Sunday, December 07, 2014

New Summerlin development to be most expensive in Las Vegas

By JENNIFER ROBIS
Southern Nevada will soon see some of its priciest homes yet.
The Howard Hughes Corp., which is developing Summerlin, is announcing a joint venture with Discovery Land Co. of Scottsdale, Ariz., to build about 250 homes on 555 acres near Tropicana Avenue and Town Center Drive, just south of The Ridges, in the foothills near Red Rock Canyon National Conservation Area.
When it breaks ground in 2015, the currently unnamed project will be the lowest-density neighborhood under construction in the local market, with lots as big as three acres, said Steve Adelson, a partner in Discovery. It probably will be the most expensive as well, with vacant parcels starting in the low seven figures, though it’s too early in planning to peg construction costs or home prices.
The announcement comes weeks after The Howard Hughes Corp. said it will construct Manhattan-like residential densities in Downtown Summerlin, where as many as 10,000 people are expected to move onto a third of a square mile in the next decade. The developments are five minutes apart, making Summerlin South possibly the only corner of the Las Vegas Valley with two such disparate density levels in such close proximity.
LUXE LIFE
“The two projects are a sign that the local economy continues to evolve, and the housing market continues to improve,” said John Restrepo, principal of Las Vegas research firm RCG Economics. “The Howard Hughes Corp. is trying to meet different market niches as those improvements happen.”
The Discovery project also will mean a new level of exclusivity, even for Summerlin, where the average price of a new home sold in May was $454,000, compared with a citywide average of $279,900, according to Home Builders Research. Summerlin’s highest-end community now is The Ridges, a custom-home development where prices on current listings range from $2 million to $9 million.
The new neighborhood will go beyond that, the developers say.
It will have a private, 18-hole Tom Fazio-designed golf course, a private fitness facility and a spa with a five-star chef on staff and consulting physicians who will design nutritional and wellness plans for residents. Its Outdoor Pursuits program will coordinate adventures ranging from Red Rock hikes to fly-fishing trips. There will be a kids’ camp, and the private club will arrange for cold drinks to be waiting when residents return from vacation.
Membership rates haven’t been set, but in other Discovery communities they range from a one-time cost of $75,000 to $150,000 and can be sold with the home.
“Ours is really a lifestyle model. It takes the exclusivity and the high-end nature of The Ridges and maybe, in our opinion, goes a notch above, and combines that with more of a family atmosphere and lifestyle, versus what you get with just a golf club,” Adelson said.
Housing experts said they don’t know any other Las Vegas Valley community that matches Discovery’s plans.
“Wow. I’m trying to understand where we would see that kind of luxury in Las Vegas, and I can’t picture anything like it,” said Dennis Smith, president and CEO of Home Builders Research.
This kind of project is now possible both because of economic recovery and because, after 20 years of development, Summerlin has advanced far enough south to bring the land into play, said Kevin Orrock, president of Summerlin and vice president of master-planned communities for The Howard Hughes Corp.
The 555-acre site always was destined for low-density housing, Orrock said. Its location next to a national conservation area and its hilly topography make routine subdivisions with uniform, 6,000-square-foot lots difficult to develop.
But it’s going to be the first and last time Summerlin goes this luxe, Orrock said.
“As we move west, you will certainly see some other custom-lot developments, but this is very one-of-a-kind,” he said. “You won’t see another Discovery project in Summerlin.”
That’s good, according to some local brokers, because the market will have all it can handle in absorbing the only one.
The luxury-home market has been on the upswing since 2012, but it has slowed in recent months. And Discovery’s sheer volume of home sites, though they won’t come online all at once, will add significantly to local inventory.
The valley moved 325 homes priced at $1 million or higher in 2013. That was up from 150 closings in 2012, but 2014 is flat, said Mark Stark, CEO of brokerage Berkshire Hathaway HomeServices Nevada Properties. So the Discovery site will contain the equivalent of nearly two-thirds of today’s entire high-end market.
“That’s a lot of product for that price range,” Stark said.
There should be more luxury buyers in coming years as the national economy continues to improve and affluent Californians relocate to Nevada for lower home prices and taxes, he said.
Still, expect a pitched battle for buyers.
WORLDWIDE MARKET
“There are only so many purchases in the market. You’re going to compete, and someone is going to get hurt, or other parts of the market will slow down,” Stark said. “Price still matters. Summerlin will absolutely be a draw, but that doesn’t give you a free-for-all to charge whatever you want. You’re going to have to price it right based on the size of the lots.”
Stark also said the project probably would take at least five to 10 years to sell out.
Restrepo agreed, saying it would be a lot for the community to sell more than one home a month.
But Smith said the partners have “obviously done their research on market demand or they wouldn’t be investing these kinds of dollars.”
Nor will Discovery rely just on local and regional buyers.
The company has 4,200 members in 17 other communities in markets including Scottsdale, Silicon Valley, Maui and Southampton, N.Y. A big part of its business is selling homes to existing residents who want second, or even primary, homes in other markets, Adelson said. Discovery has done nearly $1 billion in sales in 2014, which he said speaks to broad demand for its products. The company expects it could sell out here in five years.
“Las Vegas is a place we’ve always coveted. It’s a place that a lot of our current members love and would love to have an address in,” he said. “We found the right piece of property, and The Howard Hughes Corp. is a fantastic development company. We think Summerlin is one of the country’s great master plans, and now that the opportunity has presented itself, we feel it’s the right time.”
Contact reporter Jennifer Robison at jrobison@reviewjournal.com

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