Palms hotel developer George Maloof is expecting to receive a certificate of occupancy for the 47-story, 599-unit Palms Place condotel by the end of February. The tower's 600-sf to 1,200-sf units sold for just under $1,000 per sf. Twenty percent deposits have been paid for every unit. Sales will begin closing sales once the certificate of occupancy is received.
The first 1,282-room tower at the Trump project is scheduled to open at the end of March. The 64-story tower stands next to the Fashion Show Mall. The units range from 515 sf to 3,500 sf and are reportedly listed for sale at between $700,000 and $7 million. Unit sales were not immediately available. A second, largely identical tower is slated to break ground later this year.
Totaling approximately 1,900 rooms, the Trump and Palms towers are the only condominium-hotel towers scheduled to open in 2008. In 2007, three condotels totaling about 1,400 rooms opened, including two of the Signature at MGM Grand towers and the Las Vegas Cay Club.
The big year for condotels is 2009, when several are slated to come on line with condo-hotel components. The bulk of the total rooms will come in three projects: the Grand Hyatt at the Cosmopolitan Resort, which totals nearly 3,000 condo-hotel rooms; MGM Mirage's Project City Center, which includes the 1,543-unit Vdara condo-hotel, and Fontainebleau, which will have a total of 3,812 rooms, an undisclosed portion of which are tentatively slated to be condo-hotel rooms.
Pinnacle, a two-tower, a planned 1,100-unit development on Tropicana west of the Strip, was originally expected to open in 2009 but has yet to break ground and is now tentatively slated for completion sometime in 2010. A potential class-action lawsuit has been filed on behalf of disgruntled buyers who want their deposits back.
Shortly before ground was broken for most of the condotels now under way--and long before the housing market fell back to earth with a thud--a new Scottsdale, AZ-based nonprofit called the National Association of Condo Hotel Owners, or Nacho, issued a report saying that buying a hotel-condo unit on or about the Strip won't give you a lot of cash flow, but could come pretty close to being a break-even proposition, which is better than most.
The mid-2006 report analyzed the rental revenue that unit owners can realistically expect. Nacho founder and chairman Dante Alexander told GlobeSt.com that Las Vegas, where 99% of hotel rooms are absorbed within three years, is close to being a break-even proposition, which is above average. Alexander could not be reached for an updated analysis.
The analysis accounted for HOA fees, management and administrative fees, property taxes, repair and replacement reserves, and added liability insurance costs were included. Mortgage interest costs were not included. On the revenue side, the analysis took into account historical hotel industry data such as occupancy, ADR, RevPAR and absorption rates.
"Based on our assumptions, participating in the rental pool would allow some mitigation of costs and, in some cases, a modest income," according to the 2006 report. "Unit economics shows more positive return if the net rental split is at least 50% and the HOA fees are kept to a maximum of $12 per sf."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
