Vegas retail focus shifting to Aladdin, Fashion Show, Desert Inn

Wednesday, July 19, 2000 | 11:12 a.m.

After the Aladdin hotel-casino's Desert Passage opens next month, the focus of Las Vegas Strip retail will shift north, a retail expert says.

George Connor, senior vice president of Colliers International's Retail Division, said the 98 percent preleased Desert Passage is the biggest highlight on the retail horizon for the Strip.

But after that, the center Strip will take center stage, with the 1 million-square-foot Fashion Show mall expansion and retail prospects in properties being developed or proposed at the Desert Inn and New Frontier hotel-casino sites.

One of the highlights of the Fashion Show's expansion will be the arrival of the state's first Nordstrom department store. Connor said that and retail to be associated with Steve Wynn's new resort project at the Desert Inn and the proposed San Francisco-themed property at the New Frontier will create interest for at least the next two to three years.

But Desert Passage is what's clearly on the third-quarter radar screen.

"In terms of the entertainment style of retail, we expect it to take the Strip to another level, even beyond the Forum Shops (at Caesars)," Connor said.

Connor said about 100 of Desert Passage's 130 stores will open when the TrizecHahn-developed center debuts Aug. 17. Some of the outlets already have a Las Vegas presence, but Connor said the phenomenon of multiple Strip locations shouldn't impact sales at other stores. The reason: There's such a drastic increase in the number of tourists that the stores will attract visits despite there being multiple locations.

Connor cited Sephora, an upscale cosmetics outlet that opened its first store at the Venetian hotel-casino last year. In the second quarter, the French company with its American headquarters in New York opened its first two-level store, a 40,000-square-foot outlet in Phase II of the Showcase mall near the MGM Grand hotel-casino. It also will have a location at Desert Passage, less than a half mile away.

But Connor said Las Vegas is on a pace to attract more than 37 million visitors in 2000 -- nearly a 10 percent increase over last year, compared with about a 5 percent increase in the room inventory after the Aladdin opens. Connor acknowledged that there are few places in the world in which multiple store locations within a short distance would work and the formula generally works with specialty stores and not department stores. Translation: Don't expect to see another Nordstrom or a Saks Fifth Avenue on the Strip.

Nordstrom, in fact, abandoned plans to locate a store at a proposed retail center at the Mandalay Bay hotel-casino before announcing the Fashion Show deal. Connor said Mandalay Resort Group is playing its plans for its center close to the vest, but that he doesn't expect any progress at that location unless a new retail developer approaches the property with a proposal that includes two anchor tenants.

Connor said rents at Desert Passage are comparable to those at the Forum Shops and at the Canal Shoppes at the Venetian hotel-casino -- up to $180 per square foot per year, which includes common-area marketing costs associated with "shoppertainment." But the rewards also are great: Forum Shops officials recently reported sales averaging $1,400 per square foot, the best of any mall in the United States, and more than three times the national average.

Rents and profits rank it among the nation's elite shopping areas: Fifth Avenue in New York, Michigan Avenue in Chicago, Post Street in San Francisco and Rodeo Drive in Beverly Hills, Calif., Connor said.

Other retail estate trends reported by Colliers International analysts in a quarterly report:

Marker also said restaurant chains Claim Jumpers and Bahama Breeze are looking to locate in the city and Raley's, the city's newest supermarket entrant, is looking to build two or three 60,000-square-foot flagship-style stores in Las Vegas. Raley's took over stores formerly occupied by Albertson's when the Boise, Idaho company acquired American Stores' Lucky supermarket division. Marker said Raley's wants to offer stores that more closely reflect its corporate identity in the Las Vegas market.

In a related report, Restrepo Consulting Group LLC and Lee & Associates Commercial Real Estate Services reported office vacancy at 10.6 percent in the first quarter of 2000, down more than two percentage points from the end of 1999. The report said absorption outpaced new construction, particularly in the northwest and central east submarkets. The companies said the addition of 92,000 square feet of office space brought office inventory to 19.7 million in the Las Vegas area.