Watching closely are 150 buyers of City Center units who are not happy with the way their transactions have played out. It is said that MGM Mirage has offered 25% of deposits, which falls some way short of Cosmo, however, the issues are quite different for each development.

So far City Center sales have been slow with 31 of the 1,495 Vdara units sold (prices from $370K to $871K) and 24 of the 225 Mandarin Units ($1.05m to $7m).

Of course, the real reason that depositors are up in arms is that values have plummeted since they put their money down. Union Gaming Group estimates that recently built mid-rise and high-rise condos are down 58% from their market peak, with condo-hotels down 71%. Union Gaming’s report, ‘Las Vegas High-Rise Blues II: From bad to worse’ studied 26 residential towers in Las Vegas and noted:

• There is a current inventory of nearly 8,700 units (pre CityCenter), which includes all relevant projects in the resort corridor, downtown, the south Strip and the suburbs.
• Of the residential towers, 20 are condos (pure residential) while the remaining six are condo-hotel.
• Of the current inventory the number of “available” units that need to clear the market is alarming. This does not include currently owned units that are actively listed on the MLS system or what we believe could be a large number of owners who would prefer to sell but simply won’t given current market dynamics.
• Union Gaming assumed that all units in default will ultimately become available. Of the 4,819 condo units it looked at, 49% are available or soon-to-be available. This includes unsold inventory (38% still held by the developer), units in default (10%) and bank-owned (2%).
• Of the 3,863 condo-hotel units, 44% are available: unsold (33%), in default (10%), bank-owned (1%).
• On a combined basis, 36% are unsold, 10% are in default and 1% are bank-owned.

John Unwin is the CEO of Cosmopolitan of Las Vegas, and it seems that Deutsche Bank will remain the owner for the foreseeable future as it has not found any other buyers, or secured an operating agreement with any hoteliers. Whilst Unwin has experience as a Caesar’s Palace GM, one thing that will different this time around is that Cosmo is starting with no database of customers. This standing start may be partially offset by the fact the development is the only new Strip casino coming online in 2010, but excitement of the new wasn’t enough to make Planet Hollywood profitable so will it work here? Harrah’s acquired Planet Hollywood because of the value it can generate using its customer database – how long can the Cosmopolitan survive solo?

With its stunning terraced rooms overlooking the Bellagio fountains it is possible that the development will break the mold of multi-casino operator model. In addition to the views, another thing that makes these hotel rooms unique is the kitchenettes. They are more like condos than hotel rooms, as that is what they were originally built to be.

Cosmopolitan of Las Vegas is 8.7 acres of prime Strip property, and Unwin plans to hire 3,600 workers in 2010 to make it a success. The hotel may open with as few as 800 rooms initially, with these increasing as demand dictates (the development has 2,995 rooms in all).

Critics of the development say that it is another faceless steel tower better suited to New York than Las Vegas. Proponents point to the increasing sophistication of Las Vegas, and note that Cosmo’s high-rise terraces overlooking the Bellagio fountains are a unique asset.

Owners Deutsche Bank will be hoping that the project manages to distinguish itself from its neighbour City Center. Many tourists mistake Cosmopolitan as being part of City Center, but from December it will have an opportunity to show that its 50-story towers, 2,995 hotel rooms and condos, 100,000-square foot casino, and 50,000 square foot spa and fitness center are something special.

Hearst Corporation, owners of Cosmopolitan magazine, had sued Cosmopolitan of Las Vegas owner Deutsche Bank in June 2008 over the use of the name. They were seeking a $500,000 pay day and a percentage of future profits. The details of the settlement were not revealed. This is just the latest problem to be overcome by the project which was bought by Deutsche Bank at a $1 billion price tage when New York-based Bruce Eichner’s company, 3700 Associates LLC, didn’t have the steam to complete the development. Some people have had deposits down on condos for as long as five years, but this could be a development that is worth the wait. Features include:

• A location in the heart of the Strip with two 50-story towers with some incredible views
• There will be a total of 2,995 hotel rooms and condos. These are notable for the terraces that they have, some overlooking the Bellagio fountains. High rise terraces on the strip are rare
• Three swimming pools said to be different from anything else on the Strip. In a city of hyperbole we will have to wait and see
• A wide range of gourmet dining is promised
• A 100,000-square foot casino. Apparently there are also going to be Casino Cabanas – sounds like a scene out of Hootersa
• A 50,000 square foot spa and fitness center
• A state-of-the-art convention center

With the latest court case behind it we are one step closer to seeing the Cosmopolitan reach its potential to be the destination at the heart of the Strip. Of course it has to compete with City Center, but with its terraces these condos should give MGM a run for its money. The Cosmpolitan of Las Vegas is set to be more than just another Strip condo.