It looks like Ivana Trump may have failed in her valiant attempt to outdo The Donald. Last summer she announced plans to build the tallest condominium tower in Las Vegas, which was expected to soar 20 stories higher than her ex-husband's latest Vegas development. Now the yet-to-be-built property is up for sale–its ultimate fate unknown.
Ivana Las Vegas isn't the only Sin City condo to take a hit recently. At least three planned projects have been canceled in the last year, including The Related Group's highly publicized 514-unit Icon and Aqua Blue, a condo-hotel attached to NBA star Michael Jordan. But this string of condo crashes shouldn't come as a surprise, given the sheer volume of proposed projects coupled with rapidly increasing construction and land costs. "I don't think anyone who was sober had the expectation that all those projects would come online," says Jeremy Aguero, principal analyst for Applied Analysis, a Las Vegas-based economic research firm.
Nearly 100 projects (close to 53,000 units) are planned for the Vegas area, according to Applied Analysis. The firm expects only 30 percent of those units to be online or under construction by 2010, with the rest to be either delayed further or scrapped all together.
But these statistics aren't scaring off developers, as many remain bullish on the Las Vegas market. "It's a market that is maturing, not a market that is in trouble," says Rick Cavenaugh, president of Chicago-based Fifield Cos., which broke ground on Allure Las Vegas, two 41-story condo towers representing half a billion dollars in sales. "Fewer deals are getting done, which helps the fundamentals even more."
So why are some projects making the cut while others are folding? It all comes down to experience, says Cavenaugh. "The five or six people who are truly building high-rise condominiums that are of a conventional type of nature are surviving and doing very well," he says. Of those who rode the marketplace hype into substandard deals, he says, "whether they were ego-driven or cheap-land driven, a lot of them have fallen by the wayside in the last year to year and a half."
Cavenaugh used his high-rise know-how to design an efficient, cost-effective building. Just as critical to the project's success, Cavenaugh priced his units in line with rising construction prices. A pricing mistake ultimately led to Icon's demise, say industry experts. (The Related Group was unavailable to comment).
A project's success hinges on the right location, developer, and product, agrees Steve Molasky, chairman and CEO of Molasky Pacific, a Las Vegas-based developer. And if these fundamentals aren't in place, not even a splash of star power can save a project. "You need more than a famous face, and I think everybody has realized that," Molasky says. "[Donald] Trump's project has sold out, and he's looking at doing another one–but he is a developer. But if you just put Ivana Trump's name on it [a building], it's not going to make me buy there."
–Rachel Z. Azoff