Las Vegas Sun

November 26, 2022

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CityCenter condo closings slow in down economy

Prospective buyers cautious amid sour real estate market, Perini dispute

Mandarin Oriental model condos

Justin M. Bowen

A look at the new model condos April 14, 2010, at the Mandarin Oriental Las Vegas at CityCenter.

Mandarin Oriental model condos

A look at the new model condos April 14, 2010, at the Mandarin Oriental Las Vegas at CityCenter. Launch slideshow »

The Residences at Mandarin Oriental

The Residences at Mandarin Oriental unveiled the first finished models of their condominiums Wednesday. They range from 1,000 to 4,000 square feet and are priced up to $8 million.

The closing of condo sales at CityCenter has gotten off to a slow start, according to analysts who track the housing market.

Through the end of April, MGM Mirage and Dubai World, the owners of the project, have closed on 78 of 1,543 units at the Vdara condo-hotel, according to SalesTraq. Closings started in March at Vdara but CityCenter had announced earlier this year it had sold 698 units there.

At the ultra-luxury condominium tower Mandarin Oriental, where 205 of 227 condos were reported sold as of earlier this year, 32 units closed between January and the end of April, according to SalesTraq.

CityCenter just started closing units in the two Veer Towers in mid-May so those numbers won’t be available until the end of June. MGM had reported that 480 of the 670 units had been sold earlier this year.

Through Thursday, MGM counted 110 closings at Vdara, 38 at Mandarin Oriental and 16 at Veer.

“This Manhattanization thing everybody was trying to take credit for a few years ago, the condominium market has fallen on its face in this town,” said SalesTraq President Larry Murphy. "This is the deManhattanization of Las Vegas. CityCenter is right in the middle of the economic (woes), and it is a horrible time to be coming online.”

CityCenter cut prices by 30 percent to lure buyers and help those who have already bought units to be able to close. In December, it unveiled a program to provide financing to some buyers.

“Maybe 30 percent wasn’t enough,” Murphy said. “I am not saying it was or it wasn’t. They recognized there was going to be a problem in getting these puppies closed. It is a great project, but it is not going to be cured with a happy attitude or more intensive marketing. It is not going to be cured unless the economy gets better. People are not spending money on condos or much of anything else. They are trying to save. They are scared.”

Tony Dennis, MGM Mirage executive vice president of residential sales, said closing sales is a work in progress that will take time, but executives are happy with the start.

Dennis said the seller-financing program has about 500 buyers in it being processed to close on units.

He said because units are closing at the 30 percent price cut, there are no plans to reduce it further. Since the prices were adjusted in late October, 18 new buyers have come forward, he said.

“Our prices are good values,” Dennis said. “I wouldn’t say it is an easy process but it is better than we expected and far better than analysts give us credit for. It is still early.”

With the price reductions announced in October, the prices per square foot went from $1,600 to 1,120 at Mandarin Oriental; Veer went from $1,000 to $700 per square foot and Vdara went from $1,200 to $840, according to analysts.

Dennis Smith, president of Home Builders Research, said he’s not surprised sales have been weak because some buyers may be concerned about liens because of a dispute between MGM Mirage and Perini Building Co. over payments to subcontractors. The economy adds another element, he said.

“When it comes to writing a check for a million bucks at Mandarin Oriental to close escrow, are you really ready to do this in this economy when everyone is being told to horde cash?” Smith said.

Luxury real estate broker Bruce Hiatt said some buyers are waiting to close to see if prices may fall even further and prefer a 40 percent to 50 percent reduction.

Hiatt said there continues to be a strong interest in CityCenter, but he said the economy is making prospective buyers cautious.

The dispute with Perini over CityCenter construction payments casts a cloud over the quality of the construction, Hiatt said.

Click to enlarge photo

A worker heads down a road leading to one of the Veer Towers during a tour of MGM Mirage's CityCenter project Wednesday, Nov. 18, 2009.

“Until those questions get answered, some buyers are concerned about the project,” Hiatt said.

Dennis said CityCenter has made a commitment to take care of subcontractors and there are no problems with liens. Buyers have a clear title to the property when they close, he said. And he said there are no problems with construction, adding that Clark County certified units for occupancy.

Earlier this month, Houston-based Metrostudy reported that Las Vegas has more than 8,200 condominium units that are sitting empty, including those still vacant in CityCenter.

Murphy said Las Vegas has a 20-year supply of condominiums whose prices are down 60 percent from the peak of the market a few years ago. Some high rises aren’t selling for that much more per square foot than single-family homes, he said.

The Veer numbers should look the same when those closing numbers are available in June, Murphy said.

“Veer is going to have a rough go at it because the last thing we need is another 670 high-rise condos on the market,” Murphy said. “It is a hell of a time to sell condos even if you are MGM. They are not different than anybody else. The image of high-rise condos is severely tarnished just like they are in Miami.”

About 700 units at Vdara remain unsold and those are part of the hotel’s pool of rooms, Dennis said. Buyers of those units can choose to have the room managed by MGM Mirage. Whatever isn’t sold will be put in the hotel pool, he said.

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