Six Months After Opening, MGM Has Boosted Activity At National Harbor
It has been six months since the $1.4B MGM resort and casino opened at National Harbor and Peterson Cos.' massive waterfront development is already experiencing a significant boost in its wake.
In addition to its own revenue, the highest of Maryland's six casinos, MGM has driven increased retail traffic and hotel demand in National Harbor and has created optimism among developers with plans to build in the area.
MGM National Harbor generated $50.6M in revenue in May, its second month above the $50M mark. The state's next-highest-earning casino, Maryland Live Casino in Arundel Mills, brought in $45.9M.
MGM's success has led to an increase in traffic at National Harbor, a 350-acre waterfront development in southern Prince George's County that Peterson Cos. has been building over the last decade.
Overall traffic into National Harbor year-to-date is up 15% compared to the same time period in 2016, a year that also had record traffic, Peterson Cos. Executive Vice President Kent Digby said.
"MGM certaintly creates much more awareness of National Harbor in the region and that is attracting people," Digby said. "It has been a huge catalyst."
National Harbor's new casino has also caused an uptick in activity at its other major destination, the Gaylord National Resort and Convention Center. The 2,000-room hotel, which has 600K SF of meeting and convention space, has added a shuttle to transport guests for free to the MGM.
The hotel experienced 12.5% RevPAR, or revenue per available room, growth in Q1, its owner Ryman Hospitality Properties CEO Colin Reed said on a recent earnings call. Since many of the rooms were already booked at the start of the quarter by group business, he said MGM was not the primary driver of the growth, but he estimated the casino contributed to about 2,000 room nights during the quarter.
National Harbor has developed rapidly over the past 10 years with the convention center, the Tanger Outlets, the MGM and several blocks of waterfront development, but Peterson says it is not even halfway to full build-out.
The development has a total of 600K SF of retail space, with 350K SF at the Tanger Outlets. It currently has more than 60 food and beverage establishments, including those within the MGM, the Tanger Outlets and the convention center. It has more than 2,000 permanent residents plus 3,000 hotel rooms. In two weeks, it will see the opening of a new microbrewery and craft beer bar, The Brass Tap.
Peterson is currently developing National Harbor's second rental apartment building, The Haven. The 248-unit building sits next to the other rental building, The Esplanade, and will deliver in about 12 months.
In the 250K SF office component of the development, Peterson has filled nearly half of the 60K SF of vacancy it had with three deals in the last three weeks totaling 25K SF. Digby could not disclose the tenants yet, but he said MGM has added to the appeal of National Harbor for office tenants.
"If you’re opening an office at National Harbor, that’s because you value the ability for your clients to stay over and have the ability to have lunch and dinner and maybe later enjoy activities," Digby said.
The development will soon get its first medical office building. Trammell Crow is breaking ground later this month on a five-story, 95K SF MOB at the corner of National Harbor and St. George boulevards, a site it acquired from Peterson. The building, set to deliver in late 2018, is already 62% pre-leased. The tenants include two medical users taking full floors, plus other doctors opening practices in smaller suites.
Trammell Crow Managing Director Eric Fischer said all of National Harbor's amenities, including the recent opening of the MGM, were factors in the doctors' decisions to open practices in the building.
"The sense of energy there is important to them," Fischer said. "They chose this because of its location and the strong growth and amenities within National Harbor. They like being associated with being part of a vibrant, dynamic part of the city."
Next to the MGM, Peterson has plans in store for roughly 1.2M SF of additional development. A site plan for the parcel, which sits along the Beltway just north of the casino's hotel, was recently approved by Prince George's County. The plan called for 891 multifamily units, a 500-room hotel, retail and entertainment uses. The portion of the site will be a Royal Farms convenience store and gas station, which Peterson recently began construction on. The developer has also completed construction of a heliport on the site.
Peterson is still determining a specific plan for the rest of the site. Digby said the site has had major interest from potential users, and Peterson wants to take its time in determining what the best use would be.
Digby said the success of MGM, plus the nearby Tanger Outlets, has Peterson feeling optimistic about the potential development on this site.
"It certainly broadens what might be the highest and best use," Digby said. "It is a great parcel, being next to MGM and right on the highway with extraordinary visibility."