Atlantic City Was On A Roll Until Coronavirus Struck
The coronavirus-related shutdown of Atlantic City's casinos could undermine revitalization efforts in the Jersey Shore town, which has seen an increase in real estate development in recent years as the fortunes of its marquee industry improved.
Earlier this decade, Atlantic City was reeling as neighboring states such as Pennsylvania decided to try their luck in the casino business, siphoning tourists away from the gambling mecca. Six Atlantic City properties closed their doors between 2014 and 2016, including two casinos that were owned at one time by President Donald Trump, the Trump Plaza and the Trump Taj Mahal.
Investors have breathed new life into the beleaguered industry over the past few years.
The $500M Hard Rock Hotel and Casino, which was built on the site of the former Trump Taj Mahal, opened its doors in 2018. The property has 150K SF in meeting and event space along with a 7,000-seat arena.
Hours later, the 62-story Ocean Resort Casino debuted with 160K SF of meeting space. Ocean took over the location of Revel, a $2.4B project that went bankrupt after two years of operations. It is the largest building in Atlantic City.
The launch of the casinos signaled a new chapter in Atlantic City's history.
"With the launch of sports betting and the opening of Hard Rock and Ocean, the Atlantic City gaming industry has been building momentum," Rummy Pandit, executive director of Stockton University's Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism, wrote in an email to Bisnow. "The successes of the gaming industry, paired with redevelopment and investment in the city's resort amenities, has brought energy to the destination."
Data from the New Jersey Division of Gaming Enforcement backs Pandit up. The nine Atlantic City casinos have seen their total gaming revenue rise for 21 straight months. The rising tide of the casinos' success has helped encourage development throughout the city.
The $200M Atlantic City Gateway Redevelopment Initiative has transformed the city's Chelsea neighborhood by developing a 9-acre site adjacent to the city's boardwalk. The area is now home to the headquarters of South Jersey Gas and Stockton University's new Atlantic City campus, including a 540-room dormitory and academic facilities. The buildings opened last year.
Stockton is planning a second residence hall that it expects to finish in two years.
Multifamily housing investment also is on the rise.
Approximately 820 multifamily units were permitted in the Atlantic City area during the 12 months ending April 2018, nearly doubling the 440 units permitted during the 12 months ending April 2017, according to the U.S. Department of Housing and Urban Development.
Atlantic City's first market-rate housing development in nearly five decades, 600 NoBe, began welcoming renters last year. The 250-unit project's developer, Boraie Development, has formed a partnership with casino operator MGM to build 200 luxury condos in the Marina District. Meanwhile, the now-defunct Showboat casino has been transformed into an extended-stay apartment complex.
Local developer/restaurateur Mark Callazzo has teamed up with Authentic City Partners to bring restaurants, bars and retailers to a distressed area of the city on Tennessee Avenue. The idea behind the Tennessee Avenue Renaissance is to make the neighborhood into a "destination" like Philadelphia’s South Street or New York City’s Greenwich Villiage.
Callazzo said he remains optimistic about Atlantic City’s commercial real estate market and hopes to add to his multifamily rental properties in the region.
However, Callazzo and everyone else affected by the coronavirus pandemic have no choice but to wait and see how the next chapter in an unprecedented crisis plays out.
"We had a lot of positive momentum going into this," Callazzo said in an interview. "If this lasts months or quarters, then obviously the rebound will take much longer. It's anybody's guess right now."
CORRECTION, MARCH 24, 9:08 AM E.T.: An earlier version of this story wrongly said the Hard Rock Hotel and Casino was built on the site of the former Trump Plaza. It is on the site of the former Trump Taj Mahal.