Edge Selling Harmon Corridor Land for $600M+

LAS VEGAS-Edge Group is days away from an agreement to sell the 50 acres it owns immediately west of the Hard Rock Hotel & Casino to a real estate developer from New York, a local industry source familiar with the negotiations tells GlobeSt.com. The sale price will be in excess of $600 million, according to the source, a record for near-Strip land. Edge Group executives could not be reached Monday morning for comment.

The assemblage includes the 25-acre Ramblas property and the adjoining 25 acres on which it has been preparing to develop W Las Vegas in partnership with Starwood Hotels & Resorts Worldwide. The two properties are slated for a combined 6,600 hotel and condominium units plus a casino, restaurants and shopping, which puts it on par with multi-billion endeavors such as Boyd Gaming’s Eschelon Place and MGM’s Project CityCenter.

While those two projects are on the Strip, the Edge property is in an area known as the Harmon Corridor, a 1.2-mile stretch of the road between the Strip (Las Vegas Boulevard) and Paradise Road. MGM’s project is under construction at Harmon and the Strip. At the other end is the Hard Rock Hotel & Casino, which Morgans Hotel Group is preparing to expand. Nothing of significance currently exists between those two projects.

“Though it has yet to happen, clearly the Harmon Corridor is poised for significant redevelopment,” says Brian Gordon, a principal with Applied Analysis, a locally based financial advisory and economic consulting company that tracks the commercial real estate market.

Edge tied up the Ramblas property in early 2006 and closed on it in June, paying $202 million or slightly more than $8 million per acre. For comparison, land right on the Strip in early 2006 was valued at approximately $20 million per acre. Given the imminent deal for the Edge property and talk about a $39 million per-acre offer (also from a New York real estate developer) for 38 acres of Strip-front property that includes the New Frontier Hotel & Casino, it appears values have risen substantially in that time.

To offset the higher prices, expect more units per acre, Gordon says. “These price points are setting a new standard,” he says. “Increased density is clearly going to be necessary to generate the returns necessary given the relative land basis.”

When Edge acquired the Ramblas property, Edge group president Adam Frank said there has been a lot of excitement surrounding the redevelopment of the Harmon Corridor and that by acquiring the additional acreage there it would be able to control the experience there. “We believe to create a great experience you really have to master plan whole area to give it an identity and a character while still having enough breadth of product to appeal to different segments of the market,” he said.

The plan at that time was to complement W Las Vegas by developing the Ramblas site with a large central casino and retail hub surrounded by a number of different hotel brands that spill into the hub. In addition, Frank said the master plan would include pedestrian connections between the two developments and possibly with the Hard Rock as well.

The name of the buyer of the Edge property was not available Monday morning. The would-be buyer of the New Frontier property is said to be New York City-based El Ad Properties, which is the US real estate arm of Israeli billionaire Yitzhak Tshuva. The company has not returned a phone call seeking comment.