A rendering of how Biltmore Fashion Park will be redesigned.

The Macerich Co., the third-biggest U.S. REIT, has formed a new division called Lumenati to elevate the luxury appeal of its upscale properties.

NEW YORK — The Macerich Co., the third-biggest U.S. real estate investment trust, has formed a new division called Lumenati to better manage and elevate the luxury appeal of its upscale properties in the West and attract chicer tenants.

It’s an unusual subbranding strategy for a real estate company, but it’s also a sign that Macerich wants to further tap the luxury sector that for years has been outperforming other retail sectors. The move also indicates that the developer recognizes that luxury retailers, particularly those publicly held, are under pressure to grow and need venues for expansion.

Macerich has a portfolio of 62 regional malls concentrated in the West and occupying 61 million square feet. The Lumenati division will include eight centers in the West that will be managed by a separate team of executives, including two senior vice presidents for marketing and leasing; three vice presidents for marketing, leasing and property managing, and six merchandise managers who will seek out tenants and work closely with them through the process of finding locations, lease documentation, build-outs and store marketing.

“We’re running Lumenati like a whole business within a business,” David J. Contis, executive vice president and chief operating officer of Macerich, said in an interview. “Lumenati is a brand within a brand.”

“The luxury segment continues to expand. In our just proprietary research, luxury retailers told us they have fairly aggressive expansion plans over the next 36 months, with the West poised for the most growth,” Tracey Gotsis, senior vice president of marketing for Macerich, said in a statement.

The Lumenati group includes five centers in California: Broadway Plaza in Walnut Creek, Carmel Plaza in Carmel, The Oaks in Thousand Oaks, Santa Monica Place in Santa Monica and the Village at Corte Madera in Marin County.

Lumenati also includes three centers in Arizona: the Biltmore Fashion Park in Phoenix, La Encantada in Tucson and Scottsdale Fashion Square in Scottsdale.

The eight centers represent 15 percent of the company’s gross leasable area and average $556 in sales per square foot. Macerich properties overall average about $380.

While luxury retailers already have flocked to New York, Los Angeles and San Francisco, Macerich, through the Lumenati division, will inform retail clients about the prospects of places such as Phoenix, Tucson and Carmel, as well as greater L.A., and about major redevelopment plans at five of the eight centers. For example, Biltmore Fashion Park is redesigning its exterior, restoring outdoor spaces and adding a pedestrian streetscape for better traffic flow. Biltmore has 610,477 square feet of leasable space. At Carmel Plaza, a 30,000-square-foot Saks Fifth Avenue that closed this year will be converted into space for about seven specialty stores.

This story first appeared in the October 28, 2004 issue of WWD. Subscribe Today.

Contis said redevelopments may entail adding anchors, increasing leasable space, conducting renovations and relocating and adding specialty stores, as well as increasing amenities such as valet parking and package drop-offs in certain locations.

Contis said that it’s possible more Macerich properties one day will be managed under the Lumenati organization. One that could qualify is the well-known NorthPark Center in Dallas, where Neiman Marcus operates one of its top stores.

However, Contis said, “We want Lumenati to be small, specialized, nimble and focused. I’ve told our guys we need to work that way.” He said Lumenati was a name that the company made up, though it’s derived from illuminate.

Gotsis said that Macerich’s key luxury specialty tenants include St. John, Tiffany, Escada, Gucci, Louis Vuitton, Hugo Boss and Burberry.

Macerich also released findings from research conducted by Behavior Research Center Inc. for Lumenati, involving interviews with 1,800 high-income shoppers in Arizona and California during September and October, and three-dozen luxury retailers.

Among the key findings:

  • Luxury retailers said 75 percent of their Western shoppers are women, but the shopper survey showed 65 percent are women.
  • West Coast luxury retailers average $883 per square foot. The same stores on the East Coast average $1,456.
  • The retailers indicated there are few, if any, differences in how they merchandise stores on the coasts. Luxury retailers could customize the offerings to maximize sales.
  • 66 percent of Western luxury consumers have household incomes exceeding $150,000 a year.
  • On a 10-point scale, what’s most important in a shopping center: wide selection of high-quality stores scored an eight; and a mix of high-end and middle-priced stores, 7.7. Day spas, dental services and fitness centers trailed.
  • The average age of the West Coast luxury shopper is 53, and 70 percent don’t have children under 18 living at home.
  • Women rank clothing and jewelry as more important than shoes and handbags in defining them as a person.
  • The celebrity fashion icons female luxury shoppers on the West Coast identify with most are Julia Roberts, Susan Sarandon and Jennifer Aniston.

  • About three-quarters of the luxury retailers ranked New York as the top market for sales. In terms of profitability, 50 percent cited California and 50 percent, New York.