Friday, June 21, 2002 | 11:29 a.m.
Chelsea Property Group said today that is partnering with Simon Property Group, owner and operator of the Forum Shops at Caesars, to build Chelsea's 430,000-square-foot, $90 million outlet mall in downtown Las Vegas.
Chelsea and Simon closed Thursday on 40 acres near the Clark County Government Center, between Grand Central Parkway and Interstate 15, where the two will build Las Vegas Premium Outlets.
The deal is bringing New Jersey-based Chelsea into the Las Vegas market for the first time. It also steps up Simon's presence in Las Vegas beyond its 500,000-square-foot Forum Shops on the Las Vegas Strip, which is the nation's best-performing mall in terms of sales per square foot.
"Simon certainly has a lot of experience in Las Vegas, and they're the biggest retail real estate company in North America," said Les Chao, president of Chelsea Property Group, on bringing Simon into the deal. "They have a tremendous depth of retail knowledge in terms of design -- everything from food courts to layout -- and they have a tremendous wealth of retail experience.
"Also, there's a financial risk-sharing, which is attractive to both partners."
It will be the second joint venture between Chelsea and Simon.
Both companies -- which hold 50 percent each in the partnership -- built Orlando Premium Outlets in Florida.
Chao said the Florida mall does more than $550 in sales per square foot per year -- more than double the national outlet mall average of about $250 in sales per square foot annually.
Chao declined to disclose tenants for the Las Vegas Premium Outlets mall, but said the store roster would be similar to that of the Florida mall. Tenants there include Versace, Tod's, Bottega Veneta, Coach, Max Mara, Donna Karan, Polo Ralph Lauren, Kenneth Cole, Nike and Tommy Hilfiger.
George Connor, senior vice president of resort properties in the Las Vegas retail division of real estate brokerage Colliers International, said the partnership will likely yield a successful property.
"In addition to its vast background in running retail malls across the country, (Simon) brings a great deal of local-based knowledge, which Chelsea certainly doesn't have. Simon knows which stores do well here, and which stores succeed in which locations."
Connor said Las Vegas Premium Outlets won't steal business from Simon's Forum Shops.
"The two properties are complementary. Oftentimes, high-end or luxury stores in malls will close out their goods in factory outlet stores. Both (kinds of properties) often have the same shoppers, but those shoppers are buying different seasonal models."
Chao said Chelsea and Simon expect a mix of locals and tourists at the downtown mall, though he said he's unable at this time to calculate the percentage of business each sector will provide.
Connor said the outlet concept off the Strip is exceedingly viable.
"The concept has proven tremendously successful at Belz Factory Outlet (mall)," he said. "The biggest challenge for (Chelsea and Simon) is to get their mall recognized by consumers. The consumers are here, but they have to know the opportunity exists, and the mall has to be convenient.
"At Desert Passage (at the Aladdin), people didn't know what the product was, so it all depends on a property's promotion to shoppers. Like Belz, (Las Vegas Premium Outlets) is about 10 minutes from the Strip. If they can get their brand out there with billboards and taxicab advertising, they'll be a tremendous success."
Connor also said the outlet concept would be successful regardless of the national and local economy.
"During recessionary times, outlet stores probably perform better than normal. People looking to save a couple of dollars might frequent outlet malls to make their money go further."
Construction on Las Vegas Premium Outlets is expected to begin next month, with completion scheduled for fall 2003.
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