Dive Brief:
- Oak View Group unveiled its vision for a $3 billion entertainment venue south of the Las Vegas Strip, according to a company announcement.
- The project will feature a 850,000-square-foot arena, a casino, a hotel and an additional amphitheater to host concerts, sports events, family entertainment, conventions and award shows.
- The Los Angeles-based global development company is betting the Las Vegas entertainment industry will fully recover, though new construction starts still lag pre-pandemic levels.
Dive Insight:
Oak View Group adds another massive entertainment project to its résumé.
The company led the rebuild of Seattle’s Climate Pledge Arena between 2019 to 2021, as well as partnering with the New York Islanders and Sterling Project Development for the $1.5 billion UBS Arena at Belmont Park in New York from 2019 to 2021.
But unlike those projects, this $3 billion development project, expected to break ground next year, does not have a professional sports franchise to fill the stands weekly.
“It’s certainly a sign that builders are more confident that people are less concerned with contracting the virus and trying to move on with their lives,” said Richard Branch, chief economist at Dodge Data & Analytics. “Entertainment-related construction should improve over the next year, but … there remains a deep hole to dig out from to get back to the levels of construction seen before the pandemic.”
Important barometers to measure the sector’s strength are air travel and hotel occupancy rates. But Branch doesn’t expect those to fully bounce back until later in 2022 or 2023.
Nevertheless, Las Vegas hotel and recreation-related construction starts last year reached $561 million, a 67% gain over 2020. However, that dollar value is down from 2019’s total of $717 million, and a sliver of the most recent peak in 2018 of $3.3 billion, Branch said.
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Sebastian Obando/Construction Dive, data courtesy of Dodge Data & Analytics
But COVID-19 has taught the city how much can change in a year.
The Las Vegas Convention & Visitors Authority projected in April 2021 about $450 million in new hospitality and entertainment development for 2022, but its most recent forecast from February 2022 is just $154 million, said John Stater, Las Vegas research manager at Colliers, a Toronto-based real estate company.
“Clearly there are projects that have been pushed back, mostly to 2023,” said Stater. “A couple projects have fallen off the radar.”
For example, the Fontainebleau Las Vegas was intended to open in 2022, but has since delayed its opening date to late 2023. The MSG Sphere also delayed its opening date to the second half of 2023.
Residential construction starts in Las Vegas were 14,503 units in 2021, about the same level as in 2020, according to Dodge Data & Analytics. Though residential starts can drive entertainment-related construction, visitors from outside the metro area are as important, if not more, said Branch.
Last February, 2.6 million people visited Las Vegas, almost 70% more than February in 2021, but still 1 million fewer, or 18% less, than February 2019, according to the Las Vegas Convention and Visitors Bureau.
“It’s yet another sign that while some large entertainment projects are sure to move ahead, progress will be slow,” said Branch.
The 25-acre Las Vegas development is located on 66.5 acres of land near the intersection of two major freeways, I-15 and I-215. The project is designed by architecture firms Gensler and Populous, while project development will be led by Steve Collins, president of global venue development and special projects at Oak View Group.
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