From Las Vegas to Macau, the synergy between stores and gaming presents myriad opportunities.
Not long ago, it would have been difficult to imagine Robert Taubman, chairman and chief executive officer of Taubman Centers Inc., strolling down the Atlantic City , N.J., Boardwalk. He's not a gambler and his highly productive shopping centers, which at $540 a square foot lead the real estate investment trust industry, are primarily situated in affluent urban and suburban settings, including Los Angeles and Short Hills, N.J.
But there's a new dimension to the portfolio and it's growing. Last year, Taubman Centers took a 77.7 percent stake in The Pier Shops at Caesars, which juts into the ocean off Atlantic City's Boardwalk and has attracted luxury players Burberry, Bottega Veneta, Gucci, Scoop NYC and Salvatore Ferragamo, as well as many more moderate-priced retailers.
In addition, Taubman is developing a 920,000-square-foot studio-retail complex at the $2 billion Macao Studio City project on the Cotai Strip, scheduled to open in mid-2009, and leasing a 500,000-square-foot retail setting for CityCenter, MGM's $7 billion "vertical city" on the Las Vegas Strip in late 2009.
"It's become very clear that casino-retail relationships are very, very synergistic," Taubman said in an interview. "We're seeing some of the highest performing retail stores, especially at the higher end, the luxury tenant, sitting in these gaming markets."
That's true for Salvatore Ferragamo, which operates 25 retail stores in the U.S. "Our Las Vegas store generates about two-and-a-half times the revenue of our average mall store," said Vincent Ottomanelli, president of Ferragamo USA.
Ferragamo's 12-year-old Las Vegas store in the Forum Shops at Caesars is 5,500 square feet, versus the typical 3,500-square-foot unit the Italian brand operates. "In Vegas, all of the folks you compete with have big presentations, so in order to be successful, you must have a strong location," Ottomanelli said, adding that Ferragamo is strategically situated in a corner near Louis Vuitton and Gucci, and has "great frontage....It's the presence that we went for."
Along with its high productivity, Ferragamo's Vegas store is unusual in its breakdown of sales. Ottomanelli said the typical Ferragamo store in the U.S. does 56 percent in women's sales, 40 percent in men's, and the rest in children's, sunglasses, watches and fragrance. In Vegas, it's almost the opposite, with men's accounting for 56 percent of sales, driven by shoes, duffel bags and other large luggage, and women's 40 percent. Within women's, 25 percent of sales are handbags, with a price point average of $1,500. In a typical store, handbags represent 20 percent of women's. "That 5 percent represents a lot of business," Ottomanelli said.
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