A rendering of the new setting for luxury brands at Scottsdale Fashion Square in Arizona.

Macerich said today it will begin a phased project at its Scottsdale Fashion Square in 2017 to enhance the iconic 1.9 million-square-foot center with a renovation of the luxury wing followed by the addition of residences, class A office space and a hotel to maximize the property, which does about $750 per square foot in sales or more than $650 million annually.

“Clearly we’ve seen the numbers grow over past few years,” said Robert Perlmutter, chief operating officer of Macerich. “We expect to increase the square foot sales and total sales of the center.”

Adding mixed-use elements to shopping center sites has become a growing trend as malls increase density with captive audiences. “As we demonstrated with Tysons Corner Center, and most recently with Broadway Plaza, our company has the talent, resources and vision to add density to our top properties for even more value, performance and sustained growth,” said Art Coppola, chairman and chief executive officer of Macerich.

“We’ve seen a lot of residential growth in downtown Scottsdale,” Perlmutter said. “Mixed-use enhances the golden goose in terms of retail.”

The first phase of the project will be to update and refine the luxury wing, after consolidating the 40 brands spread throughout the center, including Cartier, Bottega Veneta, Louis Vuitton, Gucci, Tiffany & Co., Bulgari and Prada. Eight to 10 new to the market luxury brands will be added.

The wing, which is anchored by Neiman Marcus, will have a new grand entry flanked by two-level luxury flagships and exterior facing retail buildings.

“We’ll create a dramatic court for two prominent tenants with exterior storefronts,” Perlmutter said. “For customers, the freestanding stores are as attractive as the inline locations.”

The luxury wing will be designed using finishes that “physically elevate it from the balance of the center,” Perlmutter said. “We’ve created an atmosphere with an entrance with valet services. We’re also going to add a concierge, resort-level restrooms and marketing programs tied to luxury customers and the hotel base in Phoenix. The whole idea is to make it easier to come and shop the luxury wing without having to walk through the whole center.”

Perlmutter admitted that a slowdown in international guests may be affecting some brands. “Clearly, a number of retailers will talk about the impact from the tourist business,” he said. “Phoenix has a large tourism base, but it tends to be domestic and foreign. The growth of Phoenix and growth of sporting events has created a good sales environment.”

Louis Vuitton has signed a new long-term lease at Scottsdale Fashion Square with plans for a major store renovation in 2017. “We’re excited about Macerich’s plans for Scottsdale Fashion Square,” said Anthony Ledru, ceo of Louis Vuitton Americas. “The luxury market in Arizona is strong and on the rise, and this property is the right real estate in the region for our brand.”

Perlmutter said Louis Vuitton won’t relocate to the luxury wing, but rather, will stay in its location at center court.

“I’ve watched the amount of people who now live here on a yearly basis change in last five to 10 years,” said Tim Braun, vice president of Neiman Marcus. “We’re an above average producer for Neiman’s. We cater more to the luxury market and are very unique in the designers we carry. We have a very fashion-forward and sophisticated customer who believes in luxury and has needs for different lifestyles, including evening attire for philanthropic events.”

When Scottsdale Fashion Square opened in 1961 it was an open-air center with Goldwater’s Department Store and a handful of specialty shops.

The mall’s development plans call for a dramatic arrival point off Goldwater Boulevard. From the street, the two-level luxury flagships, and a restaurant with spill-out café seating will be visible.

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