By Matthew Haggman
Knight Ridder
MIAMI - Two years ago Miami developer Jorge Perez said the Las Vegas market was ripe for the high-rise condominiums he has built so successfully in Florida. But Sin City has not been kind to South Florida's ``Condo King.''
In January, Perez canceled a twin-tower condo called ICON Las Vegas. Now he's weighing selling the 25 acres on which he, along with actor George Clooney, planned to build a massive -- and much-hyped -- 11-tower condo project, Las Ramblas.
The $3 billion project was to rise near the Las Vegas Strip, and full-page newspaper ads heralded the arrival of Perez, Clooney and team as the second coming of the Rat Pack. But now Perez says demand is lower than expected and construction costs much higher.
His experience reflects that of some other South Florida developers who gambled on Las Vegas: Going West has turned out to be not quite as easy as it looked. As Las Vegas grew, these developers figured it was poised to become a second-home destination. But now, some wonder if the Las Vegas market is not yet ready for projects centered on condos rather than on the tried-and-true formula of hotels and casinos.
A decision will be made in the next two weeks about Las Ramblas' fate, Perez said. Options include going forward, bringing in another investor or selling -- which may still bring a profit, he said. But it would leave the builder without a project in a city he proclaimed the next South Florida.
``Did we misjudge the levels of demand and costs in Las Vegas?'' Perez. asked. ``The answer is `yes.' ''
Two years ago Perez and several other South Florida developers -- including Miami Beach's WSG Development, Miami-based Fortune International and Royal Palm Communities in Boca Raton -- decided Las Vegas might be the next hot condo market. At the time, only Aventura-based Turnberry Associates had successfully built condos in Las Vegas.
Like South Florida, Las Vegas was growing. Just as South Florida drew buyers from the northeast, Las Vegas drew the massive Southern California market. And neither Nevada nor Florida has an income tax.
Sprawling development and chronic traffic was whetting the appetite for urban living -- i.e., condos near The Strip. And, the hope was Las Vegas would do as well with Asian buyers as South Florida had with Latin Americans.
Now some South Florida developers are less sure.
Fortune International CEO Edgardo Defortuna considered a Las Vegas project but backed out.
``The reality is that there are such wonderful, gorgeous hotels at very reasonable prices,'' said Defortuna. ``Why would you stay in a condo when you can stay in a hotel in the middle of the action and not pay that much price?''
That's just why Royal Palm Communities' Dan Kodsi has decided to pursue a condo-hotel and casino in Las Vegas -- not condominiums. Unlike in South Florida, the high-rise condo market in Las Vegas remains unproven. ``We are attempting to follow the formula that has worked on The Strip,'' he said.
An added problem for newly arrived condo developers: They get nudged out by huge casino and hotel players, like Steve Wynn, who get the best deals for materials and labor because of longstanding relationships and who are willing to spend heavily on a project.
But not everyone is ready to throw in the towel on condos in Las Vegas. WSG's Eric D. Sheppard said the condo market is real in Las Vegas, but too many builders rushed in and sold units before understanding their construction costs.
``We are very bullish,'' Sheppard said. ``We plan to announce a two-tower, 1,600-unit condo, condo-hotel and spa project in the next 30 days.''
For Perez's part, he says he won't be looking for more Las Vegas projects -- at least for now. He said he's not comfortable becoming a hotel and casino builder, which may be necessary to succeed in Las Vegas.
Instead, Perez recently announced plans to build in Atlanta. He has projects set for Punta del Este, Uruguay, and Buenos Aires, and he is exploring another in Jacksonville, Fla. He said he also plans to make a major push into building affordable houses.
Meanwhile, Perez still has dozens of South Florida condos to complete.
The trouble in Las Vegas comes as Perez seemed on a perpetual roll. Every project he touched seemed to turn to gold -- whether in Miami Beach's South of 5th or in downtown Miami. He made the cover of Time magazine last year and Forbes' richest list. The University of Miami named its architecture school after him.
Yet Perez says he has no regrets about going to Las Vegas. ``I never regret,'' he said. ``You learn, but you don't regret. We thought it was a market with a lot of similarity to Florida. But we were not as knowledgeable about the market nor as dominating as we are in South Florida.''
Looking West
The flirtation of South Florida developers with Las Vegas:
• Jeffrey Soffer, Turnberry Associates: Went to Las Vegas in 1997, becoming the first South Florida developer to enter that market; only one to have a proven track record there.
• Eric Sheppard and Philip Wolman, WSG Development: Plan to build a two-tower 1,600-unit condo, condo-hotel and spa near the Las Vegas Strip.
• Dan Kodsi, Royal Palm Communities: Plans a condo-hotel and casino to be built on the Las Vegas Strip.
• Edgardo Defortuna, Fortune International: Seriously considered a project but ultimately decided against it, saying he ``couldn't get comfortable with the values or a site.''
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