Vegas Building Worth More Dead than Alive?

FOXBusiness

The Harmon Tower was supposed to open with a bang in 2009, as the jewel of MGM Resorts $9 billion CityCenter project. Two years later, the building sits unfinished in the heart of the Las Vegas Strip, and MGM is ready to declare the Harmon a bust.

As a result of building and structural problems, MGM is calling for the implosion of its Norman Foster-designed Harmon Hotel, which sits vacant and draped with signage boasting of CityCenter amenities, functioning as a shimmering, all-glass billboard.

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CityCenter opened in 2009 as a joint venture between MGM and a subsidiary of Dubai World, and was billed as the largest privately funded development in the history of the United States, comprised of a high-end mall, with several condo and hotel and casino properties. The Harmon, situated at the front of the resort complex property, rises 26-stories above Las Vegas Boulevard, and was intended to be a 53-story luxury hotel and residential property, but construction was halted early after architects on the project noticed a number of building mistakes in 2008.

Now, MGM says it wants to demolish the Harmon out of concern for public safety.

CityCenter consulted with experts about the fastest and safest way to resolve public safety concerns created by the structural defect issues at the Harmon, said Gordon Absher, vice president of public affairs for MGM, in a statement issued last month. Based on their expert advice CityCenter is recommending that the structure be demolished by implosion.

The tower is caught in the crosshairs of a heated legal battle between MGM and the Harmons builder, Perini Building Co. MGMs position is that Perini did not construct the building correctly according to design, and Perini asserts that the buildings structural defects were caused by design flaws and maintains that the tower can be fixed.

The builder argues that MGM would not be claiming the Harmon unstable if market conditions were better, and is also seeking more than $200 million in contractor fees, which MGM has refused to pay on account of the towers structural shortcomings.

The truth is&that MGM does not want the Harmon to be repaired because the Harmon is worth more dead than alive to MGM. Otherwise, MGM would allow Perini to repair it, Perini Building Co. said in a press released last July. MGM never intended to complete the Harmon after the economic downturn; MGM cannot fill the Aria and Vdara hotel rooms or sell the Veer and Mandarin Oriental condo units that it has now.

But MGM said the Harmons status as a premier luxury property, designed to target a younger, trendier demographic, generated more interest than any of the other CityCenter Properties. Bob Hamrick, President of Coldwell Banker Realty, who was the Broker for MGM/Mirage CityCenter, said he had buyers committed to 40% of the towers condo units, which were selling for just under $1 million in Jan. of 2008.

Hamrick said the structural problems at Harmon made the sale of other CityCenter properties difficult.

It wasnt so significant only to the Harmon, Hamrick said. It did create concern on our part about all the other buyers that were committing to buying at CityCenter.

As it sits currently, the Harmon remains sealed as evidence in the ongoing legal matters, and MGM awaits word from county officials as to whether or not the building, as a threat to the public well-being, could be taken down.

Until then, the Harmon will continue to fulfill its role as Las Vegas most expensive billboard, an emblem of a boom-time vision gone awry.

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