By Barbra Murray, Contributing Editor
Forming a strategic alliance with New York-based private equity fund Och-Ziff Real Estate, Orlando-headquartered Hard Rock International is making a move to get in on the ground floor of new gaming opportunities that may ultimately arise from the introduction of new legislation in New Jersey this week.
The proposed legislation would, for the first time in Atlantic City, open the door to the development of hotels with fewer than 500 guestrooms, and the newly formed partnership would capitalize on the opportunity with the creation of a Hard Rock Hotel & Casino that would cost over $300 million to realize.
The recession has severely damaged the gaming market, so while the grip of the credit crunch may be loosening, lenders are hardly eager to dole out major financing for casino projects. With an eye toward gaming recovery, legislators crafted the proposal in an effort to entice cash-strapped developers to build projects that would have lower construction costs due to their reduced size. The new size guidelines would reduce the current minimum hotel and casino requirements from 500 rooms and 60,000 square feet of gaming space to 200 rooms and 20,000 square feet of gaming space.
Hard Rock and Och-Ziff, if all goes as expected, will build a new Hard Rock property on a site along the beach where Albany Avenue and the Boardwalk meet. Plans for the first phase of the upscale project call for the development of an “ultramodern” casino floor, a luxury hotel, and dining and entertainment options at a total cost of $300 million, excluding the price tag on the land.
Atlantic City isn’t the only area locale that is preparing for the gaming market’s revival. “There is new competition,” Jacob Oberman, Director of Gaming Research & Analysis for real estate services firm CB Richard Ellis’s Global Gaming Group, told CPE. “Delaware is getting table games; Pennsylvania is getting table games; Charles Town in West Virginia is going to get them. So, as a market, Atlantic City needs to evolve and attract new customers, and a new project is a way to do that.”