Sustained, 20-Year Boom Leaves Vegas Showing The Strain
The Engineering News Record recently released an in-depth article on how rising costs are hitting real estate, construction capacity and utilities. The full article can be found at www.enr.com. Here are a few highlights:
- Construction prices are rising along with soaring real-estate prices, driving the Manhattanization of the city. But in the tight market, local bidders are choosing their targets while the high-rise growth is attracting outsiders with experience in vertical construction.
Clark County land values have risen more than 300% in the last four years, with asking prices now ranging from $900,000 to $1 million per acre, say local builders.
Under provisions of a 1998 local law, the U.S. Bureau of Land Management is divesting federal lands in Clark County. To date, 13,000 acres of government land have passed into private hands.
Nearly $25 billion worth of resort expansions are planned by 2009, the Las Vegas Convention and Visitors Authority reports. Another $6.45 billion worth of projects are tentatively proposed through 2009. Topping them all will be MGM Mirage Inc.’s Project CityCenter development, a $7-billion, 18-million-sq-ft hotel, condominium, casino and entertainment complex (ENR 12/5/05 p. 16). Main resort construction will begin in April, with a phased opening in 2009 and 2010. But the condo market is starting to show signs of exhaustion in the face of soaring real-estate costs. In July, one developer canceled a $600-million condo-hotel project; last month saw cancellation of a $325-million condo. Other developers are flipping properties rather than build.
The overheated construction market has sparked intense competition for labor, contractors and materials. Contractor demand for project managers and management staff has resulted in poaching among local firms, a “disturbing� practice that has strained relations among subcontractors and rivals, says Frank Martin, president and CEO of Martin-Harris Construction, Las Vegas.