HOUSTON — We have a gusher.

Long in the shadow of Dallas, Houston retail is exploding with a profusion of new luxury and contemporary stores.

The Galleria mall, which has emerged as the city’s premier destination for high-end shoppers and retailers, this year is creating an all-luxury corridor between anchors Neiman Marcus and Saks Fifth Avenue. Burberry, Christian Dior, Ferragamo, Jimmy Choo, Lalique and Movado all will open stores there this spring and summer. Luca Luca bowed Dec. 15, and the previous month Louis Vuitton nearly quadrupled the size of its Galleria store to 6,795 square feet with 4,780 square feet of selling space. The old store was 1,700 square feet.

“Houston became one of the attractive cities for us because it is a growing market, and the Galleria is taking a new turn in its expansion,” noted Yildiz Blackstone, president of Luca Luca. “Our new store there is doing amazingly. We were immediately able to catch tourists. The second day, Beyoncé came in and did her shopping for New Year’s and holiday outfits.”

The Galleria crafted the 100,000-square-foot luxury strip by moving less pricy stores to a new 700,000-square-foot wing that opened last March, anchored by Nordstrom and Foley’s. The expansion elevated the mall to the fifth-largest retail center in the country, with 2.4 million square feet and average sales per square foot exceeding $600.

“Unlike other cities, where the luxury shopping might be more splintered over several centers, Houston is much easier for the luxury retailer and shopper — the Galleria is the place to go,” observed Eugenia Ulasewicz, president of Burberry U.S. “It’s a great fashion market.”

The surge in retail development is driven not only by the Galleria’s expansion, but also by the city’s economic strength and its underdeveloped retail scene. Though Houston is the fourth-largest metropolis in the nation with a population of 1.9 million, according to the 2000 U.S. Census, industry observers and shoppers say its fashion offerings have lagged.

“Luxury retail is long overdue for the size of the city and the income,” noted Larry Plotsky of The Plotsky Group, a real estate agency that specializes in retail. “We’ve always had the money and the inclination. If the stores open, people buy. But the [wholesale] market centers of Dallas, Atlanta, San Francisco, Los Angeles and Chicago have always been ahead of Houston in specialty retail. Most people think Dallas is a bigger city.”“I’m thrilled to death that all of these designer stores like Dior are coming to Houston because I want to shop and keep my dollars close to home,” said Becca Thrash, a socialite and couture customer who chaired Vuitton’s opening gala in November. “The variety and selection will be a lot more exciting.”

Thrash lamented that she’s bought most of her clothes outside the city because the hometown high-fashion pickings were slim. “A great deal of my friends are fashionistas, and they all feel the same way,” she added. “It will be interesting to me to see if they stock Houston boutiques with the more fun, unique runway pieces.”

The number of independent fashion retailers is swelling rapidly, as well.

Specialty stores are sprouting in the affluent River Oaks, Montrose and Westheimer neighborhoods that stretch west and southwest from downtown toward the Galleria. Among those that have opened in the past year are Images, Couture, Merrill & Watson, Jeans Couture, Bella and Get With It, which are all contemporary boutiques, plus Principessa, which specializes in Lilly Pulitzer, and Glo, a high-end accessories shop.

“In the last two-and-a-half years, a lot of stores have opened, whereas before we had almost no good street retail,” Plotsky observed. “We are developing a traditional inner city and inner-city retail that we are kind of behind on.”

Virginia Leffler opened Merrill & Watson in September with a partner, stocking Autumn Cashmere, Citizens of Humanity, Margaret O’Leary and Milly, among others. “It’s been going really well,” said Leffler, who formerly managed a clothing boutique in Boulder, Colo. “Price doesn’t seem to be an issue, which is nice. We had $600 cashmere sweaters and we weren’t sure how they would go, but we sold all of them and didn’t have to put them on sale. I wish we had had more.”

The retail growth is spurred by Houston’s strong economy. The general downturn following the Sept. 11, 2001, attacks did not hit Houston as hard as other parts of the nation because energy prices remained fairly high, and oil and gas are the bedrock of Houston business.“When energy prices are high, that is good for Houston,” said Tim Hopper, senior economist with the Houston office of the Federal Reserve Bank of Dallas. Job growth in the Houston metro area is projected to be 2 to 2.5 percent this year on a base of 2.1 million jobs, he pointed out.

That represents a return to the city’s trend during the boom of the late Nineties, when consolidation in the energy industry brought an influx of white-collar jobs to Houston. Even during the national recession of the new millennium, employment in the Houston area remained relatively stable with minimal losses.

“It’s all about momentum and the direction of the economy, and right now it’s strong,” Hopper said.

That’s evidenced by an effort to revitalize the city, especially downtown, with public and private projects valued at more than $4 billion. Since 2000, three new sports stadiums have opened, including Minute Maid Park and Toyota Center downtown. In December, the George R. Brown Convention Center celebrated its $165 million expansion to 1 million square feet. An adjacent Hilton Americas Hotel, the largest in the city with 1,200 rooms, opened in November.

Last month, Houston’s first light rail line opened to link downtown with Reliant Park, a four-year-old football stadium that hosted the Super Bowl this month. The rail line also runs through Texas Medical Center, the largest freestanding medical center in the world, and Rice University.

Four new office buildings opened downtown within the past six months — the first major new construction downtown since 1986, noted Pamela Lovett, president of economic development at Greater Houston Partnership, a chamber of commerce.

“We are poised for a tremendous year in ’04,” Lovett said. “All the statistical data, as well as anecdotal data from talking to ceo’s, reflects optimism.”

Evelyn Gorman, owner of the designer specialty store Mix, noted that her customer base and sales have expanded since she opened five years ago.

“The economy is very good here right now, comparatively speaking,” she observed. “Houston’s cost of living is reasonable, and the standard of living is high. It’s an energy city, and people need oil. It’s about the money.”Gorman, who carries Lanvin, Balenciaga and Proenza Schouler, speculated that retailers also are discovering Houston because its image is improving.

“The word is out that Houston is sophisticated,” she said. “[Retailers] know that not only do the women have the money, but they have the taste. They know they can sell those clothes here.”

As Jimmy Choo president Tamara Mellon put it, “Houston has the right customer base. They love luxury brands and are very fashion-forward and directional, so it’s definitely got our customer. We went into the Galleria because we were amongst the right neighbors, like Yves Saint Laurent, Cartier, Chanel and Tiffany.”

One attraction of the Galleria is its big draw of tourists, which generate 30 percent of the mall’s revenue. “The majority of that is Latin-American traffic that is very wealthy and a very good customer base for luxury retail,” pointed out Greg Vlahos, vice president of leasing for Simon Property Group, which bought the mall two years ago.

The Houston Galleria has more square footage devoted to luxury tenants than any other Simon center, except the Forum Shops at Caesars Palace in Las Vegas, Vlahos noted.

Many of the luxury retailers opening in Houston noted they already do business at anchors in the mall.

“With the consistent history of strong Ferragamo sales at Neiman Marcus and Saks…Houston has been a targeted retail niche for some time,” said Massimo Ferragamo, chairman of Ferragamo USA. “Furthermore, Houston customers call Ferragamo boutiques in Florida, Los Angeles and New York for product not yet available in Houston. There have already been overwhelming calls for Ferragamo’s ‘It’ bag for spring, the Gancini Mediterraneo.”

Louis Vuitton, which has had a presence in Houston since 1984, carries all categories of merchandise in the Galleria store.

“Houston is very fashion conscious and already had one of the strongest LV businesses in the country,” a Vuitton spokeswoman said. “It made perfect sense to expand and to increase our classifications.”

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