tower that now is rising.

"The goal is to create a pedestrian village where you walk, where there's stores and shopping in a beautiful environment with no cars," Mr. Wynn said.

MGM Mirage's master-planned urban metropolis, approved by the casino giant's board during a lengthy meeting yesterday, is being designed by the same architects responsible for Battery Park City in New York and the Baltimore Inner Harbor East. It will be the largest private development under way, said Jim Murren, MGM Mirage's president and chief financial officer.

"This is a fairly dramatic departure for Las Vegas and for our company," Mr. Murren said in an interview.

The development plans are set to take advantage of the recent renaissance of Las Vegas, where casino profits and stock prices -- and land values -- have been soaring. Boosted by the city's return-to-sin mentality and the success of a global advertising campaign -- "What happens in Las Vegas, stays in Las Vegas" -- people from all over the world have been flocking to the city's nightclubs, shows and casinos.

A rendering of MGM Mirage's planned Project CityCenter, which insiders dub 'Kerkorian City.'

Another catalyst for the development activity is the coming opening of Wynn Las Vegas, which is set to debut in April. Given the previous successes of Mr. Wynn's earlier casino resorts -- Bellagio, the Mirage, and Treasure Island -- most Las Vegas casino operators expect Wynn Las Vegas to be a tough and highly luxurious competitor.

All this activity has contributed to a wave of mergers and acquisitions this year in the casino industry, which is centered in Las Vegas. MGM Mirage in June cut a $4.8 billion deal to buy Mandalay Resort Group. Following that deal, which is subject to regulatory approval, Harrah's Entertainment Inc. agreed to make an even bigger acquisition -- to buy Caesars Entertainment Inc. for $5.3 billion. That was followed by several additional planned acquisitions, including Penn National Gaming Inc.'s planned purchase of ArgosyGaming Co., announced last week.

When its acquisition of Mandalay Resort Group closes next year, MGM Mirage will have several hundred more acres to develop nearby along the Las Vegas Strip. Ultimately, MGM Mirage will oversee most of the southern end of the Las Vegas Strip in what some people who are familiar with the dense, urban plans are calling "Kerkorian City." MGM Mirage is controlled by billionaire investor Kirk Kerkorian.

The working title for the MGM Mirage metropolis is "Project CityCenter." The plans include a 4,000 room hotel and three smaller hotels. The company has been talking with existing hoteliers that would manage those smaller hotels. While no deals have been cut, the company is seeking hotel brands that exist in Europe and Asia, places where Las Vegas is competing heavily for high-rolling gamblers. Mr. Murren mentioned Raffles, Peninsula and Cipriani as the type of hotel the company is seeking.

There also will be 1,650 condominium and private residence club units whose role will be to create a city-like 24-hour atmosphere. The 66-acre development, designed by New York-based Ehrenkrantz, Eckstut & Kuhn Architects, will sit next to Bellagio and the Monte Carlo casinos on land that is owned by MGM Mirage.

It isn't clear yet exactly how MGM Mirage will pay for the project. But Mr. Murren, who this week put together a $9.7 billion package of bank debt that can be used for the Mandalay acquisition and other things, said he thinks the company will be able to fund CityCenter "easily."

The CityCenter retail shopping area will be outdoors and "SoHo-type," Mr. Murren said, with streets designed for strolling as well as cars -- and no mall. Executives at MGM Mirage have been referring to this retail area as "SoBella" for "South of Bellagio." "We're creating our own urban environment," Mr. Murren said.

One goal of both MGM Mirage and Mr. Wynn is to prevent their customers from leaving for rival properties. The idea is to build vast resorts with dozens of restaurants, several shows and endless shopping.

Mr. Wynn's project would build out the 240-acre site where he is building Wynn Las Vegas. The dozen or so resorts are to be built on the $22 million Tom Fazio, Steve Wynn-designed golf course whose own construction was completed just last week. "The whole thing would be many waterfront resorts, not high-rise -- medium-rise," said Mr. Wynn in a recent interview.

Several people familiar with Mr. Wynn's plans there said that project would be built around a vast lake -- which could offer water skiing and other entertainment -- with a boardwalk that would lead to the high-rise hotels. There would be more shows and entertainment, as well as vacation homes that probably would be sold as timeshares or other forms of "fractional" real estate.

Unlike MGM Mirage's hotels, the elements of those resorts would be fully owned by Wynn Resorts Ltd. "This is for my grandchildren," Mr. Wynn said. The costs would be paid for with cash flows from Wynn Las Vegas and bank debt. Construction isn't expected to start until 2008.

Write to Christina Binkley at christina.binkley@wsj.com

What do think? Can Vegas continue to maintain this enormous amount of development. You could rebuild all of downtown Houston with dollars being spent on just a few Vegas developments.

[Guest danax]

The development plans are set to take advantage of the recent renaissance of Las Vegas, where casino profits and stock prices -- and land values -- have been soaring. Boosted by the city's return-to-sin mentality and the success of a global advertising campaign -- "What happens in Las Vegas, stays in Las Vegas" -- people from all over the world have been flocking to the city's nightclubs, shows and casinos.

What do think? Can Vegas continue to maintain this enormous amount of development. You could rebuild all of downtown Houston with dollars being spent on just a few Vegas developments.

<{POST_SNAPBACK}>

As much as we all talk about and hope for nice, master-planned developments, I'm sure glad we don't have casinos and all the ridiculous projects that go with it.