4,000-Key Resort Planned for Dormant Vegas Site
- Feb 14, 2018
The big blue building that’s been languishing unfinished in Las Vegas for nearly a decade will soon open its doors as The Drew Las Vegas, a 4,000-key resort and casino destination. Global real estate firm Witkoff will complete development of the property that was once planned as the Fontainebleau and put it into the management hands of Marriott International.
Plans for The Drew come roughly six months after Witkoff and investment company New Valley LLC became the new owners of the partially developed Fontainebleau project, having acquired the 25-acre asset from Icahn Enterprises LP for $600 million. The partners’ vision for the property at 2755 Las Vegas Boulevard South is a grand one. The Drew, which will be part of Marriott’s EDITION brand, will deliver more than premier guestrooms and gaming space; the development will also encompass retail and dining options, entertainment space and, befitting its location just across from the Las Vegas Convention Center, 500,000 square feet of convention and meeting space.
The timing for the project may be just right. “When looking at other market dynamics such as the Raiders coming to Las Vegas and the $1.4 billion expansion of the Las Vegas Convention Center, it is no surprise that developers are looking to capture the rising trends. The Fontainebleau’s location puts it in a great position to capitalize on the Convention Center’s expansion,” Brent Pirosch, director of gaming consulting with commercial real estate services firm CBRE’s Global Gaming Group, told Commercial Property Executive. Numbers paint a pretty picture. Citing information provided by the Nevada Gaming Control Board, Pirosch notes that total revenues on the Strip reached a new record in FY 2017 of nearly $17.8 billion. Additionally, the average hotel RevPAR reached a record high of $553.63, marking a 1.7-percent jump over the prior peak set in FY 2008.
THE COST OF COMPLETION
Witkoff isn’t talking development costs for The Drew just yet; however, the company isn’t precisely starting from the ground up with the resort. The location that will become home to The Drew was originally planned as a 7 million-square-foot tower, and it had reached 70 percent completion before construction suddenly halted and then-owner Fontainebleau Las Vegas LLC filed for Chapter 11 bankruptcy protection, leaving the project to fall into the lap of Icahn for $150 million. So, as it stands, Witkoff has much more than a shell to work with at the site. Furthermore, as Witkoff CEO Steven Witkoff said in a prepared statement, Witkoff and New Valley snapped up the “well-designed, structurally-sound project with a significant discount to both replacement cost and the implied public market valuations of comparable Las Vegas Strip resorts.” Fontainebleau had carried a $3 billion development price tag; not so for The Drew.
“It is generally considered that new construction on the Strip costs at least $1 million per key to be competitive. As it relates to the Fontainebleau, their estimated all-in costs will be just over half that of new construction, which should significantly reduce their risk,” Pirosch remarked.
The Drew is scheduled to welcome its first visitors in late 2020. Two Blackbirds Hospitality is in place to spearhead the launch and operations of the resort, which will hold the distinction of being the first JW Marriott property on the Strip.
Image via Google Street View