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ATLANTA — Lenox Square, a Simon Properties luxury mall here, is launching a $12 million expansion that will add a floor to its Neiman Marcus anchor, along with second-level mall space for high-end contemporary fashion tenants.

Preliminary work has started on the project, which is to be completed by fall 2007. It will add 52,000 square feet to Neiman Marcus’ 153,722-square-foot store, which opened in 1973, expanded in 1988 and is the chain’s only Atlanta location.

The build-on will add 35,000 square feet of specialty retail space. The project will also update the mall’s atrium, which was last renovated in the mid-Eighties.

Wayne Hussey, senior vice president of properties and new store development at Neiman Marcus, said the city’s Buckhead area, particularly Lenox Square, has “continued to gain strength as the fashion destination for Atlanta.”

Simon has yet to announce new mall tenants, but Tisha Maley, the company’s assistant vice president of leasing, said the expansion would include 10 to 15 stores. Apparel will be the primary focus, mostly contemporary fashion retailers offering high-end merchandise to attract a hip crowd, Maley said.

Lenox’s target fashion customers, both men and women, are younger than those at Simon’s sister mall, Phipps Plaza, located across the street, which has updated its tenant mix with contemporary stores such as Jimmy Choo, Barneys Co-op and Theory in the past two years.

“The goal for both malls is new brands,” she said. “It’s time to remerchandise Lenox and freshen up the mix. Like Phipps Plaza, contemporary fashion is performing well, but Phipps targets 35- to 55-year-olds, while Lenox is a younger, 20- to 35-year-old customer.”

Beck Construction, a Dallas-based firm that has done renovations for Lenox Square and other Simon properties, is handling the expansion.

Lenox Square, which is also anchored by Bloomingdale’s, is about 1.5 million square feet with more than 250 stores. It ranks in the top-five performers in Simon’s portfolio. Combined with Phipps Plaza, the malls have annual sales of just under $1 billion, Maley said.

This story first appeared in the November 3, 2006 issue of WWD.  Subscribe Today.