Overbuilding worries downtown developers

Results of a downtown office space market study came as no surprise to the dozens of developers gathered Wednesday for the monthly meeting of the city's private sector redevelopment board.

The City Centre Development Corp. board didn't need representatives of Keyser Marston Assoc. Inc. to tell them that downtown is ripe for three to four large office buildings.

Just moments before the board had received updates on two such buildings and approved a negotiating agreement with the developer of a third.

Suddenly, it seems, downtown Las Vegas has a new problem as board president Jodi Goodheart remarked: "In the process of redevelopment, are we creating blight?"

Plans for new office buildings -- complete with pre-leasing contracts -- are drawing longtime downtown tenants out of "obsolete" buildings.

Although ground has not yet been broken on Opus West's planned office tower on the Union Pacific property, or for the Pauls Corp.'s building at Fourth Street and Lewis Avenue, a new wrinkle has formed in the delicate revitalization skin.

Board member Nick Niarchos cautioned that market demands would have to precede the development corporation's approval of new office towers now that three seem headed toward construction.

"If they're all built, we could have a very serious overbuilt downtown," he warned.

Keyser Marston's Robert Wetmore, who presented the study results suggesting downtown could handle 360,000 square feet of office space, told the board they would be on "firm ground" with three buildings and "questionable ground" with any more.

Minutes earlier the board had approved an unsolicited plan from the Trenton Group to build a 72,600-square-foot building at Clark Avenue and Las Vegas Boulevard.

Actually, board member Thomas Shoeman cast the lone vote in favor of the proposal due to abstentions by Goodheart, Niarchos and board member Ken Templeton, all citing conflicts of interest.

Under the proposal -- which still requires final approval from the city Redevelopment Agency -- the Trenton Group would purchase the land from the city for $900,000 and would be responsible for acquiring adjacent land not owned by the city.

The building would include a 216-car garage and would contain a mix of office and retail, anchored by a local law firm.

The Pauls Corp., which is under an exclusive agreement with the city to plan an office tower at Fourth and Lewis, will purchase the land on that corner for $1.5 million.

The location is met with trepidation due to the failure of Sun Plaza, a 14-story tower project scrapped by American Nevada Corp. and Nevada State Bank in March when the city decided not to offer any additional funding on top of the $7 million it had already spent.

The Greenspun Corp. owns both American Nevada Corp. and the Las Vegas Sun.

Sun Plaza developers had said they needed additional money because they were having trouble leasing their proposed building.

John McKeown, regional leasing director for the Colorado-based Pauls Corp., said his company is taking a different approach by beginning construction before tenants are in place for the 100,000-square-foot Class A office building.

All three current office building proposals along with the Regional Justice Center, federal building and Neonopolis retail center under construction will likely create more jobs downtown and more need for housing.

The corporation board approved plans Wednesday by San Diego developer Tom Hom Group for a residential-retail mixed building at Las Vegas Boulevard and Gass Avenue.

The building will have 47 apartments above a first-floor restaurant and will be designed by nationally recognized architect Robert Wellington Quigley.

"His responsibility was to integrate a building into the site that will be an immediate success due to its design and scale while also becoming a cornerstone of future development," said Will Newbern, president and CEO of the Tom Hom Group.

In other downtown development news, an environmental company, e.three, announced plans to build a $10 million chiller plant adjacent to Fitzgerald's hotel-casino at Fourth Street and Carson Avenue.

The plant would supply chilled water to subscribing businesses nearby, such as Neonopolis, thus erasing their need to have air conditioning chillers on site and freeing that space up for additional retail use.

Phil Cirone of e.three said the proposed plant could serve about five downtown tenants by way of underground pipes.

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