Construction continues Friday on Turnberry Towers at Karen Avenue and Paradise Road. Photos by Jeff Scheid. John Riordan of Turnberry Towers says many developers sold high-rise condos at prices too low to cover costs.

The Related Cos. officially pulled the plug Friday on Icon, a twin-tower luxury condo project on Convention Center Drive, taking 500 units off the Las Vegas high-rise market.

Related insists that its $3.5 billion Las Ramblas project on Harmon Avenue is still proceeding and that developers are negotiating with major hotel partners. The sales staff for Icon has been let go and deposits are being refunded, though some buyers are being steered from Icon to Las Ramblas.

The recent demise of proposed condo projects such as Ivana Las Vegas and Icon has turned Southern Nevada into a supply-constrained market, an executive for Florida-based Turnberry Associates said.

Six months ago, there were 50,000 to 70,000 units planned or ready to begin construction in Las Vegas, raising concerns about the depth of the market here.

Doubting that demand for the pricey condos was strong enough to support those numbers, real estate experts predicted that one-fourth to one-half of the projects would actually be built.

Today, there are fewer than 500 luxury condos for sale near the Strip corridor, said John Riordan, vice president of sales for Turnberry Place and Turnberry Towers.

"When there was a frenzy of announcements and reservations being taken, everyone knew it was a short-term unjustifiable event," Riordan said. "There's not enough workers here to build them all and there's not enough buyers to buy them all. What we have is survival of the fittest, I suppose, people who have the experience and know-how to do these projects."

Even developers with experience in building high-rise condos had difficulty in Las Vegas because they underestimated the cost to build here, he said.

Related, developer of the Time Warner Center in New York and thousands of luxury condos in Florida, said it was an "extremely painful decision" to cancel Icon.

"The major factors include a decrease in market high-rise sales, lawsuits and rising construction costs," Related said in a statement.

"In the several months needed to resolve lawsuits and finally be in a position to break ground, construction prices had increased so drastically that after pursuing every possible way to move forward, Related was unable to build Icon based on original pricing without seriously impacting the integrity of the development."

David Ezra, owner and broker of Ezra International Realty, said he had heard rumors about the Icon project being dead, though he sold a unit there just two days ago.

"It's all a rumor mill right now, so we're just sitting back and see what happens. We're waiting to hear from the developer to see what happens," he said. "If they pull out of the Icon project, they'll probably never make Las Ramblas happen. They were supposed to do the 61 acres downtown, too."

Rick Cavenaugh, president of Chicago-based Fifield Cos., developer of Allure, said there are only a couple of "real deals" in Las Vegas.

"My prediction is that only two or three new high-rise towers break ground in 2006," he said. "Why? Construction costs and financial viability of the developers. Period. Simple story.

"Las Vegas is going to whittle down to three or four good developers succeeding in the market. It's getting back to blocking and tackling, the basics. All the others will fade into the sunset."

Riordan said the reality is that only four or five projects will get built around the Strip, including Panorama, Sky Las Vegas, Allure and Turnberry Towers. Metropolis, a loft-style condo project on Desert Inn Road, is already built and completely sold.

Construction of the fourth and final 38-story tower at Turnberry Place is being topped off next week and all 180 units are sold, Riordan said. That completes a 720-unit project that started in 1998 and sparked a wave of high-rise condo development in Las Vegas.

"I don't think it's the demand," Riordan said. "The problem is these guys rushed to the market and sold their product too cheap. They couldn't build them for what they were selling for."

Riordan said Turnberry bought much of the steel used for construction of both Turnberry Place and Turnberry Towers about a year and a half ago.

"We have to commit a lot of money to do that. We pay 50 percent up front, so if for some reason you don't go through with the project, you're out that 50 percent," he said.

Securing construction financing is a major hurdle in the development of high-rise condos, especially as banks have started tightening their lending requirements in light of the large number of projects that have been announced in hot markets such as Las Vegas, Miami and San Diego.

One Queensridge Place, the first suburban high-rise condo to go up in Las Vegas, has completed $250 million in financing through HSBC Bank, said Frank Pankratz, president of Executive Home Builders, one of the development partners.

The loan is being used for construction of two 18-story towers with 219 condo units that are priced from $1.2 million. General contractor Perini Building has completed the ninth floor of one tower and the eighth floor of the second tower.

Queensridge units average 3,600 square feet and are targeted mainly to primary residents, Pankratz said.

"Our buyers are largely from the northwest (Las Vegas) area. Our suburban location (at Alta and Rampart boulevards) in proximity to high-end neighborhoods like Queensridge and Summerlin is desirous to people who already live in the neighborhood," he said.

Turnberry is geared more toward vacation and second-home owners, Riordan said.

"It's just like South Florida, except here they stay for shorter stays. In Florida, they come for eight to 12 weeks a year on average. Here they come on a Thursday night and leave Monday," he said.