Growing Austin Gets Major Retail Boost

This college town and state capital, long known as a hotbed for music and proud of its offbeat style, is getting an injection of designer fashion and accessories.

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AUSTIN, Tex. — This college town and state capital, long known as a hotbed for music and proud of its offbeat style, is getting an injection of designer fashion and accessories.

The Domain, a $245 million open-air mixed-use center featuring Austin’s first Neiman Marcus, opened this month. It is a milestone in the retail coming-of-age of a metropolitan region where the population has more than doubled since 1980 to 1.5 million in 2005.

Tiffany & Co., Louis Vuitton, Intermix and Barneys Co-op are among the 34 retailers making their Austin debut at The Domain. Openings are planned for Michael Kors, Burberry, David Yurman and Anne Fontaine, and other newcomers include BCBG, Betsey Johnson, Calypso, Cole Haan, Juicy Couture, Lilly Pulitzer, Marciano, Mac Cosmetics, Lacoste, Ralph Lauren and Tumi. There is a Macy’s, Victoria’s Secret and Banana Republic, too, among the 66 retailers and nine restaurants.

“We have targeted Austin as a market we want to substantially invest in,” said Richard S. Sokolov, president and chief operating officer of Simon Property Group Inc., The Domain’s lead developer and the largest publicly traded U.S. retail real estate company. “It has a great combination of quality of life, the state university, the state capital and a very diverse economic job base.”

Neiman’s 80,000-square-foot, two-level store is constructed so that a third floor can be added as the market develops, explained Neva Hall, executive vice president, stores. The company has been eyeing the market for six years.

“We…understand how many Austin customers we have and how much they are spending, and it became very clear that it was time to enter the city,” she said. “It is very sophisticated with high technology and a great entertainment and artist community. They are very savvy people, and they understand fashion and are interested in it.”

Neiman’s has Austin exclusives on Chanel, Prada, Dolce & Gabbana, Roberto Cavalli, Thakoon, Escada and Chloé, Hall said. Following custom, the retailer contracted for works from regional artists and used local limestone, quartz and other minerals to build a store that reflects the community.

With a total of 700,000 square feet of retail space, The Domain is designed as a lifestyle center with fountains, kinetic sculptures and mosaic tile artwork along a serpentine strip of shops with apartments and offices above.

This story first appeared in the April 3, 2007 issue of WWD.  Subscribe Today.

Neiman’s is at one end facing Tiffany and Louis Vuitton and an avenue of luxury stores. The street turns slightly to a second block featuring brands such as Lilly Pulitzer, Madewell and Sony. The final portion of the strip, leading to Macy’s, features Origins, Lucky Brand and Apple, among others. Residential buildings and parking garages are tucked behind one side of the street of stores.

A law firm is the first tenant for some of the 75,000 square feet of office space, and the 380 apartments rent from $920 monthly for a studio to $2,200 for a town home.

“We see these lifestyle centers as an emerging and very important trend in real estate, and we are looking very closely at a lot of lifestyle-center projects,” said Daniel Lalonde, president and chief executive of Louis Vuitton, North America. “It has wide appeal in that it provides many aspects of what the consumer is looking for: high-end retail, restaurants, cinema, places to live. If they’re well done, it’s quite a pleasant environment to spend time in.”

A second multi-use phase of The Domain is slated for 2009 with 350,000 square feet of retail, a slightly heavier entertainment component and an upscale hotel, the operator of which has yet to be named.

Simon is the dominant mall operator in the Austin area with seven major shopping centers, including Barton Creek Square Mall, whose anchors include Nordstrom, Macy’s and Dillard’s. The city’s Saks Fifth Avenue is at the Arboretum Market operated by regional developer Barshop & Oles Co.

Simon began planning The Domain three and a half years ago in response to Austin’s growth. The shopping complex is in an office and industrial district on main roads that link to affluent neighborhoods.

“It’s always been a very good market,” Sokolov said. “It has shown a resiliency — when a sector like technology got weaker, other sectors picked up — and it has gotten increasingly sophisticated in its consumer tastes. That’s reflected by the caliber of tenants that we have been able to attract to The Domain.”

Retail sales at Simon’s Austin centers have met or exceeded the company’s national average of 4.5 to 5.5 percent annual sales gains over the past five years, he noted.

Austin’s economy is buffered by the stability of its largest employer, the state government, plus the University of Texas and its 48,000 students. With the headquarters of Dell Computers in suburban Round Rock employing 17,000 people, technology is Austin’s primary economic engine, including semiconductors, biotechnology, pharmaceuticals and wireless communication.

The city provides easy access to hiking, swimming and recreation in the surrounding hills, and its workforce is well educated: About 44 percent of the metropolitan area’s population age 25 and over hold bachelor’s or advanced degrees, compared with 27 percent nationwide, 30 percent in Dallas and 43.8 percent in the technology enclave of San Jose, Calif., according to the U.S. Census.

The rapid corporate growth in and around the city led to T-shirts and bumper-stickers that urged: “Keep Austin Weird.”

“Austin is maturing,” said Steve Lieberman, chief executive officer of The Retail Connection, a retail consulting, brokerage and development company in Dallas. “It’s historically a very young market and bohemian…and yet it’s the nicest place to live in Texas, and you’re seeing people move down there.”

Austin’s $30,000 median individual wage is the highest of all metropolitan areas in the state, according to the Texas Workforce Commission. Area unemployment was 3.8 percent in February, compared with 4.7 percent in Texas and 4.9 percent nationwide.

The city’s median household income is $50,484 against $46,242 nationwide, and 32.4 percent of households have income of $75,000 or higher compared with 27.7 percent in the U.S., according to the U.S. Census.

The region’s growth set the stage for The Domain, noted Susan Dell, chairman of the Phi designer collection and wife of billionaire computer magnate Michael Dell. She’s seen the city change since moving here from Dallas in 1987.

“Clearly, Austin has evolved,” she said. “There are more professionals, and they dress like people in other cities.” Still, she observed, “Dallas and Houston are a little more fashion-forward.”

In a nod to Austin’s eclecticism, Tiffany has given its Domain store a more fanciful style, said Scott Shibley, retail regional vice president.

“The store is a little more hip in its furnishings and the way it’s set up,” he said. “We used more ornate steel on the exterior and much lighter wood elements and delightful lighting and wall coverings that have a little more fashion feel to them than you will find in our usual Tiffany store.”

Michael Celestino, executive vice president of store operations for Barneys New York, said Austin “has a customer base that translates very well to the Co-op, but it’s also becoming a very forward-thinking type of town.”

Vuitton was inspired by “great growth” at its leased department at Saks here to open a store that carries more categories, including sunglasses, scarves and ties, Lalonde said.

One of the few independent specialty stores at The Domain is St. Thomas, a 20-year Austin fixture for designer sportswear and eveningwear.

“This luxury shopping center is something that Austin has needed for a while,” said Margo Thaxton, marketing director at St. Thomas. “It raises the caliber of designers that we need. This is a huge opportunity and the direction that Austin will be going in the future.”

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