A decade ago, when business was booming in Las Vegas and tourists
flooded the Strip with cash, developers seemed destined to pull in record
profits with each new multibillion-dollar project they announced.
America's zeal for spending and fun, coupled with consumers' disposable income, fortified builders' confidence. Many inked absurd deals to gain a foothold in Las Vegas' real estate market.
Some paid as much as $34 million for a single acre of land.
Everybody wanted a piece of the action, and players with the deepest pockets paid whatever it took to get in. Analysts called the phenomenon "punch-drunk capital."
"That's the sound byte we used to have around here," said Joshua Smith, an analyst with Colliers International Gaming Group.
Analysts rarely utter the term anymore. The city's winning streak ended when the recession hit.
Developers began to wise up and focus on a more realistic bottom line.
As CityCenter struggled and construction on Fontainebleau and Echelon stalled, developers abandoned the illusion that business on the Strip would always improve.
Strip land values reflect that change in attitude.
Today, resort corridor real estate sells for 80 percent less than its peak value. An acre of prime Strip land typically goes for $3 million to $6 million.
The stratospheric drop was highlighted by the sale of the failed Echelon earlier this year. Malaysian powerhouse Genting Group paid Boyd Gaming $350 million for the 87-acre site, about $4 million an acre.
By comparison, the El-Ad Group paid Phil Ruffin $1.2 billion for the New Frontier in 2007, or $34 million an acre.
For Ruffin, it was the deal of a lifetime. He spent $142 million for the 26-acre casino in 1998.
The deal marked the largest price-per-acre land sale in Strip history.
While no newer sales compare, Strip real estate had a strong showing through most of the 2000s.
In December 2005, Harrah's Entertainment, now Caesars Entertainment, acquired the Imperial Palace from the Ralph Engelstad and Betty Engelstad Trust for $370 million, or roughly $20 million an acre. Ralph Engelstad opened the resort in 1979. Caesars has since rebranded it as the Quad.
In early 2006, Columbia Sussex bought the 34-acre Tropicana from Aztar Corp. for $30 million an acre. It later lost the casino to bankruptcy.
Harrah's struck again the same year, snatching up the former Westward Ho for $279 million, or $18.4 million an acre. A year later, the gaming giant later traded the 15.1-acre property with Boyd Gaming for the 4.5-acre Barbary Coast, which became Bill's Gamblin' Hall and now the Gansevoort. The Westward Ho sat adjacent to the site of Boyd's planned Echelon, while the Barbary Coast neighbored the Flamingo.
In May 2007, MGM Resorts International bought a vacant 26-acre parcel at the corner of Las Vegas Boulevard and Sahara Avenue for $444 million, or approximately $17 million per acre. To date, MGM has done nothing with the land.
Later in 2007, SBE Entertainment bought the Sahara for an estimated $19 million an acre. The parcel will soon be home to the SLS.
That was one of the last big Strip deals before the crash.
"In the old days, people were looking for return, but they just thought it was a guarantee: If I built something on the Strip, I'd absolutely make money," said
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