LAS VEGAS RETAILING ON A ROLL
Byline: Teena Hammond
LOS ANGELES — In Las Vegas, pricier retailing seems like a sure bet.
In fact, this desert mecca is blossoming with high-end shopkeepers, led by the Forum Shops at Caesar’s, which will more than double its size in August to bring in such marquee names as Emporio Armani, Polo/Ralph Lauren and Niketown via a $100 million expansion.
As the Forum adds 283,000 square feet, bringing the highly successful indoor mall to about 533,000 square feet, other glitzy resort complexes are reeling in upscale tenants of their own.
Giorgio Armani, Chanel, Gucci, Hermes, Tiffany & Co., Fred Leighton and Prada are the latest to sign leases in the Bellagio resort opening next fall on Las Vegas Strip, according to Frank Visconti, senior vice president of retail operations for the parent Mirage Resorts Inc. Mirage’s plan is to build a 90,000-square-foot mall in the $1.4 billion hotel and casino and even operate some of the retail stores itself, including Moschino and La Perla stores.
Following that, TrizecHahn Centers will open the $750 million Aladdin hotel and casino in fall 1999 with 450,000 square feet and 150 stores of “better, bridge and couture merchants,” though it’s too soon to specify, according to Mel Valiquette, director of entertainment leasing for TrizecHahn.
The Fashion Show mall, which opened on the Strip in 1981, is also planning an expansion, said Robin Faulk, interim marketing director for Fashion Show mall. The 840,000-square-foot mall is anchored by Saks Fifth Avenue, Neiman Marcus, Dillard’s, Macy’s and Robinsons-May. The Rouse Co., which owns the mall, is expected to announce details of the expansion this week.
“The better women’s retailers are doing extremely well. We’d like to add more,” Faulk said.
Just last February, the Rio Suite Hotel & Casino opened the $200 million Masquerade Village retail project with 60,000 square feet for stores, including Nicole Miller, Guess and Speedo.
The developers are anxious to test their luck in retailing after seeing the overwhelming success of the Forum Shops at Caesar’s, which posts $1,200 in sales per square foot and is considered one of the most productive malls in the country. The mall opened in May 1992. In addition, the city’s phenomenal growth rate and booming tourist trade is spurring the retail trade.
“It seems that retail is often matching or outgaining gambling in this city,” said Randy Aguilar, retail marketing manager for Masquerade Village. “Las Vegas ignored the retail market for a long time, but we’ve accepted that gamblers are coming in with money, and they do have other needs and desires than gambling.”
Masquerade Village was created with the Forum Shops in mind and hopes to eventually pull in sales equal to those at the Forum Shops, Aguilar said. Per-square-foot sales are a “little bit lower than the Forum right now,” since the mall opened less than three months ago, he said.
Nicole Miller opted for a 2,500-square-foot site at Masquerade Village instead of in the Forum’s expansion because of the high cost just to get into the Forum Shops, said Bud Konheim, chief executive officer of Nicole Miller.
“It was $1 million key money for the Forum,” Konheim said, explaining that Nicole Miller would have had to pay $1 million just to be allowed to sign a lease at the mall, on top of rent and standard costs to open a store.
Rents in the Forum Shops’ expansion area are “in excess of $250 and $300” per square foot, though the rates at Masquerade Village are comparable, Konheim said. But the cost of doing business in a high-end Las Vegas project is worth it, he said, because sales are so high. The Masquerade Village store is pulling in $1,200 per square foot, compared with $700 per square foot from the 1,400-square-foot Nicole Miller store at Fashion Show mall, he said.
“The only thing that sells in Vegas is the sexy, top end of our line,” Konheim said. “It’s really glitter and go.” In Vegas, it’s the $800 to $1,200 Nicole Miller dresses that sell, compared with the $400 average elsewhere, he said.
Other retailers haven’t balked at paying the high lease rates at the Forum’s addition, said Deborah Simon, senior vice president of Simon DeBartolo Group. Simon DeBartolo and Gordon Group Holdings are joint developers of the mall.
“We’re 95 percent leased with only one vacant spot,” Simon said. The final lease for approximately 14,000 square feet is expected to be signed any day, she said, declining to name the likely tenant.
The mall attracts about 60,000 visitors daily. They’re attracted by the mall’s impressive architecture, entertainment features, prime location on the strip and its long hours, said George Connor, retail broker for the Las Vegas office of CB Commercial, a real estate firm. The mall opens 10 a.m. daily, and many retailers stay open late into the night, some until 11 p.m. Others stay open until the mall closes at 1 a.m.
Construction on the expansion began in January 1996. The first phase is attached to Caesar’s Palace, which also fronts the strip. The expansion is scheduled to open Aug. 29 and will connect at the west end of the first phase. The design of the new phase will be similar to the first, including the barrel-vaulted, day-to-night ceiling painted like a Mediterranean sky. It periodically changes from bright sunshine and clouds to a midnight blue version dotted with stars and a gleaming moon.
In addition to multimillion-dollar fountains with animatronic Roman figures and security guards dressed like gladiators, there will be plenty of new retailers in the expansion. In addition to Emporio’s 6,400-square-foot unit and Niketown’s 14,500-square-foot stores, Bernini Sport is opening a 5,400-square-foot store; Fendi’s will be 2,400 square feet; Shauna Stein will have 4,000 square feet; Polo’s will measure 8,900 square feet; Max Mara’s will encompass 2,500 square feet, and Rampage will have 6,500 square feet.
Armani A|X currently occupies 3,000 square feet in the original Forum Shops, but it is moving to a new 5,100-square-foot site in the expansion. Salvatore Ferragamo, new to the mall, will take over the old Armani A|X spot, Simon said.
The existing Forum Shops has only one level of shopping. In the expansion, the facade for each store will be designed as a three-story villa, which will give the tenants the option of using the additional space to open two- or three-story sites.
All of the tenants except for Niketown and Ferragamo are expected to open on Aug. 29. Niketown will open this fall, and Ferragamo will open in late September. Niketown will have two floors, along with Emporio Armani, Virgin Megastore, Alfred Dunhill Cigars and Chinois, which is Wolfgang Puck’s restaurant. FAO Schwarz will occupy three floors, while Polo is considering opening a two-story site, Simon said.
The Forum Shops is known for its upscale tenants, such as Gucci, Gianni Versace, Versus, St. John, Plaza Escada, Louis Vuitton, Christian Dior and Stuart Weitzman, which helps to push up the high per-square-foot sales at the mall.
Yet, less pricy merchants are also bullish about the location. Bebe president Manny Mashouf said his 2,700-square-foot site is the best-performing unit in his 82-store chain, pulling in per-square-foot sales of $1,500 annually.
Simon said she thinks the mall is popular because of the tenants. “It’s accessible to just about everyone.” In addition to the upscale retailers, there’s Banana Republic, “so everyone can walk away with something,” Simon said. Banana Republic is scheduled to open a 17,000-square-foot site in the original section of the mall in August. Other moderate retailers include Victoria’s Secret, Express and Structure.
Rampage ceo Larry Hansel said he “aggressively pursued” the chance to open a site at the Forum Shops and hopes the 6,500-square-foot site posts about $1,230 per square foot.
“It’s just such a fabulous property, and it’s so visible. The best retailers in the world are there,” Hansel said.
The Rampage store will be a prototype and will carry 40 to 50 percent designer labels such as Jill Stuart, Betsey Johnson and Michael Kors. The average price in the store will be $150, nearly triple the $60 price at typical Rampage sites. The shift is geared to make up for the high rent at the mall, he said.
“We’ll target a more sophisticated, older, a little bit better customer. Price is no object in this center,” Hansel said.
Most of the merchandise in the Forum Shops unit will be exclusive to that location, although some of the designer clothing will also appear at the Rampage store in Beverly Center in Los Angeles, where the average price is also moving up, he said.
The mall can handle such high prices because people in Las Vegas “like to splurge, and this is a perfect place to splurge,” said Jack Kyser, chief economist for the Economic Development Corp. in Los Angeles.
Las Vegas is the most visited tourist spot in the nation, with 30 million people visiting the city last year.
“Usually, when you’re in Las Vegas, you’re crawling through the casinos, and sounds of slot machines are ringing in your ears. The Forum Shops are sort of like a welcome breath of fresh air,” Kyser said.