Large land parcel on Strip remains unsold

By Liz Benston (contact)

Tuesday, June 4, 2002 | 11:09 a.m.

One of the last available large parcels on the Las Vegas Strip failed to find a buyer at a public auction Monday, despite promotional efforts touting the land as a prime, reasonably priced parcel that can accommodate a mix of uses.

But a lender's requirement that buyers close escrow on the parcel in 25 days may have torpedoed the sale, experts say.

"Most buyers would want to have a cushion of more than 25 days in purchasing a property of that magnitude," said Carleton Geer, director of commercial broker CB Richard Ellis' global gaming group in Las Vegas.

The auction of a 65.4-acre parcel at the southwest corner of Las Vegas Boulevard and Warm Springs Road drew a crowd of more than 60 people to the Las Vegas Country Club. Yet the room was silent as the asking price fell from $43 million -- the land's assessed value -- to $26 million.

The proceedings were cut short after only a few minutes when no takers were willing to put up the lender's minimum bid of $25,650,000.

Arranging financing in such a short period of time could be difficult for buyers and investors to accommodate, Geer said. Also, purchasing a large tract of vacant land requires a considerable due-diligence period to investigate zoning, utility and groundwater access and other issues, he said.

"With that kind of money in this economy -- that's a tough order," added another real estate source who declined to be identified. Several lowball buyers may be waiting in the wings, however, the source said. "Some of the guys with the money to do this deal are ... bottom-feeders, waiting to buy it cheaper from a lender after auction."

Information on how many people actually made the $1 million registration deposit required to bid on the property wasn't available Monday, though one source reported only a couple of registered bidders in the audience.

The outcome doesn't indicate a lack of interest in the land, others said.

"(T)his is truly a prime piece of property and the value is there," said David Atwell, president of hotel-casino brokers Resort Properties of America in Las Vegas and the co-presenter of the auction with auctioneers Robert Deiro and Associates. "It's not over yet," he added.

Real estate expert Richard Lee, who presented a bullish real estate market video prior to the auction, said he was surprised at the result.

It could indicate the preference of property developers to jump in after land has been subdivided, said Lee, senior vice president of First American Title Co.

A condo developer may be interested in paying less per square foot than another user. Also, smaller parcels can further increase property values, he said.

Owner Tom Lindstrom, who has held the land for several years, will now be free to refinance the property or accept any offer on the table.

The site has generated interest from several retail developers over the years. Most recently, plans to build a 3,000-room hotel-casino with a Mediterranean theme were derailed in part because of Sept. 11.

Lee's presentation centered on the development potential in the southwest corner of I-15 and I-215. The region, with its freeway access and available land, has transitioned from windblown desert to one of the hottest real estate markets in Las Vegas.

Nearby parcels have sold for more relative to the site's pricetag of roughly $15 per square foot, Atwell said. Across the street, pads fronting the Belz Factory Outlet mall are going for more than $30 per square foot. Other parcels near the same intersection were appraised several years ago at $16.45 and $23.95 per square foot, he added.