Tuesday, February 12, 2013

Surplus buildings from the economic bust could wind up in the scrap heap

Back in the bad old days of the 1980s Texas real estate crash, you had to wait until sundown to tell what buildings were a bust.
Those big glass office towers all looked full during the day.
But driving down the Dallas North Tollway as the sun was setting, the light would stream through the buildings sitting vacant along the highway.
That’s the great difference in today’s North Texas property market and where we have been in the aftermath of previous downturns.
Unlike in almost every recession, the Dallas-Fort Worth area doesn’t have a huge overhang of empty space on the market since the economy tanked.
In previous economic cycles, we’ve been covered up in excess office space, empty shops and vacant houses out in the ’burbs.
That’s the case this time in some U.S. cities.
Last week, I was in Las Vegas for a national housing conference.
Instead of “sin city,” they should call it “empty city.”
Probably no place in the country got so overbuilt during the boom times of the early and mid-2000s.
At night when the lights go on in the high-rise residential buildings near the Vegas strip, most of the deluxe condos are still dark.
Near the old Sahara hotel and casino — which is boarded up after a redevelopment plan fell through — work crews have completed about 70 percent of the tallest skyscraper between Dallas and Los Angeles.
The 68-story Fontainebleu Las Vegas was to be a luxury hotel, casino, condominium and entertainment complex.
But after spending close to $2 billion, the development went broke and shut down in 2009.
From the outside, the huge green glass tower looks mostly done.
Investor Carl Icahn bought the unfinished building in 2010 for $150 million. Since then, most of the fixtures, furniture and equipment that were to go in the skyscraper have been sold off.
Word on the street in Vegas is that Chinese buyers are willing to pay almost $200 million to buy and dismantle the tower for scrap.
Another new 49-story hotel over on the strip has also been abandoned for more than three years, and there is talk of tearing that one down, too.
That’s just unbelievable.

Whole article at:
Steve Brown