Condo builders sticking together

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Condo builders sticking together

Trade group will bring 'cohesive voice'

By JENNIFER ROBISON
REVIEW-JOURNAL

A new trade group is forming to promote the Las Vegas Valley's high-rise and midrise condominium sector.

Representatives of Panorama Towers, Sky Las Vegas, Allure Las Vegas, Spanish View Towers, Boca Raton and Newport Lofts met Wednesday on the 18th floor of Sky Las Vegas to announce creation of the Las Vegas High Rise and Condominium Alliance.

The alliance will hold officer elections on Feb. 8. The biggest criterion for membership: A developer's project must be under construction, with the foundation laid and steel coming out of the ground. Based on that qualification, organizer Bea Goodwin said, developers and managers of 16 local high-rises -- out of nearly 100 proposed or planned valleywide -- are eligible for membership.

Goodwin, who is vice president of sales and marketing for International Sales Group and Allure Las Vegas, said the alliance will provide a "cohesive voice" for the high-rise sector.

Goodwin pointed to recent stories in the national media that claim the Las Vegas condominium market is headed south. An article in The New York Times on Sunday focused on what it called the "disappearing Las Vegas condos" and cited canceled projects such as Icon, Aqua Blue and Krystal Sands. The story warned prospective buyers that more cancellations could occur because of rising costs for construction materials and labor.

Goodwin said such publicity belies the vigor of local high-rise construction.

"The high-rise market in Las Vegas is strong, it's viable and it's a reality," she said. "Unfortunately, what happens in Las Vegas doesn't always stay in Las Vegas. We expect some projects to not make it, but this city is very visible, and when a project doesn't make it, that news is heard around the world. We do face challenges in the cost of land and the availability of labor, but that doesn't mean the market is weak."

Alliance members will weigh in on marketwide issues related to high-rise development, including the infrastructure needs that high-rises create. Goodwin said the organization will also track market trends and create a logo to serve as a seal of viability for member projects to use in marketing.

Local housing analyst Steve Bottfeld said the alliance will gain clout as Las Vegas continues its trend toward condominium development. Land constraints, combined with sustained population growth, will foment ongoing demand for high- and midrise projects -- perhaps as many as 10 new developments could be announced and built every year over the next decade, Bottfeld estimated.

"(The alliance) is the forerunner of what is ultimately going to be a very important trade association for the shelter (housing) industry," Bottfeld said. "While it may not replace the Associated General Contractors or the Southern Nevada Home Builders Association, it will become an important addition to those organizations as the market continues its transition to a vertical market."

Analysts said the group's efforts will help the image of the area's condominium sector.

"From a development standpoint, the perceptions of the market are as important as the economics, and any activity to promote the industry is probably important to alleviate market concerns," said Brian Gordon, a principal in Applied Analysis, which tracks condo projects in Southern Nevada.

Bottfeld agreed.

"There's no question that those who are unfamiliar with the Las Vegas market have been particularly unkind in their comments regarding local high-rises, and their ignorance has been a detriment to the high-rise industry in Las Vegas," Bottfeld said. "Any publicity that underscores the strength and depth of demand for high-rise in this market is a good thing."

David Ezra, broker-owner of Ezra International Realty, said the group's mission to spread the word about the vitality of local high-rises could be "very positive for Las Vegas." He said e-mail newsletters and press releases could help the alliance portray a better picture of the market. He said developers could also create a unified front by gathering at groundbreakings of competitors' projects.

"If you go to the opening of Panorama and you see 10 other developers there, that would send a big message in terms of the unity and viability of the market," Ezra said.

But Ezra expressed some concern about the logo.

He said such a "stamp of approval" could give members a competitive advantage over projects that are viable but haven't yet broken ground. Based on the foundation requirement, representatives of planned towers at MGM Mirage's Project CityCenter, the Hard Rock Hotel and the Palms wouldn't be eligible to join, even though those projects have substantial backing from moneyed corporations and are likely to happen, Ezra said. And while big brand names could propel projects that lack the seal, lesser-known high-rises could suffer.

"Smaller projects could be hurt," Ezra said. "Not having that seal is going to make sales a little tougher for them."

Plus, pouring a concrete base isn't an assurance that a project will reach the finish line, he said.

Financing a big project is complicated, with multiple rounds of funding. If a lender submits money for the start of construction, that doesn't always translate into future cash infusions, especially if sales dip or construction costs spike. Projects can fail even after groundbreaking.

"Having the foundation laid means there's a higher percentage of probability that a project will be completed, but it's not necessarily a guarantee," Ezra said.

Goodwin said she understands concerns about fair competition and the likelihood of project completion. But joining the group and snagging use of the logo could spur developers toward important milestones, she said.

"It hopefully gives them something to shoot for," she said. "To get that next step in their credibility, they'd want to get sales contracts in, make their lenders happy and get concrete and steel in the dirt."

Also, focusing on projects that have laid their foundations means working with developers "who have their t's crossed and their i's dotted," Goodwin said.

"The worst thing we could do is have an alliance member whose project falls apart," she said. "If developers are going vertical, they have their contractor and construction financing in place."

Goodwin added that the group wouldn't look to actively warn consumers of developers with poor track records.

"The goal of the alliance is not to harm anyone in the industry," Goodwin said. "There's a saying: A rising tide lifts all ships. We want to elevate our industry, not denigrate anyone."