The Grand Pequot Tower, the luxury hotel at Foxwoods Resort Casino, was built as part of an expansion project that began in 1995. The further expansion of Foxwoods is expected to spur additional growth in the local commercial and residential real estate markets.

The $300 million expansion of Foxwoods Resort Casino in Mashantucket will bring more than increased revenue to southeastern Connecticut. It also will bring 200 new employees and, along with that, possible changes to the real estate market and the towns that surround the 4.7 million-square-foot casino and resort.

The Mashantucket Pequot Indians opened the casino in 1992, said Bruce MacDonald, spokesman for Foxwoods. The opening of the casino, along with the opening of the nearby Mohegan Sun casino in Uncasville and general increased interest in communities along the Shoreline, have helped drive up housing prices in the area.

“All of southeastern Connecticut is burgeoning,” said broker Ann Buonocore of Buena Vista Realty in Stonington.

The area has been a sleeper, Buonocore said. There was some interest on the part of developers in the 1980s, but nothing got off the ground. Then the casino opened and pharmaceutical giant Pfizer Inc. built its world headquarters in New London. Mohegan Sun followed. The presence of the two casinos and Pfizer’s building has been attracting developers to the area since, Buonocore said.

Now, developers who years ago weren’t returning phone calls from area real estate professionals are ringing up local agents, who often have to tell them the projects in which the developers were suddenly interested are finished.

“The real situation is there’s more demand than supply,” Buonocore said.

Area ‘Upgrades’

Another byproduct of the casinos is the increased demand for housing, she said. The casinos are major employers and have attracted hundreds of new residents to the neighboring towns of Ledyard and Montville.

“There’s a much greater need for housing,” Buonocore said.

William Newman, president of Connecticut Commercial Realty in New London, agreed.

“It has placed a tremendous demand on the housing market in the area,” he said.

That has pushed up housing prices in the area. But the two towns near Foxwoods, Montville and Ledyard, haven’t experienced increases as great as other towns and cities in the state.

Ledyard’s median home prices increased 17 percent, from $175,000 in 2002 to $205,000 in 2003, the 33rd highest increase in the state, according to The Warren Group, parent company of The Commercial Record. Montville’s home prices have increased from $153,000 in 2002 to $173,000 in 2003, an increase of 13 percent, the 72nd highest increase in the state.

“The casino, I think, is just one element that has affected prices around here,” MacDonald said.

At the same time, the presence of the casinos has brought renewed vigor to residential development projects in the area, Newman said. Rentals and other residential real estate in the area are now very strong, he said.

Many areas around Foxwoods that were not “loved,” as Buonocore puts it, have been purchased by developers and transformed into new condominium or apartment complexes. Many of those are affordable and popular with casino workers.

“What I think is happening is the casino brings a lot of employment to the area,” Buonocore said. “It’s upgraded the area.”

Other “upgrades” have come because of the popularity of the casinos. They have attracted people from Massachusetts and New York who weren’t previously familiar with southeastern Connecticut, Buonocore said. But when some of them learned of the reasonable housing prices there, they bought second homes, paying $400,000 or more, Buonocore said. They also spurred the million-dollar housing market in the area.

The increase of residents in the area also has attracted more businesses to serve them. There are more lawyers and doctors in the area now, Buonocore said. Other kinds of businesses also have come to the area, Newman said.

“Secondarily, we have seen the emergence and growth of businesses that serve the casinos,” he said.

Companies like laundry services have come to town and those companies have pushed up demand for warehouses and offices for those companies, Newman said

“We have seen growth in companies,” he said.

The expansion of Foxwoods could compound those effects.

The tribe plans to make three main changes to the casino, MacDonald said. The first is the Rainmaker expansion, which will add 120,000 square feet to the casino. There will be a new Hard Rock Cafe, an additional 20,000 square feet of gaming and a 2,100-car parking garage, he said.

“There’s a greater demand for more games, particularly slots,” he said.

The tribe is putting in 800 new slot machines and also is expanding within the casino’s existing footprint by adding restaurants and retail, MacDonald explained. It also will build two championship golf courses across the street from the casino. The expansion is considered to be an important component of Foxwoods’ continued popularity.

“You basically have to stay fresh in this business,” MacDonald said.

The Mashantucket Pequots got into the gambling industry in 1986 when they opened a high-stakes bingo parlor, MacDonald said. The casino opened nearby in 1992 and has been expanding ever since. It has grown about 4.35 million square feet since it opened with about 350,000 square feet, MacDonald said.

The casino’s biggest expansion came in 1995 when the tribe began to construct the Grand Pequot Tower, the casino’s luxury hotel. The tower began opening in 1997, in phases, MacDonald said.

The next expansion will put more of a strain on the already-tight residential and commercial marketplace, Buonocore said. Some towns still have room for growth, but others, like Norwich, don’t, she said. The growth also has spurred more expansion into small towns like Preston and Griswold, she added.

One negative effect of the area casinos is that local restaurants have suffered, Newman said.

“It’s very difficult to compete with [the casinos],” he said.

The expansion at Foxwoods, which will include at least one new restaurant, could make competing even more difficult for the local restaurants.