Soloviev Group Bets Manhattan’s Largest Undeveloped Lot Will Help It Win Coveted Casino License
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The Soloviev Group has finally settled on what it wants to do with what’s billed as the largest undeveloped lot in Manhattan, which it said it’s owned for 15 years: place a big bet on winning a casino license among heavy competition as demand for offices looks less attractive.
The developer, known for projects such as New York’s iconic 9 W. 57th St. black glass office tower overlooking Central Park, plans a $3.5 billion mega mixed-use resort that comes not only with a casino and 1,000-plus-room hotel, but also two residential towers, a museum and Manhattan’s first observation wheel.
The project, if selected, is expected to liven up a quieter part of the United States’ largest real estate market.
Soloviev’s ideas for the 6.7-acre site, facing the East River and bordering First Avenue between East 38th and 41st streets just a block south of the United Nations headquarters, highlight an increasingly high-stakes competition. Well-known developers and casino operators — including Manhattan’s largest office landlord S.L. Green Realty and Caesars Entertainment as well as Hudson Yards developer Related Cos. and Wynn Resorts — are jostling for one of three casino licenses New York state is expected to issue after approving them last year.
The New York Gaming Facility Board in January issued a request for applications to officially take its chances on the process. The minimum capital investment and license fee for applicants seeking to build a commercial casino is $500 million each, with the application fee for a license alone costing $1 million.
“I call it the New York state World Cup,” Michael Hershman, Soloviev chief executive, said in an interview. “There are so many large powerful competitors. ... We recognize we are up against some very formidable opposition.”
To up its game, Soloviev, after unveiling four months ago its master plan for what it’s calling Freedom Plaza, recently said it’s partnered with Mohegan, described as one of the world’s largest casino operators and known for its flagship Mohegan Sun casino resort about a two-and-a-half-hour drive outside New York in Uncasville, Connecticut.
“Mohegan is the largest casino in the Northeast” with the biggest database of players in the region, Hershman told CoStar News, adding Soloviev hasn’t decided on a hotel branding partner. “It has the largest database of players in the Northeast. A lot of their players come from New York, New Jersey, Massachusetts and Connecticut. … We’ve been talking to them for some time. It’s a good fit.”
Established in 1995, Mohegan, an extension of the Mohegan Tribe of Indians of Connecticut, owns and manages eight casino resorts in the United States, Canada and Northern Asia, where it plans to open the region’s largest integrated resort in South Korea. The firm made history in 2021 as the first tribe to operate a casino in the highly competitive Las Vegas Strip market, Soloviev said in a recent statement.
Soloviev, a third-generation, family-owned business whose chairman, Stefan Soloviev, is the son of the late famed New York developer Sheldon Solow, didn’t decide to pursue a gaming project until the New York Legislature’s decision to OK new downstate licenses, Hershman said.
The site already has the zoning in place to build 2.75 million square feet of mixed-use development housing three residential towers and one commercial property where Soloviev originally intended to build an office tower, Hershman said. The developer decided not to proceed with that “because of the changes brought by the [COVID-19 pandemic] in the commercial” property market, he said.
The pandemic-driven hybrid and remote working trend has pummeled the office sector and led New York’s office vacancy rate to rise to what CoStar data shows as a record high of nearly 13%.
“We have owned this shovel-ready plot for 15 years, patiently waiting for the right project to break ground,” according to the master plan laying out Soloviev’s vision for Freedom Plaza.
The site once housed a Con Ed steam electric generating plant.
Soloviev also owns the One United Nations Park luxury residential tower at 685 First Ave. that it completed across from the site during the pandemic.
To bolster its bid and community support, some 4 acres of Freedom Plaza will be set aside for green space, many times bigger than what was previously envisioned in the original approved mixed-use development plan, Hershman said.
The developer intends to house parking underground so it’s “less obtrusive” and can allow for better views of the East River, he said. Different from the century-old, 150-foot-tall landmark Wonder Wheel at the Coney Island amusement park in Brooklyn, the 400-foot-tall observation wheel that Hershman said Freedom Plaza plans to build is similar to the London Eye and will offer views of the five boroughs.
The developer has one of the world’s largest private art collections, and it plans to pay tribute to the fact that the Freedom Plaza site is near the UN by opening a Democracy Museum that will showcase works including pieces of the Berlin Wall the company owns, Hershman said.
The chief executive called the project an “integrated resort” surrounded by massive green space with a sports field and walking trail that will build “an entertainment center” for both the community and visitors.
“There’s a shortage of hotels and residential developments on the east side. We can meet those needs. … It’s hard to build anything in Manhattan given community opposition. We bring a lot to the community by building a park, and children can play on the sports field. We make sure the entire project is green and carbon neutral,” Hershman said, adding the developer has begun to reach out to community groups.
Soloviev also plans to add a marina providing direct ferry access, nearby the existing 34th Street ferry stop. The firm also wants to build a bridge over the Franklin D. Roosevelt East River Drive that will “fill the gap” along the East River waterfront promenade, Hershman said.
Different from the previous process, developers and gaming companies applying for a license will have to obtain approval from a local community advisory committee and get all municipal zoning and land-use requirements before any application will be evaluated, the New York Gaming Facility Board said in January. Despite having already gotten rezoning approval, Hershman said he expects the casino may still require a special-use permit or some rezoning.
“A casino has never been built in New York City,” he said. “There’s no ground rules in place. … No one is certain what new zoning or special permitting will be required.”
Soloviev has assembled a team of 70 people, including land-use attorneys, architects, construction engineers and financial advisers to work on its application, Hershman said.
He’s not concerned about higher borrowing costs that have seized up market activity at the moment. “Interest rates will start to come down by the time we get to the financing and development stage,” he said. “We are ready to break ground as soon as we have the license.”
If licensing and zoning are completed in 2024, he expects the resort can open by 2026.
The development is projected to yield over 4,000 full-time, “good-paying” jobs beyond the construction workers, while generating tax revenue of more than $100 million a year, among the important deciding factors for the winning bid, according to Hershman.
“The bid at Freedom Plaza, if all elements check out, will be very competitive,” said Max Bichsel, who’s consulted dozens of land-based retail sportsbooks across the country from Michigan to New York and is now vice president of publicly traded Gambling.com Group.
He added that “Soloviev coupling with Mohegan makes the bid much stronger. Mohegan is one of the best operators. They are the largest Las Vegas-style casino within driving distance to New York. … You are taking someone [like Soloviev] who’s very good at developing real estate in New York and someone who knows how to operate a casino. ... They have a marriage of proposals that’s very conducive to what a downstate casino would require.”
The amount of green space in the Freedom Plaza bid is also “compelling,” Bichsel said in an interview, adding the project could also “revitalize” an area “that’s a little dead.”
Still, Freedom Plaza is up against many other bids that are just as competitive. SL Green and Caesars, the biggest U.S. casino-entertainment company, have said they are seeking a gaming license in the tourist and entertainment mecca of Times Square with billionaire rapper Jay-Z’s entertainment company, Roc Nation, also having joined their team.
Related, for its part, has joined up with Wynn to pursue a license at Western Yards, directly next to the Javits Center convention venue, at Hudson Yards, the largest U.S. private development.
The Mets owner Steven Cohen is said to be eyeing a casino license in Queens near Citi Field as New York is set to build its first professional soccer-specific stadium in the borough as part of a megadevelopment.
Gaming giant Bally’s is also planning a casino, next to the Trump Organization’s public golf course at Ferry Point in the Bronx, the New York Post recently reported.
Further heightening the stakes is the fact that all these contenders may be competing for just one of the three licenses, as the other two are expected by the real estate industry to go to the owners of the existing Resorts World New York slot parlor at the Aqueduct race track in Queens and to MGM Resorts’ Empire City Casino in the New York suburb of Yonkers.
These two so-called racinos are expected to submit their respective bids to expand their offerings to include live table games, the Post has reported.
“As it stands, New York state will reward those two operators because they made an investment a long time ago,” Bichsel told CoStar News. “I fully suspect two of the licenses are spoken for. … It’s really up to the [New York State Gaming Commission]to decide. … New York is a lucrative market with massive tourism [and] a diverse population. The payoff [for whoever wins the third license] is you can corner a market.”
