Since August, when Harrah's Entertainment announced a partnership with Anschutz Entertainment Group to build a $500 million arena on 10 acres owned by Harrah's, land values in the area have jumped by 10 to 20 percent, said John Knott, executive vice president of the global gaming group for CB Richard Ellis.

Properties that were worth $12 million to $15 million an acre are today worth $15 million to $18 million an acre, he said.

Market observers say developers, in order to capitalize on the arena, which is slated to open by the end of 2010, are likely to seek out and develop nearby properties with retail, residential and hotel space.

Some suggest that projects already planned could be accelerated and financing prospects bolstered with an arena so close.

Competition with a downtown arena doesn't appear to be a concern.

The proposed site of the AEG Harrah's Entertainment arena behind Bally's near Flamingo Road and Koval Lane. The view Looks south along Koval Lane from Flamingo. Photo by Steve Marcus

Given the track record of AEG, which owns the Staples Center in Los Angeles, and the backing of Harrah's, analysts expect the Strip arena to get built.

Likely to benefit from a Strip arena is a group led by Africa Israel Investments, which in August reportedly paid $625 million to close a sale to acquire 60 acres at the northeast corner of the Koval-Harmon intersection.

The large parcel was once planned as the location of the canceled W Las Vegas resort as well as the proposed Las Ramblas condo and resort project of actor George Clooney.

David Berman is managing director and head of gaming, hospitality and investment banking for Credit Suisse Group, which is an investor in the Africa Israel project.

The project is expected to include several boutique hotels, retail and gaming, and Berman said having an arena with 20,000 people on a nightly basis will be a huge benefit.

Since the Hard Rock opened in 1995, the Harmon Road corridor hasn't developed as quickly as some had anticipated. The arena provides another link in the chain between the Strip and Paradise Road.

"What it does for the neighborhood is a further positive for the further development of the Harmon corridor," Berman says.

Many analysts cited comparisons to cities such as Phoenix and Glendale, Ariz., and San Diego as places where the construction of stadiums have spurred mixed-use development.

"It definitely makes it more desirable," said John Vorsheck, regional manager of Marcus Millichap. "People like to be in a submarket that's hot."

That includes Harrah's as well. It owns 25 acres adjacent to the arena, and additional hundreds north of Flamingo Road, between Koval and the Strip, behind its Bill's, Flamingo, Imperial Palace and Harrah's hotels.

Harrah's hasn't announced plans for the 25-acre site. Analysts expect large-scale mixed-use development involving condos and gaming on Harrah's land north of Flamingo, although the casino operator has delayed announcing its plans for more than a year while the company is acquired by two private equity firms.

The Ellis Island Casino and Super 8 Motel are shown on Koval Lane are just east of the proposed arena site behind Bally’s.

High-end retail and boutique hotels and some residential are the most likely mixed-use choices, analysts said.

The construction of office buildings is unlikely given the high cost of land, said Vic Donovan, managing partner at Colliers International.

"I think all along Flamingo and Koval to Tropicana you will see changes immediately," Donovan said.

Not only does the Harmon Road corridor benefit, but Glenn Dulaine, a broker with Realty Executives, said an arena would ultimately provide a boost to the Maryland Parkway corridor when it comes to office development.

Maryland Parkway is the next major corridor to the east and any eastward expansion from the Strip will benefit it, he said.

The chief concerns cited about the arena are its lack of accessibility and the traffic congestion it will cause near the Strip.

AEG choose the Strip site because of the arena's ability to draw from hotel rooms within walking distance of the facility.

But if a sports team is lured to play in the arena, the arena should be able to attract local residents, who because of traffic congestion, seldom go to the resort corridor.

That will further benefit Strip-area casinos, retail and restaurants and take away business from some outlying areas where locals now dine and gamble.

Harrah's is leasing the 10 acres to the partnership and both Harrah's and AEG will share the construction costs on a 50-50 basis, says Greg Miller, vice president of property development.

Not only will Harrah's profit from the arena but from arena visitors who will go to its nearby properties, which include Bally's, Paris, Flamingo and Caesar's Palace.

"When you have something that draws 20,000 people, they are going to want to do something when it's over," said Harrah's Entertainment Chairman Gary Loveman.

The prospect of an arena behind the Strip is welcome news for owners of the condo-hotel units at Residences at MGM Grand and the Platinum, where owners haven't been happy with their cash flow, said Steve Bottfeld, executive vice president of Las Vegas-based Marketing Solutions. Having an arena within walking distance will increase demand and rates and make those units more valuable, he says.

An arena will also help sales at condos such as Project CityCenter at Harmon Avenue and the Strip, he said.

"All the hotels and condos are going to benefit by having that there," Bottfeld said. "The name of the game is it's positive for the area. What this arena does is give one more shot in the arm to bring in tourists."

Besides the economic development near the arena, there are other long-term advantages, analysts said.

An arena is the first step for Las Vegas to attract a professional sports franchise in the National Basketball Association or National Hockey League.

That national exposure would enhance the valley's image in its bid to land more corporate relocations and diversify an economy heavily dependent on gaming.

"It kind of gives credibility to the entire market much like the Olympics did for Salt Lake City," says Mike Hillis, managing partner with Commerce CRG. "All of a sudden people recognize you. We are known for gaming. It gives you additional credibility and is another dimension that adds validation of Las Vegas as a real place."

AEG says it has no commitments from the major sports leagues, but it has ties with them. The company owns the Staples Center in Los Angeles, the home of the Los Angeles Lakers and the Los Angeles Clippers of the NBA and the NHL's Los Angeles Kings, which the company owns.

Attracting a sports franchise is crucial to help create a sense of a community as a place where more and more companies and their employees want to relocate, said Craig Shute, managing director with CB Richard Ellis.

Las Vegas is still trying to overcome its image as simply a town for gaming and conventions, brokers said.

"I think as we become more of a city with more diverse entertainment options, we have more of an ability to attract people who want to live here," Shute said. "But the first step is that we need a sports team. It is just another critical component that major cities have when it comes to lifestyle."

Arenas can sell corporate naming rights and whoever chooses to sponsor the Las Vegas arena will bring more corporate attention to the community, Donovan said. It shows the city has "come of age," and is reaching its potential, he said.

"It will let people know we are a major metropolitan area rather than simply a tourist destination and that a lot of people live here," said Joseph Kupiec, managing director of Grubb & Ellis.