Arena builders

Oak View Group plans $3 billion entertainment development in Las Vegas

Diving Brief:

  • Oak View Group has unveiled its vision for a $3 billion entertainment venue south of the Las Vegas Strip, according to a company announcement.
  • The project will include an 850,000 square foot arena, casino, hotel and additional amphitheater to host concerts, sporting events, family entertainment, conventions and awards shows.
  • The Los Angeles-based global development firm is betting the Las Vegas entertainment industry will fully recover, though new construction starts still lag behind pre-pandemic levels.

Overview of the dive:

Oak View Group adds another massive entertainment project to its resume.

The company led the reconstruction of Seattle’s Climate Pledge Arena between 2019 and 2021, as well as a partnership with the New York Islanders and Sterling Project Development for the $1.5 billion UBS Arena in Belmont Park in New York from 2019 to 2021.

But unlike those projects, this $3 billion development project, which is slated to kick off next year, doesn’t have a professional sports franchise to fill the stands every week.

“It’s definitely a sign that automakers are more confident that people are less concerned about getting the virus and trying to get on with their lives,” said Richard Branch, chief economist at Dodge Data & Analytics. “Entertainment-related construction should improve over the next year, but … there is still a deep hole to dig to return to pre-pandemic construction levels.”

Important barometers for measuring the strength of the sector are air travel and hotel occupancy rates. But Branch doesn’t expect those to fully rebound until later in 2022 or 2023.

Still, hotel and leisure starts in Las Vegas last year hit $561 million, a 67% gain over 2020. However, that dollar value is down from the total of $717 million in 2019, and part of the most recent peak in 2018 of $3.3. billion, Branch said.

Optional legend

Sebastian Obando/Construction Dive, data courtesy of Dodge Data & Analytics

But COVID-19 has taught the city how much that can change in a year.

The Las Vegas Convention & Visitors Authority forecast in April 2021 about $450 million in new hospitality and entertainment developments for 2022, but its most recent February 2022 forecast is only $154 million, John said. Stater, director of research in Las Vegas at Colliers, a Toronto-based real estate company.

“Obviously there are projects that have been pushed back, mostly to 2023,” Stater said. “A few projects fell off the radar.”

For example, the Fontainebleau Las Vegas was supposed to open in 2022, but has since delayed its opening date end of 2023. The MSG Sphere has also delayed its opening date in the second half of 2023.

Residential housing starts in Las Vegas were 14,503 units in 2021, about the same level as 2020, according to Dodge Data & Analytics. While residential starts may boost entertainment-related construction, visitors from outside the metro area are just as important, if not more so, Branch said.

Last February, 2.6 million people visited Las Vegas, almost 70% more than in February 2021, but still 1 million less, or 18% less, than in February 2019, according to the Las Vegas Convention and Visitors Bureau.

“It’s yet another sign that while some big entertainment projects are sure to go forward, progress will be slow,” Branch said.

The 25-acre Las Vegas development sits on 66.5 acres of land near the intersection of two major freeways, I-15 and I-215. The project is being designed by architectural firms Gensler and Populous, while project development will be led by Steve Collins, president of global site development and special projects at Oak View Group.