Pavilion - Raising the Bar for Future Development

[ By Howard F. Thompson ]

Clad in honed and split-face travertine, Pavilion features green-tinted, low-E glass to optimize energy efficiency. A large balcony at the sixth floor presents views of Red Rock Canyon while palm trees and landscape materials surround the building and parking area.

Sometimes a project is part of a bigger vision. Developing a landmark building that not only attracts quality tenants but also enhances a community is no small task. During the planning stages of the Pavilion office project, KKE Architects and developer Charleston Pavilion, LLC envisioned how the building would fit into a 400-acre Las Vegas community being built by The Howard Hughes Corporation, an affiliate of General Growth Properties, Inc.

Pavilion, a six-story, 154,000-square-foot office building, was completed in November of 2007. It is situated on 6.56 acres of Summerlin Centre, a regional and local service center of retail shops, office buildings, restaurants, hotels, entertainment centers and residences in close proximity to the I-215 Beltway. Pavilion's offices were 90 percent occupied less than four months after completion with rental rates averaging $2.85 per square-foot modified gross, 20 percent above proforma.

With no intention of blending in, the goal was to provide a superior building that would prescribe the highest standard for future development in the area while establishing the architectural tone for a whole new neighborhood. Owner/developer, Charleston Pavilion, LLC purchased the land outright from the Howard Hughes Corporation. "Once we shared our vision of the project with them, the first high-rise office building in the Summerlin Centre, they agreed to the construction; however, not before they made certain that our project met their strict and meticulous criteria with respect to building design, signage and landscaping," said Jason A. Awad, managing member.

Initially, plans called for a building that would serve as the headquarters for the Business Bank of Nevada as well as an investment property. To achieve its financing objectives, Charleston Pavilion LLC also sought assistance from the Nevada Pacific Realty Capital, LLC. After several months of dealing with various lenders, Principal Global Investors was chosen as the lender of choice to construct Pavilion.

The success of the Pavilion project can be attributed to the creativity and imagination of several people, including a very capable management team that supervised every aspect of the job. The owner's representative, who had a vast knowledge of building construction and tenant improvements, was on-site at all times encouraging architects and engineers to be innovative, creative and willing to take bold steps. The result has attracted such notable tenants as Fertitta Enterprises, Inc.; City National Bank; UBS Financial Services, Inc.; TD Ameritrade, Inc.; Hill International, Inc.; Lawyer's Title Insurance; and Avery Brooks & Associates, to name a few.

Value Engineering Doesn't Always Pan Out

Pavilion's upscale design and amenities set it apart from the competition, commanding higher rental rates in a tightening office market.

The first of several project challenges involved the zoning regulations in the Summerlin area, which restricted buildings to 60-foot heights. With the assistance of the Howard Hughes Corporation, a variance was submitted as part of their overall Summerlin Centre project. The granting of the request proved to be the pivotal moment when the vision became a reality.

Early in the construction of the Pavilion project, consultants attempted to influence decisions under the auspices of either being the cheapest or the easiest way to go. In order to avoid having consultants arbitrarily change the mindset of the project, the developer met with them on a regular basis to ensure their vision remained intact.

Finding the right general contractor also proved challenging, necessitating the direct involvement with sub-contractors. To ensure that the sub-contractors completed their jobs in a timely and professional manner, the developer provided certain incentives.

In concert with the general contractor, Whiting-Turner Contracting Company, Charleston Pavilion, LLC attempted a value-engineering approach to its project. "In hindsight, the adage 'you get what you pay for' was realized and this was not the best approach," admits Awad. "A better approach would have been to use the architect's high standards that were called for in the plans and specifications. Using alternate building materials did not prove to be cost effective.

The time and energy consumed during this process added to the delay in obtaining the Certificate of Occupancy," remarked Awad. Another consequence of value-engineering sought out by the general contractor was the design of the steel structure. It is not always to the owner's advantage to design the steel structure to the minimum floor load standards. Designing to medium floor load standards or, in some cases, exceeding the medium floor loads to ensure future capacity of the tenant improvement is best. Also, this would ensure the high quality of the concrete floors poured on the metal decks. These criteria should be looked at closely and kept under the umbrella of the architect.

A developer and his architect should meet personally with officials from the Fire Department, Planning Department, Building Department, etc. and show them building plans and a viable schedule for construction. For example, clarifying potential code issues and fire-life-safety requirements must be addressed early to avoid delays in securing the Certificate of Occupancy.

Designing for the Environment

Pavilion's steel and glass canopy entrance provides the office building with both shading and a dramatic design element.

Throughout design and construction, Charleston Pavilion LLC sought a building with a unique character and design that would lend itself to the desert surroundings. Consequently, the building was clad with natural materials. Travertine and split-face stone were purchased directly, eliminating the middle-man to realize cost savings. In addition to the travertine and stone cladding, Pavilion features a distinctive green-tinted, low-E glass to optimize energy efficiency. The steel and glass canopy at the entrance provides both shading and a dramatic design element to the office building. A large balcony at the sixth floor presents picturesque views of Red Rock Canyon. Mature palm trees and landscape materials surround the building and parking area. Along with emphasizing environmental aspects and energy conservation, tenants enjoy natural lighting and balconies on each floor.

In order to stay within budget, Charleston Pavilion, LLC continuously monitored the design costs since the cost of building materials significantly increased due to the overseas demand for steel, glass, etc., and the development of other Las Vegas projects such as the City Center, Palazzio Hotel, Trump Plaza, etc. In spite of rising costs and a tightening office market, the developer stayed true to his vision. "To find that balance between constructing a quality building with special characteristics that was economically feasible and profitable as a business investment was a particularly difficult challenge. We were confident in our belief that once the building was constructed, potential tenants would be willing to pay higher rents in a quality building, resulting in higher returns for our investors," said Awad. Charleston Pavilion LLC involved a real estate broker early in the planning process to ascertain what was available in the market with respect to office buildings and/or business complexes, the demand for potential tenants and tenant expectations. However, construction on the project was not based on statistics only. Other office buildings in the Summerlin area were not only being built as investment properties but also featured a tilt-up design. Charleston Pavilion LLC wanted to differentiate themselves in the Las Vegas market by constructing a building that stands alone in its class while serving as a beacon for the future.