With sites from Springfield to Everett in the running for resort casinos in Massachusetts, real estate investors are eyeing surrounding parcels that could be ripe for spin-off development.
But there’s still room for debate about whether casinos will act as catalysts for growth, particularly in the hospitality and service sectors, or cannibalize local economies.
In Revere, the owners of the Wonderland Ballroom property are betting that a proposed $1 billion casino at Suffolk Downs – which had been backed by Caesars Entertainment until it was dropped recently – will jumpstart nearby development. In June, they put the Route 1A property on the market as they seek permits for a 196-room hotel.
The casino proposals for Suffolk Downs and the former Monsanto Chemical parcel in Everett convinced the Wonderland owners that the time was right to sell the longtime nightclub site, said Trey Agnew, executive vice president for broker NAI Hunneman.
“If East Boston is chosen by the gaming authority, that will further drive the need for hotel rooms in the immediate area,” Agnew said. NAI Hunneman is marketing the property for Wonderland Realty LLC.
A casino in East Boston or Everett also will prompt businesses that supply casinos to look for warehouse and distribution space in the surrounding area, Agnew predicted.
“Casinos need lots of services, from bed linens to food to liquor, on a daily basis. Some of these companies will want to be closer than others,” Agnew said.
The East Boston and Everett sites are vying for the Greater Boston casino license along with Foxwoods Resort Casino, which is proposing a 980,000-square-foot gambling palace in Milford. Developers in Springfield and Palmer are in the running for the western Massachusetts license. The Massachusetts Gaming Commission could award both licenses by April.
In the central Massachusetts town of Palmer, some property owners are already looking to cash in on their proximity to Mohegan Sun’s proposed casino site. Local voters will decide whether the casino plan goes forward at a referendum Nov. 5.
One local family is asking $1.9 million for a five-acre property that abuts the rear of the casino site.
“It probably should be a hotel, which would be ideal,” said the listing broker, Janet Morgan of Morgan Realty in Monson. “It could be a parking lot and still be worth the money.”
Mohegan Sun is among the potential buyers who have inquired about the property, which contains an auto body shop and three homes, Morgan said.
Little Effect
But real estate sources in Connecticut, where Foxwoods Resort Casino and Mohegan Sun opened in the 1990s, say hopes of a real estate boom there were dashed.
Since Mohegan Sun opened in 1996, two budget hotels have been built nearby in Montville, and a 154-room Hilton Garden Inn opened in February in neighboring Preston.
“It’s highly unlikely those hotels would be there if the Mohegans (and Mashantucket Pequot tribe) didn’t build the casinos,” said Fred Allyn Jr., a real estate broker and former mayor of Ledyard. “However, there really has been very little effect within a five-mile radius. Both tribes have worked very hard to keep development on the reservations.”
Values of commercial properties in Montville have been flat in recent years, said Norm Peck, an agent for Pequot Commercial in Waterford. There’s been little new development other than the motels and Montville Commons, a 280,000-square-foot grocery-anchored shopping center that opened in 2007 near the highway exit for Mohegan Sun.
Palmer is unlikely to attract a wave of spin-off development if the casino is built, Peck said.
“There’s an influx of transient workers who may move to the area and apartments may be built, and maybe retail to support that influx of employees,” he said.
Mohegan Sun initially boosted the retail and multifamily markets in Montville, said Susan Howard, a commercial real estate broker for U.S. Properties in New London.
Thousands of people moved to the area in the late 1990s to work at the two casinos. Both resorts employed more than 10,000 people at their peaks. That prompted out-of-state investors to snatch up strip malls and apartment buildings, Howard said.
But casino revenues have declined since the recession, prompting Mohegan Sun and Foxwoods to lay off more than 5,000 workers in recent years. Many retail properties near Mohegan Sun are vacant or in foreclosure, Howard said.
“It was good in the beginning, but we’ve had so many layoffs, it’s hurt many people. If you look at the economy, this part of Connecticut is the worst hit and still doing poorly,” she said.
Commercial investors seem to be taking a wait-and-see attitude toward Foxwoods’ attempts to build a $1-billion casino off Route 495 in Milford.
“We do not have any extra activity going on because the casino is supposed to come in,” said David Consigli, vice president for Century 21 Commonwealth in Milford. “It’s a big if, and a lot of the major players just think it’s going to Boston.”
In Springfield, MGM Grand’s $800-million casino proposal would have the biggest effect on downtown office properties, predicts Andrew Cohen, general partner at Century Investment Company in Springfield.
MGM’s project would span 10 acres over three blocks in the city’s South End. Among the parcels that would be demolished would be office buildings that house law offices and other legal services.
“Most of these people want to stay downtown,” Cohen said. “They’re going to fill up the empty (office) spaces.”
