Las Vegas, 2010. Big news about boom town!
From www.lvbusinesspress.com, by STEVEN MIHAILOVICH
If the history of Las Vegas consists primarily of casino operators outdoing each other in creating the next generation of grandiose billion dollar-plus casinos, then MGM Mirage made history last week with the announcement of its Project CityCenter development.
Approved by the company's board of directors, the plan calls for a mix of residential, hotel, and retail sites along with the ubiquitous casino to be developed in phases by 2010 along the lines of a master planned community on 66 acres of prime Strip real estate between the Bellagio and Monte Carlo casino resorts.
Unlike the construction of themed casinos, which try to recreate historical or international destinations, MGM Mirage's multi-billion dollar development aims to produce a 21st century urban district akin to Greenwich Village in New York City or Haight-Ashbury in San Francisco that will bring the company into the business of urban planning and potentially take the casino industry to the next stage of its evolution.
"This is the largest development project in the United States at this time," says Jim Murren, president and CFO of MGM Mirage. "No one has embarked on a development [of this scale] in this town. It's hard to equate it to anything. We are going to be leaders in the reshaping of the valley into a global market."
Currently named Project CityCenter, the outline was assembled with the assistance of three urban planning firms over an eight month period. The company settled on the master plan designed by New York-based Ehrenkrantz, Eckstut and Kuhn Architects (EEK), which has previously done similar work for Battery Park City in New York City and the Baltimore's Inner Harbor East.
According to Murren, MGM Mirage and EEK will be interviewing leading architects, general contractors, construction companies and related businesses from around the world over the next 18 months to flesh out the project, which is still in its infancy. Once the blueprints, materials and work schedules are developed within that period, construction will begin and is expected to last 42 months.
"You're not going to see another white tower with fancy gingerbread," Murren says. "It's going to be an icon and you will be able to see it from McCarran International Airport."
Although details remain to be worked out, the first phase will be the construction of a 4,000-room hotel and casino, along with three other 400-500-room hotels managed by independent operators, 1,650 condominium-hotel units and retail, dining and entertainment areas comprising 550,000 of the total 18 million square feet to be developed in the first stage.
Once completed, the first phase will create more than 12,000 new jobs, the largest single infusion of employment in Las Vegas history.
Estimated to cost $3- $4 billion and creating more than 7,000 construction jobs, the MGM Mirage president says the new casino and other structures will depart from the "theme" craze of the past decade and will instead target the kind of qualities that pervade notable communities and neighborhoods in cities worldwide and make them so attractive to tourists.
"I think the era of themes have come and gone in Las Vegas," he adds. "I think the word is 'feel.' It will have an urban feel that is contemporary, modern and forward-looking. The whole project will have that type of nomenclature. It will [incorporate] modern ideas, modern materials. It will recreate a city of the past but be a city of the 21st century."
To develop the project along those lines, MGM Mirage will use top developers and consultants for each of the different segments in the overall project. For instance, in creating retail shopping outlets, the casino operator will rely on consultants to design space and provide tenants that will fashion an inimitable shopping experience similar to that found in places such as Rodeo Drive in Beverly Hills or Michigan Avenue in Chicago.
"I don't think Las Vegas needs another mall," says Murren. "We're going to build SoHo (in New York City). We'll get lots of retailers because they know it's revolutionary."
The same philosophy will underpin the residential development. Project CityCenter will blend condominium-hotel units that are used as hotel rooms when the occupant-occupants are away. They can also be sublet and used as fractional timeshares.
MGM Mirage has hired market research firm McKenzie and Co. to determine the market absorption rate of the residential products in order to calculate the optimal amount and timetable of each.
For the three hotels, MGM Mirage has been talking to about 12 different operators to date about entering into management contracts to run the boutique lodgings, most without a presence in Las Vegas, and even the U.S., currently. The arrangement gives MGM Mirage the advantage of tapping into the brands of the individual operators and their loyal and large customer bases.
As a result of the possibility of legalized gaming in Singapore and MGM Mirage's interest in the new jurisdiction, Murren confirmed that one of the hotel operators includes the Raffles chain of Singapore.
"We will own [the hotels] and bring in hoteliers of the type not represented here to manage them," he says. "Many are the absolute best brands in Europe and Asia."
Because of the massive scope of the project and its goal of creating an urban district, MGM Mirage and the companies ultimately involved in the various service segments will be able to draw the whole gamut of consumers, from mass market to high end.
A resident of Manhattan for 14 years, Murren compared Project CityCenter to his prior home, where people would choose whether to have a quiet dinner in the East Village or see a show in the Broadway Theater District.
"They don't have to be ultra high end [exclusively]," Murren says. "The great thing about a city is its diversity. It is vibrant and dynamic and has people of different backgrounds. Real cities have many different environments, like Manhattan. That's what I loved about the idea. We're not creating a fake city but a real one."
The mix of participants will lead to a creative palette of participation. Although still in the works, the project could allow a range of models, from leases to management contract to joint ventures.
Although the ultimate price of Project CityCenter will be determined once the plans are finalized, the inclusion of others from the start will relieve MGM Mirage of bearing the full costs while allowing the company to maximize efficiencies and realize almost immediate returns.
"We've been talking to a variety of retail, residential and [other entities]," Murren says. "Now the phone is ringing off the hook. We've getting so many calls from people saying would you please let us invest."
Bordering the Bellagio and Monte Carlo, both fully-owned MGM Mirage properties once the proposed purchase of Mandalay Resort Group is approved, Project CityCenter should eventually connect to both properties.
With the 66-acre development taking 11 acres from the Bellagio campus on the north, the first tangible physical structure to emerge from the project will be the construction of a parking garage for Bellagio employees as well as future residents. That portion is set to begin in the middle of next year and will take a year to complete.
While Project CityCenter complements similar projects announced for downtown and UNLV, the undertaking moves MGM Mirage into an almost entirely different field: urban planning. The project is to be supervised by Mirage Resorts president and CEO Bobby Baldwin.
In a city and industry renowned for its ability to replicate success, Murren says it will be difficult for competitors to copy its venture because of the huge financial wherewithal required as well as other resources. Moreover, no company has 66 acres of prime Strip property at its disposal or can afford to acquire as much with an acre currently valued at $20 million.
"We hope they do but I doubt it," he said. "We own the most and best land and have the best financial resources. It's urban planning, which is why we're not doing it alone. It's our first significant departure from the same old same old."
By pulling ahead of the pack, MGM Mirage's entry into the larger urban planning segment puts the company in somewhat unfamiliar, and thereby, riskier territory. Yet Murren contends that is how the company achieved its leading position within the city and its industry in the first place and the only way it will lead in a city whose reputation is based on innovation and imagination.
"The market here is one of a kind," he says. "We could have taken the land and turned it into a casino/hotel and been served [well]. It would have been alright but it doesn't provide the civic opportunities that this does. This is historic for our company and for Las Vegas."