December 17, 2008 - 10:00 pm
Construction has been suspended on the ManhattanWest mixed-use condo development in southwestern Las Vegas, the developer said Tuesday.
Funding for the $350 million project is no longer available and it’s uncertain when new financing will be secured, Gemstone Development Chief Executive Officer Alex Edelstein said.
Edelstein is looking to form a group to purchase senior notes at a discount and finish the project, but that will take time, he said.
“The main problem is a mismatch of what it costs to build one of these things and what people are willing to pay for condos and office space,” he said. “We are very sorry to have to suspend construction. We are looking for ways to finish it. We’re going to try and get it done.”
ManhattanWest plans call for 700 condo units in 12 buildings, including a nine-story tower that has already been topped off. It would also encompass 150,000 square feet of office space over 50,000 square feet of retail and underground parking.
The project at the Las Vegas Beltway and Russell Road is near completion, but recent economic events have created an extremely difficult environment for real estate development, Edelstein said.
“It started out as just a real estate problem and now it’s a global problem. Real estate is hurt because the larger economy is busted,” he said. “If you’d told me a year ago Las Vegas would have severe layoffs in the casinos and a severe drop in tourism and negative population growth, I would have laughed.”
Gemstone incurred “significant financial impacts” from alleged material contractual breaches by its former general contractor, Apco Construction, Edelstein said. That’s the main reason lenders cite for terminating financing.
The increased costs include charges to rework and rebuild parts of the project that were built improperly.
Existing buyers remain under contract as Gemstone works to complete the project. The sales center remains closed.
Gemstone, which built the Manhattan condo community at Las Vegas Boulevard and Serene Avenue, acquired 20 acres in 2006 for about $30 million. It was financed by Theraldson Financial Group, the same lender on Manhattan.
Other mixed-use developments have met a similar fate in Las Vegas. Paxton Walk suspended sales earlier this year and Sullivan Square never progressed past excavation. Two condo projects — Mira Villa and Vantage Lofts — halted construction and filed for bankruptcy.
Contact reporter Hubble Smith at firstname.lastname@example.org or 702-383-0491.