Partnership to Specialize in High Rises

Developers Stephen Cloobeck and Steven Molasky have formed a partnership that will specialize in developing high-rise residences on or near the Strip.

The developers' first project, announced Thursday, will involve building up to 600 condominium units at Station Casinos' Red Rock Resort in Summerlin.

The partners are looking at other sites for condo towers but no deals have yet been signed, they said.

The partnership, called Cloobeck Molasky Partners LLC, has been in the works for several months and was created independent of the opportunity at Red Rock Resort, Cloobeck said.

"We chatted about it on or off for the last year and a half," he said.

The pair, who have known each other for more than a decade, responded to a request for proposal initiated by Station Casinos. They said their condo proposal edged out residential home builders trying to enter the booming high-rise condo market in Las Vegas.

Station Casinos executives wouldn't disclose the names of other developers in the running.

During a discussion of Station's second quarter earnings report Thursday, executives said they were contemplating building condo towers at some of their other casinos around town. Potential sites include Sunset Station, the proposed Durango Station at Durango Drive and the Las Vegas Beltway and Wild Wild West, a casino and motel that is slated for redevelopment into an upscale, high-rise resort, they said.

Cloobeck, a time share developer, exited the business in 2003 when Marriott's time share unit bought his operating company and its new time share development near the Strip called The Chateau. Cloobeck, chief executive of Diamond Resorts, built and still manages the nearby Polo Towers time shares. As part of the deal with Marriott, he receives a percentage of business generated by Marriott time shares in Las Vegas.

Molasky, the son of pioneering condo developer Irwin Molasky, has developed low-rise condo units in Las Vegas and mid- to high-rise condo towers in California and Colorado.

"There's a lot of business we thought we could create together," Cloobeck said.

Molasky dismissed recent concerns that the demand for condos might be overblown and that the number of projects on the drawing board will exceed available buyers.

"A new Las Vegas" is emerging with more than enough demand for high-density living to satisfy supply, Molasky said.

"All of these new (casino) resorts will have a (residential) component along with the gaming component," he said. Condo towers built as part of or next to a casino "are going to be much more well received" than free-standing towers, he added.

Home owners are increasingly gravitating toward a more urban lifestyle by moving into high-rise condos, Molasky said. Moreover, more home owners are eyeing condos as second and third homes, he said.

Some condos planned in Las Vegas are less than 300 units each, which means even 10 of those towers would be "tiny" compared to the number of potential buyers eyeing Las Vegas, he said.

Some of these towers won't ever be built because the developers lack financing and experience, Cloobeck said.

"Everyone is so concerned about overbuilding," Molasky added. "But Las Vegas has never been more vibrant. There's a tremendous depth (in demand) that is much deeper than supply. I think we could build 20 to 30 high-rises per year and still sell them but I don't think even five to 10 will be built in a year."

Station hasn't yet finalized prices for condo units or the potential cost of the project, though executives suggested they could command prices similar to those selling on the Strip.

The company could begin taking reservations for units in the next six to nine months and open the property by late 2007 or early 2008, though demand will ultimately dictate how fast the condos are built, they said.

Executives also disclosed Thursday that Red Rock Resort is scheduled to open late in the second quarter of 2006, implying a later start date than initially expected. A second phase expansion will open by the end of next year.

Officials also took time to justify the resort's increased pricetag of $925 million, saying its favorable location and upscale neighborhood will still make the project profitable.

"This is absolutely a category killer," Station Chief Financial Officer Frank Fertitta III said. "There is nothing like this that's been developed in the locals market."