The Palms casino is addressing a room shortage in a big way, with a 40-story hotel tower, left, and 50-story residential tower. RENDERING COURTESY OF THE PALMS George Maloof sits atop the Palms on Wednesday as construction on a second tower goes on behind him. Photo by John Locher.

The ever-expanding high-rise condominium market will gain another player, with the Palms announcing plans Wednesday to add a 50-story luxury tower that will serve as an additional playground for the property's celebrity clientele.

Palms developer George Maloof said the residential project is part of a $600 million expansion at the 4-year-old property.

Already under construction is a 40-story hotel tower that will have 347 rooms and suites along with entertainment offerings, two new restaurants, a 2,200-seat showroom, and an 8,000-square-foot recording studio.

The 34-acre site on West Flamingo Road will eventually encompass 1,300 rooms in three towers once the current expansion is completed.

"We have been able to build a tremendous brand at the Palms, but what we need are rooms and suites," Maloof said. "Right now, with 420 rooms, we're the smallest major casino in Las Vegas."

The Jerde Partnership, a Los Angeles-based architect, designed the new tower and the condominium project, dubbed Palms Place.

"We didn't want to just add another tower that looks like the existing tower," Maloof said. "We're taking the site and creating icons and a destination that all ties together with three distinct looks."

The expansion plans do not call for an increase to the resort's 100,000-square-foot casino and Maloof said the Palms has a strong revenue stream through its 2,000 slot machines and a loyal local customer base.

One financial observer said the Palms could make the most of its casino space by adding rooms.

"It's probably one of the most visited properties in Las Vegas, but it is terribly under-roomed," Deutsche Bank gaming analyst Marc Falcone said. "George has done a great job marketing the Palms to two audiences, the younger, affluent hip crowd and the local gambler. He's created a great niche property."

Maloof said the expansion will be funded through normal bank financing and the resort's cash flow.

As a privately owned casino, the Palms does not have to publicly disclose revenues and earnings on a regular basis.

However, Maloof said the property's cash flow and success allowed his family to quickly pay off the resort's minimal debt associated with the original price tag of $265 million for the Palms tower and resort complex.

Construction on the 599-unit luxury condominium component won't begin until 2006.

The tower will be built on the far west end of the property and will be connected to the Palms via a 300-foot glass-enclosed elevated moving walkway.

"Residents will have full use of the Palms restaurants and other amenities," Maloof said.

The tower will include studio condominiums of 600 square feet, one-bedroom units of 1,200 square feet, and several 7,000-square-foot penthouse suites.

Through the Maloof family's network of Palms customers, including sports figures, actors and actresses, recording artists and other celebrities, sales have been brisk without any public outreach. The units are priced from $500,000 to $7 million.

Maloof said reservations have been taken for more than 50 percent of the building -- a schematic layout of the condominium tower inside the Palms' makeshift sales center shows all the penthouse units with red "sold" buttons along a majority of the one-bedroom suites on the upper floors.

Potential owners have paid deposits of $25,000 for the smaller units and between $100,000 and $200,000 for the penthouse suites.

"People are always asking if we're going public so they can buy a piece of the Palms," Maloof said. "There is a demand for it and this is their opportunity to own a piece of the property. I think we're successful with this project because people believe in our brand."

As with several other announced hotel-condominum projects, the units will come fully furnished.

When not in use, many owners can opt to offer their condominiums -- most likely the studio and one-bedroom models -- back to the Palms as rentals by the hotel's customers.

Brian Gordon, a partner in Las Vegas-based Applied Analysis, said Maloof's plan could become a growing trend for casino operators.

"It's a way to increase the land value and also create a revenue stream for both the condo owner and the hotel that handles the rental as a management company," Gordon said. "The Palms could be a good location for this type of project."

Construction on the new hotel tower, just south of the main building, began in 2004 and portions will be completed this year, with the bulk of the tower opening in 2006.

A rooftop entertainment venue will highlight the new tower. The dining and entertainment attraction will be a joint-venture between the Palms, Playboy Enterprises, and the N9NE Group, which operates ghostbar and Rain in the existing Palms tower.

The new hotel tower will including 46 suites and penthouses that will range from 1,800 square feet up to 9,000 square feet and will include such amenities as indoor-outdoor swimming pools, fireplaces and basketball courts.

The pools will be cantilevered with glass walls, creating the impression of waterfalls off the side of the new tower.

About 60,000 square feet of meeting space and specialty retail will be added in the new tower.