When viewed from afar in the light of day, the second-tallest structure in the Las Vegas area looks like many of the other resorts on the Strip.
But at night, the Fontainebleau reveals itself for what it really is: a monolithic, largely abandoned black hole on the otherwise brilliantly lit skyline. It’s been a ghost of a building for years now, and no one seems to know when work will resume to finish the structure — or if it ever will.
Once pegged as a roughly $3 billion resort project, the Fontainebleau went bankrupt during the recession in 2009 and construction ground to a halt. Then, exactly five years ago this month, billionaire Carl Icahn received approval to buy the property for $150 million. It’s unclear precisely what it would be worth today, but a larger property nearby — the land where the former New Frontier was located — reportedly sold for $280 million last year.
Real estate broker Michael Parks of CBRE said that since purchasing the Fontainebleau out of bankruptcy “at a great price,” Icahn and his colleagues have maintained the property while monitoring the Las Vegas market.
“I think they’ve analyzed a number of opportunities, they’ve been approached by a number of people — I just don’t believe there are any set plans for the asset at this time,” Parks said. “I think it’s kind of a wait-and-see on market conditions.”
Penn National Gaming, a Pennsylvania-based casino company, expressed early interest in the property after its developer filed for bankruptcy in June 2009. But Penn pulled out after Icahn made a bigger bid. A bankruptcy judge in Miami approved Icahn’s winning bid on Jan. 27, 2010 — five years ago this Tuesday.
Icahn has been tight-lipped about the project over the years, and he couldn’t be reached for comment for this story. However, he did share some of his thinking after winning the bid in 2010.
"My philosophy has always been to buy things when nobody wants them," Icahn said in an interview with Reuters at the time. "There's no question Vegas is pretty stormy right now, but if you buy things when nobody wants them, you just buy them and hope the sun will come out."
Icahn also acknowledged that “it will be challenging for a while,” Reuters reported.
Conditions on the Strip are much less challenging now than they were when Icahn took over the Fontainebleau site. Gaming revenue and tourism figures have improved since their recession-induced slump. Down the street from the Fontainebleau site, the SLS Las Vegas casino opened last year in the shell of the old Sahara. And in May, a new concert venue across from the SLS will debut in time for the Rock in Rio music festival.
Two brand-new resorts have been planned for the neighborhood. Parks said they would be a major factor in determining what happens with the Fontainebleau.
Construction on one of those forthcoming projects, Resorts World Las Vegas, was supposed to start last year on the site of Boyd Gaming’s abandoned Echelon project. Michael Levoff, a spokesman for the Resorts World parent company, said in a statement that they’re working on “final refinement of the project design” and the project is “on track to break ground early next quarter.”
The first phase of Resorts World is scheduled to open in 2016.
The other project came to light last fall, when Australian casino mogul James Packer acquired the former New Frontier property with the intention of building a resort there. Packer is teaming up with former Wynn executive Andrew Pascal on the project, and Rob Oseland left his post as president of the SLS in October to join them, but details about the resort haven’t been publicly announced yet.
Although the progress of these resorts certainly indicate a more positive environment for growth on the Strip, whether they can be successful remains to be seen. And for the Fontainebleau, Parks suggested they contribute to another problem: banks hesitant to gamble on a potential glut of big projects.
“If you had banks out there willing to finance multibillion-dollar projects again, multiple multibillion-dollar projects in Las Vegas, I definitely think you’d see some activity on that site sooner rather than later,” Parks said. “But until you see that capital flowing again, it’s going to be, I think, a little more difficult.”
Meanwhile, county officials don’t have many tools to force the project into action. The building is privately owned, and it’s structurally sound — the ownership has kept it from falling into total disrepair.
County Commissioner Chris Giunchigliani, whose district includes the Fontainebleau, says county officials regularly inspect the site. She’s been there before to check it out.
“It’s in excellent condition,” she said. “There’s absolutely no structural issues.”
Still, Giunchigliani said she’s gotten some improvements here and there, including the completion of roadwork on Riviera Boulevard after the road was partially closed for construction.
But Giunchigliani would like more tweaks to be made to the project while it sits there. Namely, she would like to see the Fontainebleau buildings wrapped to cover up some of the exposed building work — like the unfinished Harmon tower at CityCenter, but without the advertisements.
Beyond that, of course, there’s the question of what will become of the site.
“I would just like it to be completed, and if not completed, then imploded and started over,” Giunchigliani said.
Parks said he’d be surprised if Icahn knocked the building down, and that the other two obvious outcomes — finishing it himself or selling it — are more likely.
Icahn could also take no action.
“He doesn’t have to do anything with it,” Parks said. “When you have a private owner like Carl Icahn, he can just kind of sit there and be patient.”