By Adam Candee | VEGAS INC
Hands joined in prayer, Bryce Krausman and Dalton Wilson sat in a car across Russell Road from the ManhattanWest project in 2006 and hoped their future waited inside the ambitious new mixed-use development.
Their DW Bistro instead would land a mile away in a turnkey spot tucked in a Fort Apache Road strip mall. The restaurant thrived while ManhattanWest stalled after losing funding in 2009, decaying into a steel eyesore symbolic of the recession.
Two years ago, though, Ofir Hagay and business partners Michael Werner and Benjy Garfinkle dropped in for lunch after buying the bones of ManhattanWest for $20 million. They insisted that the cozy eatery described by Wilson and Krausman as “Jamaican meets New Mexican cuisine” move as a retail anchor to what is now known as the Gramercy. Wilson immediately texted Krausman; their dream space might finally be ready just as their current lease expired.
“It was kind of one of those warm moments knowing it belonged here,” Krausman said.
The doors of the new DW Bistro will open in the Gramercy, at Russell Road just off the 215 Beltway in the southwest valley, the first week of November, a major building block in the reimagining of one of the Las Vegas Valley’s few mixed-use communities.
“It’s not a construction site anymore,” Hagay said. “It’s a living, dynamic place. The whole concept of mixed-use projects, which is, in a way, new to Las Vegas, I think you can see the proof that it’s working.”
After imploding a crippled nine-story, 72-unit condo tower last year, developers WGH Partners and the Krausz Cos. pushed forward with 160 upscale apartments and 190,000 combined square feet of office and retail space. Ground-floor retail tenants also include Pinches Tacos, Cuppa Coffee, Portion Control, Raw Fitness and Nohea Nails, reflecting the developers’ focus on attracting locally owned businesses.
All but 3 percent of the 190,000 square feet is leased and will be occupied within the next two months. Apartments ranging from a 530-square-foot studio to a 2,085-square-foot penthouse vary in price from $1,075 to more than $3,000 per month, and are nearly 80 percent occupied.
Sitting in the development’s centerpiece courtyard on a charming fall day, Hagay pointed up through windows around the encircling four-story, faux-urban buildings and described workers preparing the last available office space for newly contracted clients.
“This type of urban construction is very hard to copy because of the cost to do it,” Hagay said. “It’s something very unique.
“The real estate in Las Vegas — residential and commercial — is outdated.” he added. “The strip malls, the one-story business park. The market is changing. The demand is changing.”
While the Gramercy stands out as one of few attempts at combined residential/office/retail development in Southern Nevada, a broader preference for similar projects appears to be emerging, according to Ed Coulson, an economics professor and director of UNLV’s Lied Institute for Real Estate Studies at Lee Business School.
“That’s the wave of the present,” Coulson said. “Nationwide, there’s a desire for what some people would call more sustainable forms of architecture, which goes part and parcel with mixed-use development.”
The Gramercy’s mixed-use concept attracted Krausman and Wilson as they readied for the “grown-up” DW Bistro that offers 1,100 square feet more than its previous home. Krausman’s energy radiates as he leads a hard-hat tour of the corner space in flooding late-afternoon sun, pointing to where the new rotisserie and full-size ice cream machine will go while expressing equal excitement for increased room for glass washing in the back.
He weaves into the conversation business plans based in part on the Gramercy’s design: two private dining rooms and expanded kitchen space for catering to serve office tenants, and a DW app for delivery and pickup orders for residents. Krausman and Wilson also plan to add six employees and expand hours to include a Sunday supper and a Monday lunch.
“The energy really is awesome here,” Krausman said. “It has a great view of the valley. They built it in the right place. It felt right for DW to grow into the space.”
Vince Upperman, owner and chef at recently opened Portion Control, chose the Gramercy for his first brick-and-mortar location because of the development’s uncommon layout and plans.
Upperman and his wife, Natalee, started Portion Control as a healthy prepared-meal business and rented the kitchen of the Blue Diamond Saloon to cook. They quickly realized the need for their own space, and Raw Fitness and its built-in clientele sat across the Gramercy’s courtyard. Upperman said a large part of his business in the first month walked over from Raw post-workout.
“It’s the vision,” Upperman said of the developers. “They have really good vision of where they want to go.”
Just a few years ago, seeing a profitable future for ManhattanWest’s broken windows and half-finished walls required vision in Costco quantities. Hagay left a job in Bulgaria to move to Las Vegas in 2003 for work on condo conversions. He lives with his wife and children in Red Rock Country Club and drove by ManhattanWest every day, watching the project go from promise to pratfall after original developer Alex Edelstein reportedly lost funding on his $170 million investment in 2009.
“It’s hard not to notice this, especially when the high-rise was here and it was really an eyesore with the steel structure in place, and the curtain walls were about 30 percent done,” Hagay said.
Around the same time near the nadir of the recession in Las Vegas, Hagay, Werner and Garfinkle partnered with plans to acquire partially finished properties. Negotiations for the Gramercy took nearly two years, Hagay said, and the project stood out among the group’s five investments because of its bold, original design.
“At the time that we bought it, everybody said, ‘Oh, you’re crazy,’ ” Hagay said. “Nobody knew exactly what we were buying.”
Such skepticism pervaded in the early part of the decade, when home prices cratered and overbuilt commercial real estate sat vacant for years. The neighboring area included empty lots and a failed restaurant project, and it would be years before Ikea — just an exit down the 215 Beltway — would invigorate the area with its 2016 opening.
History portended some degree of rebound in demand and pricing, but with less certainty for a type of mixed-use development to which Las Vegas was unaccustomed.
“Part of this is just what you might call a market correction,” Coulson said of recent growth in the local real estate market. “By the time we hit bottom in 2012, everyone had been so pessimistic that there was some modification of expectations.”
The Las Vegas market shows modest improvement in both office and retail vacancy rates. From the second quarter of 2015 to the same period in 2016, retail vacancy dropped from 9.7 to 9.2 percent and office vacancy fell from 18.5 to 16.7 percent. The quarterly forecast from Colliers International suggests both sectors could soften for the remainder of the year.
Given those conditions, Hagay and his partners will wait for the right time to begin a second phase of the Gramercy, which could include up to 500,000 square feet of mixed-use properties. Hagay, Werner and Garfinkle have close to a century of experience in American and international development, and take a sober view of the Las Vegas market’s potential to bounce back.
“The Las Vegas economy, and especially real estate, it’s a cycle,” Hagay said. “We can never change that cycle because there are too many elements — banking, mortgage, the overall economy.
“You remember Simba in ‘The Lion King?’ It’s the circle of life. It’s the cycle of the economy.”
Some parts of anticipated conversion proved untenable. Hagay and his partners decided it would be too expensive to repair the partially constructed and structurally questionable condo tower, and planned its implosion.
“Not everyone had positive thinking about what you see here,” Hagay said. “A lot of people said, ‘How can you rent this?’ But you see here with your own eyes. People are living here, people are working here, people are dining here.”
Young women in bright yoga pants and vibrant tank tops sprint back and forth through the Gramercy’s concrete courtyard right before lunch, from the doors of Raw Fitness under a gazebo to the main office entrance and back up the gradual incline as part of their boot-camp routine. Minutes later, two of the women walk out the front entrance toward the shaded patio adjacent to Cuppa Coffee and Nohea Nails.
The taller woman glances down at her cellphone and says, “It’s not very often you get your (butt) kicked like that and still walk out laughing.”
The same could be said for this development.