Vegas mart closes deals
City OKs $50M in tax breaks; developer buys land
By Clint Engel -- Furniture Today, November 12, 2001
Las Vegas — The developer of the proposed World Market Center here has received city approval for tax breaks and closed on the land, clearing two big hurdles for the first phase of what's now billed as a $1 billion project.
Separately, the developer confirmed plans to both expand the first phase of the project and speed up the second phase because of heavy demand for space.
Las Vegas City Council members voted unanimously last Wednesday in favor of providing tax rebates worth more than $50 million over the next 20 years to offset infrastructure costs for the development. On Friday, developer Furniture Mart Enterprises completed the purchase of the first 20 acres of a 57-acre tract near downtown.
It paid "under $15 million" for the property, where it plans to develop the first three phases (the three World Market Towers) of the now more than 7.5 million-square-foot project, said Shawn Samson. He and Jack Kashani are managing partners in the development.
"We are very excited about closing on the land and even more excited about the fact that the project is moving ahead fast and furious," Samson said. "There is no stopping us now."
Construction of the first building is expected to begin in the spring and be completed in late 2003 with the first Las Vegas furniture market slated for early 2004.
The first building, formerly set at 1 million square feet, is now planned to be more than 1.25 million. Furniture Mart will add two extra levels of showroom for a total of 12 levels, including two for parking.
Samson said the land closing signals "the most important news in the modern history of markets in the U.S."
"Given our international strategy, we are convinced that Las Vegas is uniquely positioned to take advantage of a significant part of the market that is not addressed adequately by the existing markets in the U.S," he added.
The developers have refused to name any of the tenants they've signed, but say interest has been strong. Its three leasing managers — Dave Palmer and Russell and Babs Blair — had full appointment schedules with prospects during last month's High Point market, Samson said.
"We now have over 70 major industry manufacturers and importers committed to being tenants in our project," Samson said. Those 70, including domestic and international producers and importers, will occupy more than half of the first phase's space, he said.
He said the two just-added floors are almost fully leased.
With the first phase expansion, the second phase has been scaled back from 1.5 million to 1.25 million square feet, but construction is being pushed up from 2004 to a yet-to-be-defined earlier date.
The first two floors of the first building will be devoted to a design center with showrooms that are open year-round, Samson said.
Each phase of the project also will have temporary showroom facilities, including the first phase. Samson said the temporary area will be in addition to the 1.25 million square feet of permanent space, but declined to elaborate.
Even though the furniture industry is slumping and the economy is facing a recession, Samson is comfortable with the size and scope of the project.
"We believe that we are at the best possible point in the economic cycle to have closed on the purchase of the land and start the development of the project," he said. He said the cost of financing is at a 40-year low, and slow times mean the best pricing from contractors.
"And yet," he added, "it is the general consensus that any down cycle in the economy will swing upward over the next two years," about the time the developers plan to complete the first phase.
Whether the property purchase and city approval will stifle the project's naysayers has yet to be seen. But Samson has said he is used to the negative reactions and saw a similar response when he and Kashani were involved in developing the Mall of America in Minnesota, now a huge tourist and shopping destination.
"This is a great project for downtown Las Vegas at a time when the city has been working hard to diversify its economy," said Las Vegas Mayor Oscar Goodman. "Las Vegas will be the beneficiary not only of a direct seven-year, $1 billion investment, but also of a new industry, 35,000 new jobs, a million new visitors annually and innumerable spinoff businesses."
While the World Market Center's convention center could be used by others outside the furniture industry, its attendance would be extraordinary if it achieves that claim. Officials estimate the attendance at each High Point market, for instance, at 82,000.
Despite four delays in the city's vote on tax rebates, World Market Center has held to its plan.
"Our investors (the Alliance brothers) are committed to providing the capital, and we believe that this is the best time to engage in new, large-scale development for the industry," Samson said. "Las Vegas has proven again and again with different industries that it's the right host city."
