ONE BIG GAME OF MONOPOLY
In barely four weeks, they’ve sold $48 million worth of boardwalk condominiums to buyers who won’t see their units – much less put a sandal inside them – until 1985.
Even in this gold rush city, where Monopoly has been played with real real estate for years, a $48 million sellout, sight-unseen, in 30 days has heads spinning.
Not only did Studnicky and the southern money men sell $250,000 and $300,000 condos like hotcakes in September, they did it with no major advertising splashes, no fancy model units, no giveaways and a modest staff and marketing budget. Their color brochures for the condo project didn’t even arrive from the printer until nearly three-quarters of the units were sold.
Who is this Studnicky? What’s going on in Atlantic City to produce a record like this? Who’s plunking down $250,000 a clip for 1,000-square-foot condos with Jacuzzis in the living room? And who are the southern slickers helping pull in the money?
Some of the answers were on display here at a celebration bash Jack Studnicky and U.S. Capital Corp. threw for 500 “close friends” and condo buyers at the Sands Casino Hotel.
A smooth-talking 46-year-old who describes himself as just “a Polish kid born in Newark,” Studnicky specializes in boom town real estate. He sold condos in Miami and Washington when those markets were hottest. He shifted to Atlantic City three years ago to catch the beginning of the gold rush.
He’s on top of it now. Not only did he sell out the 232 luxury units of the Enclave on the boardwalk in a month, but he and his associates sold $40 million worth of condos at the nearby Ocean Club – where prices range from $180,000 to over $1 million – earlier in 1983.
“This city’s real estate is so hot right now it sizzles,” said Studnicky, with his usual dose of sales hyperbole thrown in. “There is no place in the country where people are pouring in so much money, so fast, as Atlantic City.”
He may be right. With its nine casinos now pulling in more than the combined take of Las Vegas’s 90 casinos (nearly $200 million a month), Atlantic City finally looks like a long-term winner to big investors on Wall Street and individual investors in real estate.
Construction and renovation projects are under way all over the boardwalk strip, and are beginning to spread into the less swanky parts of town as well. At least eight new casino hotels have broken ground or are on the drawing boards, including a 2,000-room Hilton and huge projects by Harrahs, Caesars, Resorts International and Golden Nugget. Twenty-three million tourists arrived in the past year, and the city is bracing for 28 million in 1984.
Numbers like that convinced Studnicky and U.S. Capital Corp. – a Columbia, S.C., resort development firm – that they could sell pieces of the Atlantic City action retail to individual condominium buyers, despite the prevailing 14 percent mortgage rates.
U.S. Capital was particularly well suited to overcome buyers’ financial inhibitions: It pioneered the concept of raising mortgage money for second home buyers on Wall Street via mortgage-backed bonds. Its bond techniques allow the firm to offer buyers 90 percent financing (10 percent down) on jumbo loans from $100,000 to $300,000, plus long-term rates that are typically below those available on ordinary mortgages from banks or savings and loans.
The combination of U.S. Capital’s financing savvy, Studnicky’s sales pizzazz and Atlantic City’s high roller economy produced the $48 million sell-out on the boardwalk.
But who were the buyers? The purchasers who crowded Studnicky’s bash at the Sands were a fascinating mix of upper-income professionals – one that offers insights into an emerging new force in American real estate investing.
Many were physicians, dentists and businessmen who have emigrated from countries such as India, Iran, Hong Kong, Taiwan and Korea. They are highly educated, earn big incomes and are passionately interested in latching on to prime American real estate as a base for their families’ financial futures.
“What could be more solid and American, after all,” said one physician from India, “than this piece of the Atlantic City boardwalk?” Studnicky had an answer: another piece of the boardwalk, which he’s working on but can’t announce yet.
The Los Angeles Times
Jacobson should know.
Although his headquarters is in Arcadia, Calif., he also has offices in Reno and Atlantic City, where he has designed casinos, as well as in Las Vegas.
In fact, at 64, Jacobson has become such an expert in casino design, he says, “Only two or three other architects have done as much volume in that kind of work.”
Since 1976, when gaming became legal in Atlantic City, his firm has designed seven casino hotels that have opened or been started there. Before that, he “probably designed a dozen casinos – – new and remodeled,” he estimates.
He established his firm in 1955 but was involved in casino design even earlier. A native of New York who earned a degree in architecture from the Massachusetts Institute of Technology, Jacobson went to work in the late 1940s for Pasadena-Glendale architect Frank Green.
His first job on his own was the New Frontier in Las Vegas. After that, his firm designed casinos in Reno and the Bahamas.
His practice has also included motels, restaurants, bars, lounges, department stores, shopping centers, office and medical buildings, residences, bowling alleys and industrial facilities.
Among his current projects is a $2.3 million Huntington Park, Calif., poker club; a $2.9 million Reno helicopter facility and a 1,200-unit Atlantic City condominium complex that he believes is “the largest multi-unit residential project in a single building in the United States.” Phase one is expected to cost $10.5 million.
Even with such diversity, however, his focus has always been on casino hotels, although he professes to have little interest in gambling and “probably only plays blackjack once a year.”
“I didn’t try to become a specialist,” he said. “It just happened.”
Yet, though he swims 50 to 60 laps a day, plays tennis and golf and water skis, he is an acknowledged workaholic who insists he’ll never retire. “I enjoy the work too much,” he said.
He and his wife Katy, who is his business manager, maintain a home in Pasadena, but he commutes between his three offices, spending about one week a month in Arcadia.
“When you fly and use the telephone, telecopier and overnight mail, it doesn’t make much difference where you are,” he said, but because an estimated 90 percent of his work is in Atlantic City, he spends most of his time there.
That has given him a chance to see what is happening.
“This bus business shocked everybody,” he said. “This summer they ran about 1,200 buses a day into Atlantic City.”
He figures that means 48,000 people daily enter town. “And that’s just by bus,” he said.
“What are they going to do with that many buses in such a little village? The island is only eight miles long by two miles wide. Most streets are only 50 feet to 60 feet wide. And all of a sudden come thousands of buses.”
What’s going to happen, he asked when the local airport is improved? “There is a big airfield near Atlantic City. It can handle any plane on the drawing board, but the terminal is about a big as my office – very small.
“Yet, the traffic there has increased about 200 percent every year for the past three years. Something like 900,000 people were projected to come through it this year. I’d guess that 3.5 million passengers will come through it five years from now.”
Of course, there are other differences between the gaming centers:
The permit approval process is more complicated; and fire codes are more stringent in Atlantic City than in Nevada, he said. “Chair and wall coverings have to have a rating in Atlantic City, and sheets and blankets will also soon come under code.”
There is a height limit in Atlantic City of 385 feet. “In that, you can get as many as 36 stories. In Vegas, there are a couple of hotels that go up 38 to 40 stories.”
And a developer must plan to build at least 500 guest rooms in Atlantic City to get a gaming license. “In Reno, he noted, “you only need 100.”
“It (Atlantic City) is getting the third largest convention facility in the United States,” he said, “but there are under 5,000 hotel rooms in town.
“There are really no non-casino hotels. There are, at best 2,500 other rooms, mostly in motels, and of those, if you could find 300 you’d stay in more than one night you would be doing well.”
By comparison, he said, there are “probably 28,000 hotel rooms and 15,000 motel rooms in Las Vegas.” But, he figures, there is a drawing area or market of 18 million people in Las Vegas and 55 million people in Atlantic City.
He estimated this by looking at the regions. “There are just so many people who can get to Atlantic City without having to go very far,” he explained. “About 85 percent of the patrons come by car or bus and the rest by air. This is a factor but not a major factor in either place. However, it’s more of a factor in Las Vegas, because the major players there come from Texas and other places (easier reached by air).”
What he calls “the second generation” or “next wave” of about 10 casino hotels in Atlantic City will help, but his estimates of the market could be conservative.
“I’m totally astounded at what I thought the market would be,” he conceded. “It’s already bigger than anybody dreamed.”
