Lady’s luck is changing

By Liz Benston (contact), Mark Hansel (contact)

Friday, June 22, 2007 | 8:06 a.m.

The new ownership group poised to take over the Lady Luck could signal a change of direction likely to spread far beyond the now-closed doors of the iconic downtown Las Vegas casino.

CIM Group, a Los Angeles-based developer, is prepared to purchase the North Third Street property that has been vacant for more than a year, city and company officials said Thursday.

Although development details for the site have not been specified, gaming does not appear to be the focus of the group's plan.

Founded in 1994, CIM specializes in developing upscale office space, residential lofts and retail space in urban centers. Many of its projects have redeveloped vacant or underused properties. Sky Lofts, a building in downtown Los Angeles, combines office space with luxury condominiums. Another project includes several new retail stores at the Third Street Promenade, an outdoor mall in Santa Monica.

The company has clustered several projects in a single neighborhood rather than developing isolated buildings. It has redeveloped a dozen buildings in Hollywood and nearly that many in downtown Los Angeles.

Because the company's portfolio suggests it prefers to aggressively embrace the markets it enters, CIM's footprint in Las Vegas eventually could extend beyond the Lady Luck site.

"We are very close to taking over the lead role in the development of the Lady Luck," John Given, a principal at CIM, said Thursday.

CIM's expected entrance into Las Vegas suggests that downtown will continue to diversify away from a strict focus on casinos. Mayor Oscar Goodman is enthusiastic about the potential changes.

"Things are changing fast in that area," he said. "It's a change of hope."

Given said Goodman has been working hard to bring CIM on board with the Lady Luck property.

"The mayor has his hook in us, and it hurts," Given said.

That should not be taken as an indication, however, that Given or CIM is reluctant to enter the Las Vegas market. Company officials seem to have not just enthusiasm, but a long-term vision that many say has been lacking since the Lady Luck closed in February 2006.

The dearth of activity on the site, which opened as Honest John's Casino in 1961 and became the Lady Luck seven years later, mirrors the surrounding area.

Downtown's primary visitors are an older, dying breed of bargain-hunters. And many locals who come downtown aren't affluent enough, operators say, to support the kind of major growth and redevelopment necessary to lure customers away from the Strip.

Many downtown investors have pinned their hopes on the Lady Luck as the property that could kick-start a renaissance in that area. But plans to create a hip boutique hotel such as those in New York or Los Angeles never materialized.

The Lady Luck may have sealed its fate when it closed its doors last year before securing financing for the redevelopment.

Lady Luck insiders say the plan also may have been too ambitious for the partnership, led by Andrew Donner, that owns the site.

Donner achieved success expanding the Timbers poker bar and restaurant chain, but had never built a major casino from the ground up. A nongaming focus may allow CIM to succeed where Donner failed.

Some say rather than an upscale casino to compete with Strip and suburban properties, the downtown corridor should cultivate the kind of upscale, nongaming attractions - such as lofts for residences and offices - that have gentrified other downtowns.

The premium that the city's business development office places on mixed-use properties to create the infrastructure necessary to support downtown living seems to fit CIM's profile.

Downtown's casinos have not seen much benefit from other major attractions nearby, such as the Premium Outlets and World Market Center. While some fault the casinos for not aggressively marketing to those centers' customers, others say the lure of the Strip is too powerful for downtown's older, smaller casinos to compete effectively.

There also is a school of thought, however, that CIM would be foolhardy not to exploit the site's unlimited gaming license and could eventually license a separate company to run a casino.

Multiple owners with various stakes in downtown properties have made it difficult for groups to band together for joint marketing efforts that could draw bigger audiences, critics say.

Arnold Stalk, an architect, urban planner and former city housing division chief under Mayor Jan Jones, says downtown needs more live-work space to become a true urban center, but also needs to redevelop its casinos, which remain the prime attraction.

"Every successful redevelopment in the United States has an oceanfront or a theme," he said. "We don't have an oceanfront, but we have casinos. It's our mainstay - it's who we are."

It doesn't seem the city is ready to turn its back on casinos just yet. A major part of the $9.5 billion Project Pulse development centered at Main Street and Charleston Boulevard includes three casinos.

Still, with a major developer looking at a downtown casino project as a potential launching pad for nongaming development, what Las Vegas is - or was - may be only a part of what it will become.