They trotted out celebrities to validate their hype. George Clooney was a partner in Las Ramblas. Leonardo DiCaprio bought a unit at Panorama, Jessica Simpson bought at Palms Place.

"Living in a hotel is one thing," Don Soffer, developer of Turnberry Place, told the Review-Journal in 2004. "But Vegas has become a very cosmopolitan city. ... The fact that they can stay here and not have to go into a casino has played out well for us here."

The fireworks have fizzled now, though.

As some analysts predicted, less than 25 percent of the proposed high-rise projects have been completed. The cancellation list started with Krystal Sands and grew with Aqua Blue, Ivana Las Vegas, Las Ramblas, Icon, Spanish View, Sandhurst and Club Renaissance, to name a few high-profile failures.

Projects that did get built are having trouble selling. Newport Lofts and One Las Vegas entered foreclosure. Streamline Tower filed for bankruptcy. Trump Tower, with about one-fourth of its 1,282 units sold, is entangled in lawsuits. Overall, only 38 percent of the units that were completed are sold.

"I often asked my own partners and the analysts to show me an example on the proposed scale of the Las Vegas condominiums model, historically and anywhere else in the world, but no one ever did," said Chet Nichols, former executive at Amland Development, developer of One Las Vegas. "They believed Richard Lee and other self-promoting hypesters who were exploiting the market euphoria in return for fees and business for themselves or their companies."

Lee, public relations director for First American Title Co. of Nevada, said he always tried to clarify what was real and what was hype. At that time, anything that showed vertical steel construction was considered real, he said.

"That was kind of naive," Lee admits. "Even now, that doesn't make it a real project. When the world financial markets changed, all the rules and expectations that we were basing our enthusiasm on changed. Things became very difficult."

Bottom line is not many people were willing to pay upward of $500 a square foot for a box of air when real property values were plummeting by 30 percent to 50 percent in Las Vegas. Association dues alone can run from $1,000 to $3,000 a month at top-end places such as Park Towers, Palms Place, One Queensridge Place and Turnberry Place.

Also, the number of people who can afford and justify a second home has been grossly overstated for years, Nichols said. That's hard to detect by front-line salespeople unless they analyze the buyer and proposed purchase, which they typically did not, he said.

The real estate downturn and economic recession rattled the high-rise market. Buyers who had made significant reservation deposits got cold feet. Financing dried up. Projects such as Allure, Streamline and Palms Place finished construction and received their certificates of occupancy, but had trouble closing escrow on many of their units.

Allure put some of its units up for auction earlier this year. Buyers had forfeited their nonrefundable deposits on the units. Even at 20 percent discounts, the developer's minimum bids were not met.

Robert Daniels experienced a bit of buyer's remorse. He had already reserved a condo at Juhl, which was delayed by more than a year in its opening, when he saw prices being reduced at nearby SoHo and Newport Lofts. He could have bought a 1,600-square-foot unit at Newport for roughly the same $440,000 he paid for a 910-square-foot unit at Juhl.

Russ Haley, vice president of San Diego-based CityMark Development, said the developer has been working with every buyer under contract at the 346-unit Juhl.

"The reality is we're here to get people into their units and for them to be happy," Haley said during a business trip to Las Vegas. "A few people can no longer qualify, but quite a few are still great buyers. We realize the market has turned and we want to make sure we get a fair price with them and everybody is happy."

The high-rise condo craze was partly created by the "mystique" of being in Las Vegas, real estate analyst John Restrepo said. The city became a magnet for commercial real estate development at a time when credit was cheap and easy, he said.

"You had an inflated sense of real demand for these units in this community," Restrepo said. "The positive is we didn't build as much as Florida. The hype here was greater than what was built."

Restrepo showed a median price of $386,500 for 12 high-rise units sold in June, a 25 percent decrease from $515,000 a year ago. The median price per square foot dropped 38 percent to $226 and could go lower, he said.

Developers are giving price concessions, even providing their own financing, to keep buyers from throwing back the keys, said Larry Murphy, president of SalesTraq, a Las Vegas-based research firm.

"The irony is they are (reducing prices), but they don't want to let anyone know about it until they get them to the closing table," Murphy said.

He reported six closings in June for Juhl ranging from $239,900 for 885 square feet ($271 per square foot) to $725,000 for 2,100 square feet ($345 per square foot). Allure had the most closings this year with 25, Murphy said.

High-rise projects face tough challenges today, said John Eisele, president of Las Vegas High-Rise Condo Association and sales manager for Juhl.

"The good news is a lot of these buildings will eventually get filled," he said. "Where the prices are in the market for remaining inventory is such that those prices could not justify another builder coming in. I don't foresee any construction lender coming to Las Vegas and lending on a new project. You can't build it for what it costs based on what it would sell for. It is what it is."

Buyers are taking advantage of perceived values in single-family home foreclosures and short sales in Las Vegas, competing against multiple offers. Eisele said he expects to see the same thing happen in the mid-rise to high-rise market.

"You've got a consortium of people -- developers and sales and marketing -- reacting to what's happening and working to put a strategy in place to get their buildings filled up," he said.

Nichols, now manager and chief executive officer of RE-Group, said developers overlooked critical facts and ignored certain conditions necessary for condominiums to succeed.

Most important is an urban environment that's densely populated, vibrant with jobs and suffering from a lack of new development space. Public zoning limitations must be in place to inflate and sustain land prices. It should be rich in amenities, preferably on a waterfront or ski slope.

Contrary to what some market observers maintain, the fundamentals that drove Las Vegas' growth are no longer in place, Nichols said.

"Ignoring reality is what got us here in the first place," he said. "I don't want to be a doomsayer, but the sooner people start behaving rationally the better off we will all be. Success on any other basis is always going to be temporary."

Gaming revenue has declined as casinos became more widespread across the United States and the world. As much as community leaders strived to diversify the local economy, it's still a "one-horse" town, Nichols said. The absence of a state income tax and growth in mostly low-income service jobs can only take an economy so far.

Quality of life -- once a beacon for Las Vegas -- has deteriorated in terms of traffic, crime, education and health care. Though housing is returning to affordable prices, it skyrocketed to unjustified and unaffordable levels.

"As for the resetting of values and the whole glut issue, it was created by the same geniuses who are now trying to tell us all how to adjust to it or recover from it," Nichols said. "The problem is that unlike most industries, the housing industry and especially the condominium sector was largely unsophisticated at the top and often completely ignorant of relevant data."

David Rifkind of Los Angeles-based investment firm George Smith Partners said high-rise developers showed polished marketing expertise, but lacked knowledge of financing and construction associated with these buildings. Capital markets are extremely cautious with Las Vegas, he said.

Many analysts, appraisers and lenders were complicit in the process, but it was the builders and developers who were most willing to ignore facts in return for receiving fees and passing on risk to others, Nichols said.

Housing affordability is directly linked to average income and there's a direct relationship between rents and sales prices in terms of determining the limits of each other, he said.

Real estate experts have suggested that many of the high-rise condos for sale will be converted to rental units in the short term. Even with home prices down 50 percent from their peak, renting is still much more affordable than buying, especially for condos. Renters accept no risk, have more flexibility and need no down payment.

Las Vegas' luxury condo market includes condo-hotels such as Platinum, Signature at MGM Grand, Trump, Palms Place, Palazzo and the under-construction Cosmopolitan.

Condo-hotels are different from time shares in that each unit is purchased by an individual owner who then has the option of putting it into a rental pool. The problem there is competition from 140,000 hotel rooms in Las Vegas, usually at a cheaper nightly rate.

What is the end game for Las Vegas? Returning to its roots as an affordable and diverse entertainment destination, Nichols said.

"We became too much of the $500 bottle of vodka and multihundred-dollar room," he said. "We increased capacity at a higher price point when there was no demand for that. There's a direct relationship between price point and market share. If entertainment, rooms, and food and beverage get back in line, just like any service or commodity, that's when the town will rebound."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.