Staying in A.C. Without the Games

As Atlantic City's casinos face increased competition, Boardwalk real estate investors are proposing sites for non-gambling high-rise projects they say will make the resort more appealing to wealthy second-home owners and vacationers.

"There's at least four tower projects along the Boardwalk today that aren't casinos," said architect Thomas J. Sykes, principal at SOSH Architects, which counts a majority of the resort's casinos among its past clients.

Promoters and their Boardwalk sites, in various stages of state and city approval, include:

Brielle attorney Jim Maggs, at Maine Avenue near Absecon Inlet.

Longport restaurateur and Boardwalk landlord George Sigonis, at Texas Avenue amid casino row.

Horsham-based residential developer Bruce E. Toll, at Florida Avenue a block north. (Toll is chairman of Philadelphia Media Holdings L.L.C., which owns The Inquirer).

Philadelphia developer Christopher DiGeorge and his partner, Thomas Stenger, former chief risk officer at GMAC Residential Capital L.P., at New York Avenue next to the planned Pinnacle casino site.

These projects have yet to dig down to hard sand. "They're all watching each other and waiting till someone puts a hole in the ground," Sykes said in his Atlantic Avenue office last week.

Proponents say Atlantic City is so underdeveloped that it can grow despite a national real estate recession. The projects have not yet reached the right balance of hope and caution, fear and greed, bad news and good.

The bad news: The national decline in residential real estate. The Wall Street credit crunch that has bankers demanding more equity for loans on speculative projects. A city government distracted by Mayor Bob Levy's resignation. Competition from Pennsylvania's new gambling halls.

The good news: The giant Revel and Pinnacle casino projects. The new, expensive retail stores at the Caesar's pier and other recent projects. The lifting of the ban on tall buildings, now that the Bader Field airport has closed. The promise of tax reassessment and development tax breaks. And competition from Pennsylvania's new gambling halls.

"I'm happy about Pennsylvania gambling," said architect Sykes. "It takes away the bus crowd and forces us to reinvest."

DiGeorge, a lawyer who was formerly a commercial real estate lender with PNC and First Republic Banks, was an early investor in the 1990s redevelopment of Northern Liberties, Center City's Schuylkill waterfront, Chinatown, and developer Carl Dranoff's Symphony House on South Broad Street.

He shifted his focus to Atlantic City as Philadelphia condo-building grew more crowded after 2003, acquiring an option on the lot where he and Stenger are proposing a $300 million, 50-story condo-hotel, full of restaurants, indoor pools and cabana units, tentatively called the Prasada (Sanskrit for "grace").

DiGeorge said his group could build the building, or make a deal with one of the big hotel chains nibbling at the city's likely construction sites.

He and the other Boardwalk-site promoters say they need to attract an older, richer crowd than the youngish party set that downtown developers expect their colleague Curtis Bashaw will attract in his redevelopment of the former Howard Johnson and Holiday Inn hotels in Atlantic City's Chelsea neighborhood. Bashaw is a grandson of one of the Shore's more colorful 20th-century personalities, the late Cape May hotel owner and religious broadcaster Carl McIntyre.

DiGeorge is betting the city "has reached a tipping point. The busloads of seniors aren't going there like they were. It can't just be about the casinos anymore. This market needs the kind of destination hotels you see in South Beach and other successful high-end markets."

"The real challenge: Is Atlantic City now a second-home market?" asks lawyer Jack Placker of Fox Rothschild L.L.P.

"We need midweek traffic," Placker said. "Who's staying at your place on a Tuesday night in February? Somebody has to take the lead and develop that market."

Placker and his developer-clients speculate over what will spark that movement. Successful financing for any of the tower projects? The intervention of a major hotel chain? A long-rumored casino-based project by Steve Wynn? Some other sugar daddy investor stepping forward, from Dubai, Shanghai, Mumbai, or the big private-equity funds?

Builders are also waiting for the next city administration to complete the downtown tax-abatement program. "Or else you could be paying $16,000 a unit - maybe $30,000 without a tax reassessment," Placker said.

"Nobody's going to build without the abatement," said developer Toll. "We're waiting for the city tax reassessment, too."

Placker, a city native, former lifeguard and regular Atlantic surfer, wishes that, nearly 30 years after the state legalized Atlantic City casinos, the city's business leaders would go further in embracing high-stakes bets on their common future.

"When Borgata first came in, people were laughing, saying, 'These people are from Vegas, they'll fail,' " he recalled. The Borgata, he noted, is now the city's highest-volume casino, and one of the few still growing.

At least one Philadelphia real estate watcher says the casino city's recent efforts to expand its appeal have already made a difference.

John Gattuso, head of Philadelphia operations at Liberty Property Trust in Malvern, says he has grown used to taking his wife and 7-year-old daughter to Atlantic City for shopping, dinner and beach visits.

"Atlantic City's a pretty dynamic place right now," Gattuso said from his job supervising the construction of the new Comcast tower, Philadelphia's tallest building. "You're finally starting to see some places that go beyond gambling."