Friday, July 1, 2005 | 11:10 a.m.
A Chicago area real estate developer with plans to build a condo-hotel tower in Las Vegas has scuttled those plans, citing stiffening competition from a slew of condominium projects near the Strip.
Michael Peterson of Diversified Real Estate Concepts Inc. had already reserved many of the units for Aqua Blue, an 825-unit high-rise that had been envisioned at the site of the Super 8 motel at 4250 Koval Lane. Peterson said he will likely take a loss on the deal after he sells an option to buy the motel site.
The status of hundreds of reservation deposits made by Aqua Blue buyers wasn't available by press time today.
Peterson said he is still under construction with another condominium tower called Platinum near the corner of Koval Lane and Flamingo Road. That building is expected to open in April.
"The competition is a lot different from when I started the Platinum," Peterson said. "There are too many projects and not not enough buyers to absorb the kind of inventory being created. It just won't work."
Newer projects include condo towers at the Palms and Hard Rock casinos, both financed by deep-pocket owners, he said. The land between Flamingo Road and Harmon Avenue to the south and from Koval Lane to Paradise Road to the east has nearly all been snapped up by developers for condo development in the past year or so, he said. The market has also been glutted with advertising campaigns, with developers outspending one another, he added.
Peterson had signed on friend and basketball star Michael Jordan to license a namesake athletic center and two restaurants at Aqua Blue. But Jordan was never an equity partner.
Peterson said he was the sole owner and developer of the project, as with his previous condo developments in the Midwest.
Peterson said he has signed an agreement to sell his option to purchase the 3.6-acre motel site to Chicago real estate investor David Schwartz.
Schwartz said he will hold on to the land for investment and run the motel as-is unless he receives a favorable offer to sell. Schwartz said his company Waterton Associates has owned apartment complexes in Las Vegas for the past several years and bought the property in a tax exchange with three complexes that were sold.
"We're not developers," Schwartz said. "It's a great development at some point. The location justifies something more significant than a Super 8."
The adjacent Ellis Island casino isn't part of the deal and will continue to operate as usual, Schwartz said.
"They have a pretty thriving business," he said.
About 29,000 of the roughly 50,500 condo units proposed or under construction around the Las Vegas Valley are located on or near the Las Vegas Strip, according to local research firm Applied Analysis.
Many investors are putting reservations on multiple projects to get a place in line but are pulling out when it comes time to sign a sales contract, Applied Analysis partner Brian Gordon said.
"The sales activity is higher than what reality is," Gordon said.