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One of Las Vegas’ most prominent office parks due for a face-lift

Updated June 21, 2024 - 11:07 am

The Hughes Center, one of Las Vegas’ most prominent office parks, is in court-ordered receivership after its owner defaulted on its loan.

Clark County Judge Susan Johnson ordered that the 68-acre office park next to the Las Vegas Strip enter into a receivership managed by Logic Commercial Real Estate.

The 1.4 million square feet Hughes Center has faced a cloudy future since last year when the New York-based investment firm Blackstone stopped making payments on a $325 million loan. Court documents indicate the loan was due in September and wasn’t fully paid and as a result Wells Fargo filed the motion for the Hughes Center to be put into receivership.

Soozi Jones Walker, president of Commercial Executives Real Estate, a firm specializing in office, retail and industrial real estate, said she expects the property will be sold quickly, because if it sits mostly empty for a while, its value could go down.

Logic is now charged with recovering the remaining funds from Blackstone. Logic can manage leases at the Hughes Center and put all or parts of the center up for sale.

Logic Commercial Real Estate has recently overseen key property transactions as it was picked to sell several downtown Las Vegas properties owned by former Zappos CEO Tony Hsieh’s estate. Logic sold several of those East Fremont Street properties to an investment firm owned by its chairman Brendan Keating for $24.7 million.

Occupancy down

The Hughes Center used to be one of the premier business addresses in Las Vegas but has seen a decline in occupancy in recent years as more companies looked to move away from the traffic of the Strip and as more high quality office space has been constructed around the 215 Beltway.

A majority of the Hughes Center is now available for lease as it has an availability rate of 51.6 percent, according to data from CoStar Group Inc., a real estate analytics company. Overall, the Las Vegas office market has an availability rate of 12.8 percent in the first quarter of 2024, according to a report from Colliers International.

The future of the office property is still unclear as Logic declined to comment for this story. Wells Fargo didn’t immediately return requests for comment.

Blackstone said the Hughes Center loan was written off more than a year ago and is part of a fund that had a rate of return of 14 percent.

“Less than 2 percent of our owned portfolio is traditional U.S. office, and we’re incredibly proud of our performance, which speaks for itself,” a Blackstone spokesperson said in an emailed statement.

Next steps for Hughes Center

Jones Walker said Hughes Center’s location could help it sell quickly since its near the Strip and should still drive demand for office tenants that want to be near the resorts. She also said a buyer could look to redevelop some buildings in the Hughes Center into either entertainment uses or some high-rise apartments or condos.

“Some of the buildings are older, they’re as nice as those buildings are, the highest and best use might be to change,” Jones Walker said. “A new buyer may come in and look at some value add, where maybe they take a building down or two and create something even new and better. That’s a very Las Vegas thing to do.”

Some potential buyers may look at the Hughes Center as more of a redevelopment opportunity rather than an office one, said Michael Petrivelli, director of market analytics for CoStar.

“There’s a possibility it could sell close to land value, at least in terms of the office component, since a prospective buyer might only view it as redevelopment play,” he said in an emailed statement to the Las Vegas Review-Journal.

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com. Follow @seanhemmers34 on X.

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