Las Vegas’ economy is back, and that’s good news for city’s private golf communities

Las Vegas’ economy is back, and that’s good news for city’s private golf communities

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Las Vegas’ economy is back, and that’s good news for city’s private golf communities

Editor’s note: This story first appeared in the May 2017 issue of Golfweek Magazine; pictured in the main image is The Summit Club’s No. 2 hole.

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LAS VEGAS – Ten miles west of Las Vegas, on an unpaved home lot just off one of the fairways of a Tom Fazio-designed course that will open this month, a visitor can’t help but admire the sweeping view of The Strip and wonder what it must look like when it’s all lit up at night.

Nearby, there’s the future site a 130,000-square-foot clubhouse – it will include 21 condo units – and all around are signs of a bustling, 555-acre construction site, though no homes have yet been built.

“If you had $6 million and wanted to build a home, this is where you would go,” said Mike Finnell, general manager of The Summit, the first Discovery Land Co. project in the Las Vegas market.

First-year sales figures at The Summit would suggest there is no shortage of people who fit that description. That’s perhaps the most dramatic sign that the Las Vegas economy, which was hammered by the recession, has stormed back over the past four years. That’s good news for the city’s private golf communities, which are experiencing strong demand for real estate and new memberships.

“Golf in Las Vegas on the private side is as good as I’ve seen it in 20 years,” said Jason Cheney, general manager at Southern Highlands Golf Club, just south of downtown. “The city is on fire.”

Southern Highlands Golf Club’s third hole

Workers and businesses are streaming into Nevada, lured by no state income tax and a business-friendly environment. Nevada’s population is growing faster than every other state, save neighboring Utah.

In 2016, 69,876 new residents poured into Las Vegas and surrounding Clark County, according to driver’s-license data. Not surprisingly, one-third – 23,292 – crossed the border from California.

“We are seeing a significant in-migration, especially with active adult buyers,” said Greg Gross, regional director of Metrostudy, a research firm. “They’re leaving California with lots of equity right now.”

Gross noted that last year there were 9,031 new home starts in Southern Nevada, which has 2.5 million residents; by contrast, Northern California’s Bay Area, with 6.5 million residents, had just 8,200 new home starts. Over the past four years the unemployment rate has dropped more than 50 percent to 5.1 percent. That has helped drive a 7.7-percent rise in prices of single-family homes over the past year, according to Gross’ research. But you still get a lot of house for your buck here.

“We are the last great American city where prices are still below pre-recession pricing – significantly below it,” said Uri Vaknin, a partner with KRE Capital, which owns a portfolio of condominiums around the city. “People from other markets see the value.”

Gross believes a major turning point for the city was the decision by Switch Communications, which operates Internet data centers, to build its headquarters in Las Vegas. That, he said, signaled to other tech companies that Nevada is a good place to do business.

Reflection Bay Golf Club

Within the past year the city also welcomed the arrival of a NHL franchise and the NFL’s Oakland Raiders, who plan to play in a new stadium just across Interstate 15 from Mandalay Bay. The NFL was the most adamant among the major sports leagues in opposition to locating a team in Las Vegas; now the Raiders are on the way.

There’s talk here of a “Raiders effect” – the sense that the perception of Las Vegas, among outsiders and locals, has been elevated by the arrival of major-league sports.

“Las Vegas is no longer a one-trick pony,” Vaknin said. “Las Vegas has become a world-class city because it’s checking all the boxes – infrastructure, affordable housing, education, recreation, professional sports.”

That’s a startling turnaround from just a few years ago, when Las Vegas was rolling snake eyes.

“From 2008 to 2013, it was just a bloodbath on raw land and lots,” said Mitch McClellan, president of Southern Highlands Realty. “There wasn’t anything happening.”

Sales have rebounded strongly, but he reasons that the lingering memories of the recession will have a salutary effect on the development community.

“Las Vegas is better off for having learned what it learned those (recession) years,” McClellan said.

Lake Las Vegas, the ambitious development in Henderson, east of the city, was among the hardest hit during the downturn, filing for bankruptcy in 2008. Four years later, New York hedge-fund billionaire John Paulson and his Raintree Investment Corp. began buying up land at the resort and residential community.

Paulson controls about 1,000 acres, including Reflection Bay Golf Club, and reportedly has pumped tens of millions of dollars into infrastructure. (The total property spans more than 3,500 acres.) Signs of development are everywhere along the lake’s north shore. Homes under construction in the Lago Vista subdivision, which is nestled among Reflection Bay’s first few holes, are priced in the high six figures and are particularly popular among ex-Californians, according to Cody Winterton, Raintree’s executive vice president. If your preference is Strip views, you can wander a half-mile up the hill to The Peaks or other subdivisions, where homes typically are priced in the mid-six figures.

Lake Las Vegas also is testing a new, decidedly high-end product – nine, one-acre lakefront lots near Reflection Bay’s seventh hole, starting at $1.3 million. Vernon Swaback, a one-time apprentice of Frank Lloyd Wright, is designing those custom-spec homes.

At Southern Highlands, McClellan sees softness in the market above $4 million, but fresh product still sparks interest. For example, a move-in-ready, 11,000-square-foot custom-spec home near the second hole was priced at $6.5 million and received multiple offers within days of going on the market.

The freshest product in the market is at The Summit in Summerlin. Lot prices average $3 million, and there doesn’t seem to be much market resistance. Discovery Land already has sold a quarter of the 260 lots – this for a site with a golf course but with no other amenities at the moment.

“I’ve been shocked at the amount of lot sales that The Summit has generated and the prices that they’re capturing,” Gross said.

Southern Highlands

What’s even more striking is that among the first wave of buyers at The Summit, 80 percent are local residents, according to Finnell, who noted that a third of the early buyers don’t play golf.

“Our first push is Las Vegas residents,” Finnell said. “Our second push is all those people who are sick of paying taxes.”

California, which has the nation’s highest individual income tax rate, has plenty of those.

Finnell said Discovery Land is confident “that we’re in an up cycle now, and it will continue as long as the current administration does what it is intending to do” – that is, tax reform.

His biggest concern isn’t selling lots, but rather staffing The Summit. Discovery Land is adamant that The Summit will be a non-tipping club, an anomaly in a city where, as Finnell said, “everybody is tipped for everything.” A waitress working on The Strip might make six figures annually, including tips. “We can’t compete with those wages,” Finnell said, though he said the club will pay “an inflated hourly wage.”

Challenging that local custom will be difficult, but he grows animated discussing plans for The Summit, which will have a “Rat Pack” theme. One of the course’s “comfort stations” – serving everything from top-shelf liquors to gourmet treats prepared by a chef – will honor Frank Sinatra. There’s talk of piping Sinatra tunes into the tunnel connecting the seventh and eighth holes. Rounds will end on the par-3 19th hole; expect some sort of exotic club ritual that will include Casamigos tequila (Discovery Land founder Michael Meldman is a partner in that business) and big payouts for aces.

Sounds like fun, right? But it’s not for everyone. You’ll need to pony up seven figures to be a part of the festivities.

“This has to be the coolest place in town,” Finnell said. “It has to be so cool that everyone wants to play (here) and no one can.”

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