The once-vibrant Borscht Belt resort playground of New York’s Catskills could witness commercial and residential real estate revitalization if a new casino is built in the region.
Construction of the Empire Resorts St. Regis Mohawk Casino in Monticello has been under discussion since 2000 with little progress on the $500 million project. But in February, Governor Eliot Spitzer signed off on an agreement to authorize gaming in Sullivan County and specifically at the Monticello site where the St. Regis Mohawk Tribe intends to build the casino.
The scent of slot machines and card games is spurring developer interest, and several applications have rolled in for commercial sites. Proposals in the last several months include strip malls and shopping malls, said Leon Smith, chairman of the planning board in the Town of Bethel, about four miles from the planned casino site. “This obviously coincides with the governor’s decision,” he said.
Smith said this activity also may be influenced by the Bethel Woods Center for the Arts, a regional performance center. “It’s hard to distinguish what [the commercial activity] is driven by. There is still a lot of skepticism of whether a casino will be built or not — it’s still awaiting federal approval,” he added.
Prospective hotel developers don’t seem to mind the little detail of pending federal approval. The casino plans don’t include hotels, so they like the odds. Hotel developers are divided into two groups: those eyeing “moderately priced hotels in close proximity to the [Monticello] Raceway clearly driven by the possibility of a casino,” and “investors looking at creating stand-alone resorts a little farther afield from the casino on larger parcels with more recreational amenities,” said David Knudsen, associate broker with Catskills Buyers Agency, which represents buyers.
The hotel development may be somewhat speculative. “A lot of property within proximity to the casino has been opted, but not closed,” Knudsen said. “Investors will not push the button on closing that property until the casino is approved, so we have not seen an impact on land values yet,” he said.
Stand-alone resort developers are also awaiting casino approval before they move forward with construction plans, said Knudsen. “For a resort developer, there is a need to extend the Sullivan County season — they see the casino as extending the [summer] season,” he added.
Also on resort developers’ radars is the redevelopment of the defunct Concord resort in Monticello by Louis Cappelli, a developer who has transformed much of Westchester.
The Concord was once a bustling summer destination, particularly between the 1940s and the 1960s, when Jewish New Yorkers flocked to the Catskills in the summer to escape the hot city. The wider use of air conditioning in the city marked the decline of the area’s popularity.
“His [Cappelli’s] plan is to build a new 200- to 300-room hotel affiliated with an upscale brand,” Knudsen said. “Other developers are waiting to see if he breaks ground, because they think that would create critical mass here.”
A handful of commercial sites for potential resort or hotel development in the area have been sold in the past few months, which Knudsen said is linked to the casino.
The White Lake Mansion House, which has been vacant for at least seven years, was sold for $825,000 in February, Knudsen said. A 113-acre site west of Bethel Woods recently went under contract for the asking price of $1.575 million after being on the market for a long period of time.
The heart of the commercial development and speculation has been along the 17B state highway corridor from Monticello to Bethel, anchored on the eastern end by the Monticello Raceway and on the west by the Bethel Woods, Knudsen said. He added that there has been considerable price appreciation in this area, but could not provide specifics.
Hotels would be needed to house not only casino visitors but also staff. The casino approved by Spitzer is expected to require a staff of about 3,500, representing more than half of the population of Monticello, said Marc Baez, president and chief executive officer of the Sullivan County Partnership for Economic Development. He said the group is getting pre-approval for 100- to 150-acre parcels of land for construction support sites, general economic development, hotels and retail space to address this possible population boom.
If the casino gets built, the arrival of new workers could further spur residential development.
“Perhaps when the casino is built it will eventually create a market for residential real estate and lower-priced [multifamily] homes for casino workers,” said Sheldon Slifstein, president of the Sullivan County Board of Realtors.
“Residential real estate over the past two years has been up pretty strong,” concurred Smith. He added that 700 new housing units in Bethel are in various stages of approval.
Notable developments include the Swan Lake Project, which features 138 single-family units and is in the middle of the approval process, and the Chapin Estate development, an upscale second-home development, which already includes 150 lots, Smith said. Buyers here, though, could just as well come from an ongoing upstate migration from New York City and Rockland and Orange counties.
Sellers are using the casino as part of their sales pitch, and Knudsen said that’s inflating residential asking prices. The average asking price for a single-family home in Sullivan County in early March jumped more than 8 percent to $312,381 from $289,062 in early December, he said. But buyers are not necessarily buying the hype yet, as actual selling prices from the end of November 2006 to the end of February 2007 period rose about 4 percent, he said.