YOU ARE HERE: LAT HomeCollections

Rising Stars on the Strip

About 8,000 condos are under construction in Las Vegas or about to start. But some worry about a real estate bubble bursting.

August 22, 2005|Jerry Hirsch | Times Staff Writer

LAS VEGAS — The boom in high-rise condo projects in this city's canyon of casinos known as the Strip has spawned its own new status symbol -- the celebrity resident.

About 8,000 condominium units are under construction or about to start, according to SalesTraq, a Las Vegas real estate information company. It's a building explosion fueled in part by speculators in the torrid real estate market here and the desire of buyers from California and Asia to own a piece of Sin City's action.

But like everything Vegas does, this building bonanza comes with an extra helping of glitz: Developers are using Hollywood stars to make their projects stand out from the more than 100 residential skyscrapers proposed for Las Vegas.

Leonardo DiCaprio and Tobey Maguire have purchased units at the Panorama Towers complex. Jessica Simpson has reserved a unit at Palms Place, the 50-story high-rise planned at the Palms Hotel and Casino. Baseball Hall of Famer Reggie Jackson has snagged a spot at the Icon Las Vegas.

"I am sure these celebrities are getting very good deals," said Peter Dennehy, senior vice president of Sullivan Group Real Estate Advisors in San Diego. "It is a marketing thing. People want to live near the stars."

But some analysts wonder if the market will be left with a Las Vegas-sized hangover in the form of a real estate bubble fueled by the large number of speculators -- estimated to be as high as 40% -- who never intend to live in the units they are buying. The high-rise condo market has proved to be particularly sensitive to market gyrations, said Delores Conway, a USC real estate economist.

Las Vegas isn't the only town that is going vertical. High-rise living, a long-standing tradition in New York, has spread to the likes of Boston, Denver, Miami, San Francisco and Kansas City, Mo. At least half a dozen new condo towers are planned for Los Angeles, Irvine and Pasadena.

Nationally, the number of condominium and town home development construction starts jumped 38% to 120,000 last year, according to the U.S. Census Bureau. And that came on top of a 23% gain in the previous year.

"Cities across the United States are booming with these projects and many of the developments are quite spectacular," said Max Neiman, senior fellow at the Public Policy Institute of California.

Many of the buildings are following the pattern of Miami, where residential towers offer luxury-hotel-style amenities such as concierge service, valet parking, restaurants, fitness centers and spas. Some developments are tailored to unique markets. Cristalla, a 22-story high-rise residential tower in downtown Seattle, will feature a rooftop dog park. Much of the demand "is coming from people who want to live in convenient urban settings, near bookstores, jazz clubs, theaters and good restaurants," Neiman said.

However, with so many high-end properties on the drawing board, it's easy for a development to get lost in the crowd. That's where the celebrities come in, assuming the real estate equivalent of a walk-on role: Most aren't investors in projects, but their presence gives condo buyers the hope of an occasional star sighting near the mailboxes.

Don't expect anything so crass as celebrity advertising endorsements; Vegas developers prefer the subtle approach, placing tidbits in gossip columns and prominently displaying celeb glamour shots in sales offices.

"It makes a building cool and hip," said Dennehy, the real estate consultant. "You always want to sell lifestyle when you are selling condo projects like these."

There are familiar names behind some projects, too. Donald Trump is building the Trump International Hotel & Tower at the north end of the Strip. And not to be outdone by her ex, Ivana Trump plans the eponymous Ivana Las Vegas 82-story development nearby.

Typically, high-rise condo buyers are empty nesters who no longer want to maintain a 2,500-square-foot home in the suburbs, said Ross DeVol, a Milken Institute economist.

"There are 80 million baby boomers, most in their 50s, and that's a big market," DeVol said.

Other buyers are young urban professionals without children who want to live in what they consider marquee areas, DeVol said.

Even in Las Vegas, once one of the more affordable real estate markets, no one considers these condos to be cheap housing.

A 972-square-foot one-bedroom unit at Icon Las Vegas, the future Reggie Jackson hangout that Related Cos. is building, starts north of $600,000.

"If one of these condos were in the $300,000s, I might do it. It would be nice to be just minutes from work," said Chris Dingell, a senior planner with Clark County. "But I can't afford what they are asking for the units on the Strip."

But for those with the money, the towers, with their luxury amenities and chic granite-and-wood fixtures, hold an allure even at prices that range from $500 to $1,000 a square foot.

Los Angeles Times Articles