The third time is a charm. At least, that is what the developers of the proposed Pinnacle Las Vegas are hoping. The Falconi Group recently named its third general contractor for the planned USD 740 million, 1,100-unit condominium-hotel development at Tropicana and Cameron avenues, across from The Orleans. Dick Pacific Construction, a unit of Pittsburgh-based Dick Corp., has replaced Marnell Corrao Associates as builder.
Marnell was the general contractor until two months ago. A reason for the change wasn’t explained. The project, which was first announced in 2004, initially had New York City-based Turner Construction Co. as its general contractor. But that relationship didn’t last either. Turner is building CityMark Development’s USD 167 million, 341-unit Juhl at 255 E. Bonneville Ave. downtown.
Dick is more than a contractor; it’s also a joint-venture project partner. Turner and Marnell, by comparison, were independent contractors. Calls to representatives of Pinnacle Las Vegas seeking comment for this story were referred to Norman Fornella, Dick Corp.’s executive vice president, who failed to return calls before deadline.
Dick’s involvement has since lowered the project price by 13 percent. Pinnacle Las Vegas was cited as an USD 850 million development in July when Marnell Corrao Associates was general contractor. Marnell is a Las Vegas-based construction giant responsible for Strip landmarks such as Bellagio, Wynn Las Vegas and Caesars Palace.
The $ 110 million discount runs contrary to current construction market conditions with labor and building material prices escalating 12 percent to 15 percent during the past two years.
Yet the basic makeup of Pinnacle Las Vegas hasn’t changed. Plans for the project, designed by YWS Architects, still call for two 36-story gold glass towers connected by three sky bridges. The twin 410-foot-tall buildings feature a three-acre wet-deck, restaurants, boutiques, and a spa and fitness center.
Pinnacle has yet to announce a construction loan, although it does have a USD 40 million bridge loan from Berkshire Capital Financial of New York. Bridge or mezzanine financing is usually a short-term, high-interest loan that acts as a stopgap between a construction loan and permanent financing. It can help a developer get things moving. Startup costs can include opening a sales center, paying broker commissions and launching a marketing program with brochures, renderings and advertising. The property is sometimes used as collateral on such loans.
The Falconi Group, headed by Angelo Falconi, is best known locally as a car dealer as opposed to a high-rise specialist. Falconi’s Tropicana Honda previously occupied the 12-acre project site. Falconi has owned the property free and clear for 20 years. It recently cleared the site in July as a sign of project progress.
Meanwhile, construction is expected to start by year’s end and finish by 2010, or about a year later than early projections. Dick Corp. helped build the USD 1.5 billion Venetian.
Pinnacle Las Vegas comes during a market adjustment with a glut of available inventory and several project cancellations. It could consequently make sales difficult, though project representatives have yet to disclose how many units are under hard contract.
„Buyers want a prime location for the cost they are paying and they can get real good deals,“ said Bruce Hiatt, owner of Luxury Realty Group, a Las Vegas high-rise residential specialist. „If it’s not well-located and branded, projects are going to face challenges. There is about two years of resale market inventory.“
There were 227 luxury high-rise units listed for resale in the second quarter, with an average sale price of USD 499 per square foot, reports Restrepo Consulting Group, a Las Vegas-based economic research firm.
The resort corridor has the lion’s share of available units, accounting for 62.9 percent of the market. There were also 221 condo-hotel units available in the second quarter, with a median price of USD 832 per square foot.
„Only 12.9 percent of the market’s planned 27,268 luxury high/mid-rise condo units had been completed in the second quarter, whereas 49.5 percent had been canceled or suspended,“ says John Restrepo, principal of Restrepo Consulting Group.
„It has become increasingly hard for first-time high-rise developers to enter the market. It really takes an experienced, well-financed development team with a good location, brand and product in order to make things happen.“