Las Vegas Sun

March 29, 2024

CRE May 2009

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Strip retailers find ways to work with change in consumer spending habits

Click to enlarge photo

The Grand Canal Shoppes at The Venetian

Click to enlarge photo

The Forum Shops at Caesars

Once thought immune from economic problems, the famed Las Vegas Strip has shown its vulnerability in the past year, and the area’s retail component hasn’t been an exception.

But with 30 million-plus annual visitors still the norm even in tough times, Strip retail centers are less likely to have large vacancies, like the many seen in today’s suburban centers, said George Connor, senior vice president of Colliers International’s retail division.

“There’s still a lot of demand. The tourists are here, looking for things to do. They’re just spending in different directions. … A lot of retailers are just having to stick it out,” he said.

“We still had 35 million visitors coming to Las Vegas during the past year. That’s a significant number of consumers. The question is, how much are they spending now? … Taxable sales are down. Certainly retailers are feeling that,” said Brian Gordon, a principal with the Southern Nevada economic research firm, Applied Analysis.

Anecdotally, Connor has heard Strip retailers claim 25 to 30 percent sales drops in the past year. While Strip retail center owners are tight-lipped when it comes to talking about tenant incentives, lease rates and sales, Gordon said concessions are likely on the negotiating table between prospective and even current tenants at Strip retail outlets.

“Showing vacancy can create a snowball. I’m sure they are working with tenants now more than ever,” Gordon added.

Below are some brief snapshots and updates of the Strip’s big retail players.

Miracle Mile Shops

With its transition from the Desert Passage shops nearly complete, the Miracle Mile Shops at Planet Hollywood Resort has taken on a slicker image and fresher look. And, according to vice president and general manager, Russ Joyner, the newly branded site is enjoying 93 percent occupancy, traffic levels of 22 million people for 2008 and a 5 percent climb in traffic for the first quarter of 2009.

“We’ve added 16 new tenants since the same time last year, about 40,000 square feet of space,” Joyner said. “We’re staying busy, and we’re staying relevant. … It feels good to be in the position we are in.”

Some of the new businesses that recently opened or are coming soon include Volcom, DC Shoes, Club Tattoo and several others. Five new stores have opened in the first quarter of the year, said Joyner. Management also recently installed a water feature in place of the street entertainment found near the site’s V Theater.

“The entertainment had a hefty price tag annually. We were able to put together a compelling automated system for a couple million dollars and, in turn, reduce operating costs,” Joyner added.

The Forum Shops at Caesars

The early Strip retail entrant that helped launch the city’s first Wolfgang Puck restaurant, Spago, brings 160 luxury and upscale shops and 13 restaurants to Las Vegas. After adding 175,000 square feet in 2006, along with its famed curved escalator, the site grew to 634,000 square feet.

The center’s director of marketing, Maureen Crampton, said a few new names are coming onboard this year. But some of the movement at the site also will involve existing retailers eyeing more suitable sites for their businesses.

“Different brands appeal to different areas of the shopping center. It’s kind of like pieces of a puzzle. You’re constantly moving them into the right spot,” she said.

Recent and future additions include: Y-3, an Adidas-influenced active and casual wear shop; the jeweler Pandora; Oro Gold Cosmetics; Kush Fine Art Gallery; and jeans maker 7 For All Mankind, which replaced the closed Kate Spade shop. Crampton said several new operators signed longer-term leases, despite the tough economy.

Mandalay Place

With 100,000 square feet and almost 40 stores, the recently rebranded shops at Mandalay Place will see a few new retail faces this year. Flip Flop Shops will complement the Beach at Mandalay Bay well, MGM Mirage spokeswoman, Yvette Monet, said. The shop offers “every type of beach accessory and every style of flip-flop under the sun,” she added.

The Minus 5 Ice Lounge, which opened late last year, has hit its stride, and locals- and tourist-favorite Burger Bar is entering its sixth year of operation.

“Burger Bar continues to be enormously popular, and we are exploring other unique food and beverage opportunities,” Monet said.

A Disney kiosk also was recently built to sell products and tickets for the new The Lion King show that is staged in Mandalay Bay’s theater. Declining to give specifics, Monet said traffic levels at Mandalay Place have been “healthy.” On deck is a new fine art gallery, and management is still looking for a replacement for the recently departed confection-maker, The Chocolate Swan.

Fashion Show

At 1.9 million square feet, the largest shopping destination on the Strip continues its popular run for locals and tourists alike. With its owner General Growth Properties mired in one of the largest bankruptcies in history, Fashion Show still boasts about 250 stores and one of the top sales volumes in the industry.

“Although Fashion Show is not immune to the current economic downturn, our sales and traffic numbers remain relatively strong,” said Laurie Paquette, the mall’s general manager. Paquette said Fashion Show will continue to serve as a gathering place for locals and tourists through the upcoming hot summer months.

Some of the new leases recently signed at Fashion Show include Kenneth Cole, Vans, Rockport, Lids and Aristo Clothing, all of which will open before August.

Fashion Show was originally constructed in 1981 and remodeled in 2003, reflecting its current size. Anchors at the store include Dillard’s, Nordstrom, Saks Fifth Avenue, Macy’s, and Neiman Marcus, which is the chain’s only location in the state.

The Grand Canal Shoppes

at The Venetian

The Grand Canal Shoppes almost immediately hit its stride when opening with the adjacent Venetian hotel-casino in 1999. The gondoliers heard echoing throughout the property’s indoor canals offered a distinguishing characteristic every tourist and local was sure to tell a friend about after leaving the upscale 500,000-square-foot center.

In late 2008, The Grand Canal Shoppes welcomed Paige Premium Denim, the shop’s first boutique in Las Vegas, and jeweler Ben Gioielli & Co., which also opened its first Las Vegas location.

Another General Growth Properties site, company spokesman James Graham insisted bankruptcy proceedings will not have an effect on day-to-day operations for the popular shopping destination.

“Despite the fact that GGP has filed for Chapter 11 protection, that process should be invisible to the visitors,” Graham said. “We think, that given the shortcomings with the economy, these properties (Fashion Show, The Grand Canal and General Growth’s other Las Vegas asset, The Shoppes at The Palazzo) are holding up well.”

The Shoppes at The Palazzo

Opening in early 2008, The Shoppes at The Palazzo will likely take some time to get its retail legs, as it steers through a parent company bankruptcy and the weight of an immensely troubled economy.

The 450,000-square-foot luxury retail destination boasted nearly 30 “firsts” for Nevada when it opened an 85,000-square-foot Barneys New York. With more than 60 retailers onboard, the center also recently opened jeans manufacturer 7 For All Mankind, which also is expanding into The Forum Shops at Caesars. Additionally, The Shoppes at The Palazzo soon will unveil First Food & Bar, another New York concept opening its first location in the Southern Nevada.

Other designer boutique shops at The Palazzo are Salvatore Ferragamo, Victoria’s Secret, Bauman Rare Books, Bellusso, Billionaire Italian Couture, Michael Kors and others.

Wynn/Encore

When Encore opened in December, the challenge on the retail side was to create a set of shops that would appeal to the Wynn customer base without siphoning business from merchants at the adjacent Wynn Las Vegas resort.

Keri Frame, director of stores for Wynn Resorts, said this was accomplished by giving the shops at Encore a distinct identity.

“Encore retail is like a hipper, younger-mentality sister of Wynn,” Frame said. “Not necessarily for a different customer, but just in what he or she wanted to express at that time.”

Customers who need a more traditional handbag, she explained, might first check the Wynn Esplanade shops. If those same customers were in need of a more casual outfit, they might consider Rock & Republic at Encore Esplanade.

Rock & Republic merchandise is available at high-end department stores and boutiques, but the store at Encore is unique.

“This is its first and only free-standing store that we actually own and operate for Rock & Republic,” Frame said. “It’s really taken that brand to a whole new level for us.”

Another store that has been popular is the Homestore, which features a room that replicates an Encore suite. Frame said Wynn customers often compliment the furnishings and inquire about how to purchase them, so offering the items at the Homestore just made sense.

Encore Esplanade has 12 shops and 27,000 square feet of retail space, positioned in a corridor between the two resort properties. The uniform look of the Esplanade belies the individuality of the stores’ interiors. By focusing signature interior design elements within view of passers-by and altering exterior panels, the designers successfully merged symmetry and individuality.

While the Esplanade shops at Wynn are a little older, its roster of high-end retailers is impressive. The list includes Manolo Blahnik, Chanel, Dior, Louis Vuitton and Cartier, just to name a few.

Frame says there was some risk that there may not be enough business to sustain two upscale retail offerings so close together, but it has worked out well.

“If anything, we are walking more people through the property now, because they have two areas to explore,” Frame said. “We’ve been very happy with how we made that happen.”

Bellagio

Everything about Bellagio says luxury, and retail is no exception. The resort offers 85,000 square feet of retail shops, including the exclusive boutiques of Via Bellagio, as well as other options, throughout the property.

Via Bellagio, the shopping arcade at the Bellagio, is easily accessible from the pedestrian bridges on Las Vegas Boulevard and Flamingo Road.

“For visitors, our location in the heart of Las Vegas offers the ease of convenient access — whether by foot or by car,” said Catherine Opsomer, director of retail stores.

“Bellagio’s diverse staff of attentive and knowledgeable sales professionals, as well as our dedication to providing extraordinary guest experiences, have always set us apart from the competition.”

The upscale shops at Via Bellagio include Fendi, Yves Saint Laurent, Prada, Hermès, Giorgio Armani, Gucci, Tiffany & Co., Dior, Bottega Veneta, Chanel and Fred Leighton jewelers.

Outlining the Bellagio Conservatory & Botanical Gardens are the Via Fiore shops that include the Chihuly Gallery, which features works by renowned artist Dale Chihuly; Essentials, offering signature Bellagio merchandise; and Giardini Garden Store.

Other Bellagio shopping includes the Cirque du Soleil store; The Lobby Shops, multiple boutiques that feature designer accessories and gifts; and Capri, a women’s designer sportswear retailer.

CityCenter

Strip retailers will soon have some high-profile company. Crystals, the 500,000-square-foot retail, entertainment and dining district at CityCenter is scheduled to open in December.

CityCenter is located on 67 acres between the Bellagio and Monte Carlo. The project cleared a major hurdle last month when financing to complete the $8.5 billion complex was secured, virtually ensuring it will be finished and ready to open by year’s end.

The spectacular glass-front Crystals will have an entrance on Las Vegas Boulevard, continuing a trend among recently opened Strip resorts to place the retail in a prominent location.

“At Crystals, we’ve joined two preeminent architects, Studio Daniel Libeskind and David Rockwell, to create an international gathering place that combines art, design and experience,” said Bobby Baldwin, president of CityCenter. “Our incredible array of luxury retailers and dining destinations, coupled with a spectacular design, will make Crystals a must-see shopping destination.”

Among the high-end retailers already announced for Crystals are Louis Vuitton, Tiffany & Co. and Ermenegildo Zegna.

Chef Wolfgang Puck will introduce two restaurants: Wolfgang Puck Pods, which will be centrally located on the iconic Crystals staircase, will offer light American and Mediterranean fare; the other restaurant will be a contemporary interpretation of a traditional French brasserie.

Other retailers will include clothier Marni; Mikimoto, which specializes in pearl jewelry; and classic wristwatch dealers Tourbillon and Rolex presented by Hyde Park.

Fontainebleau

The opening date of Fontainebleau, another Strip resort with a significant retail presence, is less certain.

Recent developments have the opening date for the project, which is on the north end of the Strip and well on its way to completion, up in the air. Construction has slowed as a result of a dispute over funding to complete the project.

When done, Fontainebleau will add another major retail venue to the Strip.

The 300,000-square-foot enclosed shopping destination, the Runway, is envisioned to employ imaginative lighting, music, and architectural and sculptural artistry to create a distinctive presence. The retail offering is expected to feature a mixture of high-style boutiques, designer fashion stores, jewelers and youthful brands.

Fontainebleau also is expected to feature 27 bars, restaurants and lounges.

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