Reinvestment in properties key, General Growth CEO says

Kevin Rademacher

Wednesday, May 25, 2005 | 10:54 a.m.

John Bucksbaum has been riding his bicycle from the Las Vegas Strip through Summerlin a few times a year since the mid-1980s.

The chief executive of General Growth Properties Inc. rides down Sahara Avenue to Rainbow Boulevard and then west on Charleston Boulevard through the master-planned community and into Red Rock Canyon National Conservation Area. He makes the trek each year when he is in Las Vegas to attend the International Council of Shopping Centers convention.

The ride took on special meaning this year, the first since General Growth completed its buyout of The Rouse Co., which has long-standing and long-stalled plans to build Summerlin Centre, a 1.5 million-square-foot mall, near Sahara Avenue and I-215.

Las Vegas-area real estate executives joked this month that the company couldn't possibly unveil the Summerlin mall at the ICSC event since the plan had been introduced at the convention several times in the past.

"You can't really announce that one anymore," laughed Christina Roush, first vice president for investment properties with CB Richard Ellis' Las Vegas office.

With General Growth in charge, those plans are still in the works despite changes in the retail landscape in the northwest part of the Las Vegas Valley.

"The residences and apartments extend further and further west (on Charleston) each year," Bucksbaum said Tuesday at General Growth's sprawling booth at ICSC. "Eventually, you saw retail centers built along Charleston with a lot of nice retailers, like Pottery Barn. ... I would think, by gosh, (The Rouse Co.) is letting all these retailers escape from them."

Now that he is leading the combined company, Bucksbaum said taking so long to get the Summerlin mall going was a smart move.

"Waiting and not going forward too early was the right thing to do," he said, adding that the more mature nature of Summerlin and the clear picture of consumer patterns leaves little doubt for retailers looking to enter the project. "There is going to be tremendous opportunity."

He also said that the high-end retailers already doing business along Charleston will not likely be deterred from the new mall.

"I think Summerlin Centre will attract the best that retail has to offer," Bucksbaum said.

Still, General Growth does not have a definitive date for a groundbreaking on the mall. At the convention, General Growth signage listed a spring 2007 opening, and company executives said development would take about 18 months.

In developing the Summerlin mall, Bucksmaum said the company will weigh the new center's effect on other properties controlled by General Growth. With the buyout of Rouse -- which was the parent company of Howard Hughes Corp. -- General Growth now owns Boulevard Mall, Grand Canal Shoppes at the Venetian and the new shopping district that will open with the Venetian's Palazzo expansion.

The company also owns Meadows mall and Fashion Show mall, which Bucksbaum said are likely to be affected by the new Summerlin Centre. With that in mind, General Growth will balance the shopping patterns of existing customers.

He said such a problem is a good one to have.

"Each one of them serves pretty distinct trade areas," Bucksbaum said. "We can alter what one center represents and tinker with that and ... give the customer in one area distinct choices."

He added that the retailers that would be entering the new mall will have a good idea of how the new center would affect their traffic patterns, particularly in a more mature Summerlin community.

"Retailers are pretty good," Bucksbaum said. "They know Summerlin. If a Fashion Show retailer opens a Summerlin store, they know what's going to happen to the other."

Competition, he said, is something that retailers and mall owners are getting better and better at addressing as the industry continues to become more and more heated.

"While the industry is good, it is challenging for retailers," he said. "Probably greater than it's ever been. If you make the slightest mistake, the retailer pays for it almost immediately."

That level of competition is visible in everything from the rise of new community lifestyle centers and retailers branching out with new concept stores, such as Sears Grand, outlet malls and the proliferation of Target and Wal-Mart.

For mall owners, the pressure is on to create properties that become a community attraction, maximizing the retailer's chances for success. Bucksbaum also noted that, more frequently, retailers have choices just like consumers. In Las Vegas, for example, while General Growth makes preparations for Summerlin Centre, Triple Five Development also is planning its 2 million-square-foot Great Mall of Las Vegas and Centra Properties and Turnberry Associates are planning the 1.5 million-square-foot Town Square Las Vegas.

"It all goes hand-in-hand," Bucksbaum said, "You have to do things that distinguish your property. It's never been more critical to reinvest capital into your property ... If retailers don't see that reinvestment being made, it's going to give them cause for concern."

One reinvestment success, Bucksbaum said, was Rouse's renovation to Fashion Show mall. Completed in late 2003, Rouse spent $1 billion renovating the mall and adding square footage that made the Strip property the valley's largest mall at 2 million square feet.

Bucksbaum said that Fashion Show got off to a slow start following the renovation but has found its stride over the past year.

"In the first year or two after the expansion started, it was off to a slow start," he said. "But in the last 12 to 18 months it has really come into its own. We've seen dramatic increases in visitor counts and sales productivity.

"The opening of the Wynn hotel has done a lot to bolster traffic into the mall. We are very excited."