The shovels in Las Vegas are waking from their slumber.
Caesars Entertainment Corp. is moving forward with The Linq, a $550 million, 326,000-square-foot outdoor entertainment, food and retail complex sandwiched between the Imperial Palace and Flamingo casinos, with guidance from Southern California lifestyle shopping center specialist Caruso Affiliated on development, leasing and operations. Originally conceptualized in 2007, The Linq was pushed to the sidelines by the recession and, when it opens in mid-2013, will be the first major retail complex in Las Vegas since the MGM Mirage’s Crystals at CityCenter opened in 2009.
“It’s a great time to come in with a project,” said Rick Caruso, president and chief executive officer of Caruso Affiliated, who was persuaded to consult on The Linq by David Bonderman and Kelvin Davis, respectively, the founding and senior partners of TPG Capital, the private equity firm that controls Caesars Entertainment with Apollo Global Management. “This is going to be the newest and best, and it is going to be the newest and best for a while because there’s nothing on the books, and the market is coming back, and people are going back to discretionary spending and discretionary travel.”
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The Linq is designed to offer accessible entertainment, food and retail to Generation X and Y visitors to Las Vegas, according to Greg Miller, senior vice president of development at Caesars. He said the younger demographic is underserved in a market that caters heavily to Baby Boomers and spends more on nongaming than their older counterparts. “We think Gen-X and Gen-Y are a big percentage of the market today. We envision a 35-year-old who lives in an urban environment, and the place they want to hang out when they come,” said Miller.
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The Linq will have about 20 restaurants and bars in spaces that go up to roughly 14,000 square feet, but average around 1,500 square feet, and about 20 stores, with the largest space reaching 10,000 square feet, but the size range mostly from 1,200 to 1,500 square feet.
Caesars Entertainment brought Caruso Affiliated on board to help convince desired tenants to take a chance on Las Vegas, which was battered by the recession and littered with stalled projects like the Fountainbleau and Echelon Place. He has a track record of drawing impressive traffic to lifestyle shopping centers The Grove and The Americana at Brand in the Los Angeles area. But even Caruso acknowledges the retail landscape in Las Vegas is saturated, and The Linq property will have to work hard to carve out a point of difference to lure people away from competing shopping venues, including The Forum Shops and the Miracle Mile Shops.
“We are not looking to duplicate what’s already there. Forum Shops does an incredible job at what they do, so we don’t need to duplicate that. This will be much more on the entertainment, restaurant side,” said Caruso. “There is a lot of retail in Vegas, but not everybody is represented in Vegas. So I’m confident we are going to have some unique retail in Vegas.”
Miller and Caruso expect The Linq to pull from the 6,000 hotel rooms immediately adjacent to it, but entice broader crowds as well. The Linq’s most visible attraction will be the world’s largest observation wheel designed by Arup Engineering, which also was responsible for the London Eye and Singapore Flyer, to be 550 feet tall and have 28 cabins on the wheel holding 48 people each. Other firms involved in the design of The Linq are Las Vegas-based Klai Juba Architects and Washington, D.C.-based David M. Schwarz Architects.
“Without anything in this area that is new, we were already getting over 20 million people walking by there a year. It is 40 million people a year who come to Vegas. Our understanding of projects like Miracle Mile is that they are getting visitation of 20 million a year,” said Miller. Caruso anticipates The Linq will perform on par or better than The Forum Shops. “I think we will easily match the performance numbers that Simon is doing over there. They are probably running around $1,400 to $1,500 a square foot,” he said.
The Linq’s funding comes from an equity investment by Caesars and project-specific debt raised by J.P. Morgan amounting to $450 million for The Linq and the 662-room Octavius Tower at Caesars’ Palace Las Vegas, which was put on hold in 2009. During the recession, Miller said, “There was no market for a project like this, and it [brings] a tremendous amount of encouragement that investors are looking at Vegas and a project like this and are willing to invest in it.”