In Las Vegas, the desert oasis built on games of chance, shopping is a sure bet.
With almost 40 million tourists annually who are primed to spend, the city is one of the most enticing retail markets in the world. Where else could there be multiple stores with the same nameplate within shouting distance of one another? Chanel has three locations along the four-and-a-half mile Strip, including units at the Shops at Via Bellagio, the Wynn Hotel and in Neiman Marcus. Coach, which has stores at the Fashion Show Mall, Forum Shops at Caesars Palace and Forum Shops II, is said to ring up $60 million in annual sales in the city. Jimmy Choo's boutique at the Shops at the Palazzo is cited by retail experts as an example of high sales productivity; the store is believed to do $3.9 million in annual sales in only 1,300 square feet.
With numbers that compelling, it's no wonder brands are eager to embrace Las Vegas.
And there are more major projects in the pipeline. Las Vegas has 7.2 million square feet of retail space under construction and another 10.5 million planned in the next 12 months, according to Nevada Land, a commercial real estate firm. The question is whether even Las Vegas can support all the stores.
"All these malls are trying to be somewhat unique," said Jeffrey Paisner, executive managing director. "There's tremendous competition for tenants between Taubman, Simon and General Growth," the major mall developers.
The mother of all projects is the $7.4 billion, 66-acre CityCenter, an 18 million-square-foot development consisting of two boutique hotels, a condominium hotel, a resort casino and a shopping, entertainment and dining district. CityCenter, which is part of the MGM Mirage group, will be connected to all MGM hotels — Mandalay Bay, Monte Carlo and Bellagio — by monorail. Taubman Centers completed a 25-year agreement to provide leasing, development and design-advisory services for the 470,000-square-foot retail space.
Robert Taubman, chairman, president and chief executive officer, said he envisions two- and three-level mini anchors. His wish list includes Chanel, Prada and Louis Vuitton, brands that already have second and third stores in Las Vegas. "This will be their main store," Taubman said. "It will be comparable in size to their flagships on the Ginza or on 57th Street. They can do the same volume here. The average sales opportunity will be higher."A Taubman spokeswoman said the company had "nothing to announce" about tenants.
The hum of construction can be heard at the Venetian Resort Casino, where the 500,000-square-foot Grand Canal Shoppes is located. The Palazzo, a $1.6 billion, 50-story extension of the Venetian, will have 3,025 rooms and the 450,000-square-foot Shoppes at the Palazzo. Barneys New York is expected to anchor the Palazzo when it opens this year. Tory Burch is launching a 1,500-square-foot unit at the Palazzo next year and a 1,400-square-foot store at Phase III of the Forum Shops at Caesars Palace. Diane von Furstenberg and Christian Louboutin are close to signing leases and talks are "very far along with Ralph Lauren, Fendi and Chloé," a real estate source said. The Palazzo was also said to be interested in signing Juicy Couture and Michael Kors.
The impact of the Shoppes at the Palazzo on the Grand Canal Shoppes is uncertain. Sources speculated that Jimmy Choo and Burberry would move from the Grand Canal Shoppes to the Palazzo, and the Canal Shoppes would be remerchandised with stores that appeal to younger customers, such as Madison and True Religion.
In 25 years, the Forum Shops at Caesars Palace has grown to 635,000 square feet. When it opened in 1982, Forum Shops raised the bar for shopping in Las Vegas, logging some of the highest sales per square foot in the industry. Forum Shops also was an early example of shopping as entertainment with its cloud-painted ceilings, which change from day to night, and actors and actresses who bring Greek gods and goddesses to life. The Forum Shops had two expansion projects, which were completed in 2004.
"When the Forum Shops opened, there was no other game in town," said one executive, who asked not to be identified. "Then Forum Shops did Phase II and III, neither of which are as successful as the original. Neither is directly connected to the casino. If there's an indicator in Las Vegas, it's that being attached to a casino is important."
Not every proposed development in Vegas gets off the ground. East Village, a New York-themed, 1 million-square-foot retail, office and entertainment complex at Tropicana Avenue and Paradise Road, appears to have made little progress. The projected cost has ballooned from $225 million to $400 million. East Village is the brainchild of Mark Advent, who built the 2,120-room New York, New York Hotel & Casino in 1997.Las Ramblas, a proposed $3 billion hotel and condo complex with 250,000 to 500,000 square feet of street-level retail, backed by actor George Clooney and partners and Related Cos. and Centra Properties of Las Vegas, was a victim of rising construction costs. The project's site on Harmon Avenue, just west of the Hard Rock Hotel & Casino, is said to be on the market.
Other developments seem to be moving forward. For example, the 4 million-square-foot Cosmopolitan will cost $1.5 billion and includes a hotel, condo hotel, convention center, 1,800-seat theater, casino and 300,000 square feet of shopping. According to sources, the Cosmopolitan, which is to open in 2009, is interested in retailers such as Kitson, the hip boutique on Robertson Boulevard in Los Angeles.
The W Las Vegas Hotel, Casino and Residences, also bowing in 2009, just east of the Strip, will combine hotel and residential units, dining and nightlife venues, 300,000 square feet of retail space, a casino and Bliss Spa & Gym. W announced that Fred Segal would open a flagship there.
"When we were planning the W Las Vegas, we imagined Fred Segal not just as our ideal retail partner, but the ideal idea," said Reagan Silber, co-chairman of Edge Group, which is the developer, along with Starwood Hotels and Resorts Worldwide.
Miracle Mile is trying to prove that there's a place in Las Vegas for more moderately priced retail. Miracle Mile is the remodeled and remerchandised incarnation of the Arabian bazaar-themed Desert Passage shopping center in the former Aladdin Hotel, now the Planet Hollywood Hotel. With brands such as Victoria's Secret, Steve Madden, Ann Taylor Loft and Lucky Brand, Miracle Mile isn't putting on airs. "What's happened in Las Vegas is that [Miracle Mile] has become the popular-priced mall," said Robert K. Futterman, chairman of the real estate firm that bears his name. RKF is leasing Miracle Mile with Related. "It's a welcome format for tenants that can't get into the Forum Shops and aren't considered luxury enough for the Venetian."
Urban Outfitters and Ben Sherman recently opened at the mall, Quiksilver added Quiksilver Kids and Bebe unveiled Bebe Sport. Futterman pointed out that rents at Miracle Mile are $125 to $200 a square foot, while other shopping centers are asking for $300 to $500 a square foot."Stores at Miracle Mile do just below $700 a square foot in sales," he said. "They were doing $550 before the mall was acquired three years ago. Compared to the Forum Shops, Miracle Mile would be considered a little more middle market. There's nothing wrong with that market. People aren't window shopping, they're buying."
Town Square Las Vegas, a $600 million, 1.5 million-square-foot superregional lifestyle center under construction on the Strip, is also targeting the broad middle. The mall will have more than 150 stores, including Abercrombie & Fitch, Aldo, American Eagle, Bath & Body Works, Express, J. Crew, MAC, Old Navy, Soma, Victoria's Secret and White House|Black Market.
"We envision Town Square as an oasis on the Las Vegas Strip for both locals and tourists," said Joseph Tagliola, president of retail for Turnberry Associates, which is developing Town Square with Centra Properties. "[Locals] will be able to easily access the center without having to maneuver through the casino and resort traffic on Las Vegas Boulevard. For tourists, Town Square will be a respite from the busy casinos."
Tagliola doesn't believe Las Vegas is in danger of becoming overstored. "When you look at the population of southern Nevada, its rate of growth and the number of visitors coming here every year, it can almost be considered underserved,'' he said. "According to the Las Vegas Convention and Visitor's Authority, there were more than 38 million visitors to Las Vegas in 2006 and more than 5,000 new residents per month moved to Clark County. Las Vegas continues to reinvent itself."
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