The Boring Company has been acquiring various real estate assets along the planned expansions of its underground transportation project, the Las Vegas Loop, prompting mixed reactions from experts about the potential returns on these investments.
Since the opening of the Loop in 2021, subsidiaries of the Boring Company have purchased eight properties situated along its route, in addition to acquiring a residential property outside the designated path.
An analysis conducted by Sunlight Research and the Nevada Independent sheds light on the company’s strategy to forge a network of properties alongside the Loop, emphasizing the company’s broader ambitions in the real estate sector.
Currently, Las Vegas serves as the sole operational site for the Loop, which has only delivered a little over four miles of underground tunnels over the span of four years, a pace significantly slower than the company’s initial projections.
Object Dash, an affiliate of the Boring Company, is responsible for six of these acquisitions, which include various types of properties such as a former tapas bar, a past hemp and CBD retail location, and two vacant lots. One of the vacant lots is intended for the development of a 132-unit residential building. In addition to these, the company recently procured a parcel of land adjacent to the airport.
Despite the individual purchases being reported, the cumulative analysis raises questions regarding the investment’s broader implications.
While the concept of transit-oriented development — which promotes residential and commercial ventures near transportation hubs — is well established, experts caution that the Loop’s current stage makes it challenging to accurately assess its future success.
Nicholas Irwin, an economics professor at UNLV with a focus on housing, expressed skepticism about the Loop serving as a mass transit solution, citing its limitations in moving large volumes of people and the high ticket prices. He pointed out, “Research does support that there is value in being near transit, but it’s always public transit, not a private subway system.”
Initially designed to connect various locations within the Las Vegas Convention Center, the Loop has expanded its aspirations to provide service to notable landmarks, including Resorts World, Encore, and Westgate resorts.
Promised by the company to function as a “public” transit system, the ambitious project suggests plans for an extensive network comprising 68 miles of tunnels and 104 stations, with claims of accommodating 90,000 passengers per hour and transit times of 2 to 8 minutes between key stops.
However, the reality of the Loop’s operational capacity falls short of these lofty promises. Currently, only five-passenger Tesla vehicles are utilized for transport, requiring a human driver due to calibration issues with the vehicles’ cameras in tunnel conditions.
Nicholas Irwin reiterated that the Loop does not fulfill the criteria for a mass transit system, highlighting the high costs involved and its inadequate mass transport capability. Presently, Loop tickets range from $4.25 for a single ride to $12.50 for a day pass, whereas the local Regional Transportation Commission (RTC) bus system offers slightly lower prices.
Irwin also pointed to the multitude of uncertainties surrounding the Las Vegas Loop project, saying, “It could be incredibly profitable or it could lose billions of dollars, and there’s a lot of range in between.”
Adding to this mix, Alan Adamson, a brand consultant and co-founder of Metaforce, noted that this type of vertical integration—controlling multiple facets of a project—aligns with Musk’s established approach across various enterprises.
According to Adamson, Musk’s strategy encompasses not just the construction of the Loop but involves providing the vehicles and acquiring adjacent real estate. He stated that such foresight aids in controlling the complete value chain.
“This is absolutely consistent with how Elon operates across his portfolio. He doesn’t just build products; he builds entire ecosystems,” Adamson explained, emphasizing that proximity to transportation options makes sense for residential developments.
For instance, the proposed residential complex bought by the Boring Company aims to offer fewer parking spaces—24 compared to the standard 189—under the belief that residents will prefer utilizing the Loop instead of their personal vehicles.
“If you build an apartment complex along one of your routes, then people are living there, and those people want transportation,” Adamson elaborated, pointing out that local residents have a vested interest in the project’s completion.
While the Boring Company faces ongoing challenges with the Loop’s construction, with permit delays and reported environmental citations amounting to nearly 800 violations, there’s considerable skepticism about the overarching viability of the project. Recent worker injury reports further complicate the narrative around the company’s operational efficiency.
The Boring Company’s previous leadership had anticipated launching five to ten stations in the first six months post-launch in 2022, followed by an influx of additional stations each subsequent year.
So far, they’ve managed to operationalize only eight stations, integrating just three more since the project’s inception, demonstrating an average growth rate of approximately 1.25 new stations per year.
On October 9, the Nevada Transportation Authority gave the green light for the Boring Company to test its vehicles above ground, although these would still need to travel through a Loop tunnel. This could potentially streamline expansion efforts without incurring additional tunneling costs, yet it brings backlash from existing taxi service providers concerned about competition.
Ray Delahanty, a former traffic engineer and urban planner who runs a YouTube channel focused on urban housing and transportation, expressed skepticism about the Loop’s design and operational capacities, declaring that the project’s delays are unsurprising.
In hindsight, he noted, the company’s initial commitments were likely overoptimistic.
He stated, “In retrospect, it was never in the realm of possibility” for the proposed timetable to have been realistic.
Delahanty also added that typically, transit-oriented development relies on robust heavy or light rail systems, which can efficiently transport large populations, contrasting sharply with the Loop’s current reach.
He remarked that the Loop’s three million passengers since they opened fall short compared to ridership numbers seen by larger metro systems, with local RTC buses achieving around 170,000 weekly riders.
Moreover, Delahanty stated, “I see it more as an express tunnel for taxis,” questioning the perceived profit potential of the current Loop model.
He was particularly critical of the Loop’s ticket pricing, suggesting they do not correspond to the quality of service delivered. The wait times he experienced were significant enough that he believed taking a conventional ride service was a more efficient option.
In summary, the mixed reactions towards the Boring Company’s real estate ventures along the Las Vegas Loop underscore the ongoing debate about the feasibility and sustainability of this unproven mode of transportation.
As the project continues to evolve amidst increasing scrutiny and regulatory hurdles, the future remains uncertain for both the Loop and the companies poised to capitalize on its success.
image source from：thenevadaindependent
