Q&A: Russ Joyner, Miracle Mile Shops

By Buck Wargo

Friday, May 14, 2010 | 3 a.m.

Russ Joyner knows something about competition at a high level, and he doesn’t like to lose.

A former Boston College football captain who had a brief stint in the NFL, Joyner in 2004 took over a team that was at the bottom of the standings and was facing stiff competition.

Joyner, 49, that year was named general manager of Desert Passage, the shopping mall at the Aladdin that was transformed into the Miracle Mile Shops at Planet Hollywood.

Football has helped him in business from a competitive standpoint, he said.

“It inspired me to take on something that had potential and a can-do mind-set that ‘we can make it happen,’ ” Joyner said.

“You look at from where we started to where we are, I am feeling pleased and optimistic applying that mind-set and skill set to achieving something today that is a competitive option on the Las Vegas Strip.”

The retail center appears to have gone through a great turnaround with its sales and occupancy increasing since 2004. With its lower price point, the mall has positioned itself to capture tourists on the Strip looking for that rare shopping value.

The mall is owned by TriStar Capital, RFR Realty and Robert K. Futterman & Associates.

IBLV: How did you get involved in this industry?

Joyner: I got into retail property management in the mid-1980s after a stint playing professional football. At a friend’s recommendation I came out to the West Coast to look at an opportunity and take my degree and see what I could do with it. I stumbled into the shopping center business in 1986 in San Mateo (Calif.). The first job I could find was a retail position and another was a security detail at a shopping center. It gave me a chance to network, meet people and earn some money on the side and see what opportunities presented themselves. I met the center manager at the time, and he took a look at my resume and thought I might have a career in retail property management. It turns out that shortly thereafter I got hired by TrizecHahn as an assistant general manager and was with that company for 17 years. I managed 10 properties during that time in Los Angeles, New York, Northern California and the like. It was a career I didn’t aspire to, but it certainly turned out to be worthwhile.

What did you get your degree in?

My degree was in business administration with a marketing concentration from Boston College.

You played at Boston College as a linebacker?

I was the captain of the football team. My senior year we played in the Tangerine Bowl — the first bowl for Boston College in 40 years. It set the tone for a lot of great things to happen to B.C. since then — Doug Flutie’s Hail Mary pass to Gerard Phelan and the series of wins over Notre Dame. I graduated in 1983. I was two years with Doug Flutie. He was starting quarterback my senior year. He was a sophomore. He was just capable of doing great things from Day One. As anyone who has come to know him, he was the magician we all thought he was.

What about the NFL?

I was with the Pittsburgh Steelers in 1983 and one year with the Indianapolis Colts in 1984. Injury … caused me to take a look at my options and move on. There were no guarantees in the NFL, and it was a case where I had done enough to say I did it and was in a position to move on.

How big was the contract?

Back then, the rookie salary was like $45,000 and coming out of college that was considered pretty good.

So the professional football career didn’t work out?

It did and didn’t. From a longevity standpoint, no it didn’t. It was a journeyman’s experience. But for the life experience, it was most rewarding. To set your goals and realize it wasn’t the finish line, but opening your eyes to a lot of opportunities and ways to handle yourself. Everything has a reason and my ability to be here today doing what I do is probably all related to the timing of the whole experience.

How did you end up Las Vegas?

It was after a completing a five-year stint in Los Angeles opening, developing and managing Hollywood & Highland, which is the home of the Kodak Theatre right in the middle of Hollywood. It was an opportunity when TrizecHahn was interested in selling that property for me to explore my options. Subsequently, I heard of an opportunity through a headhunter that the Fashion Show mall was looking for a general manager. Twelve interviews later I was offered a position. In December 2003, I came to Vegas to manage the Fashion Show mall.

How long were you at the Fashion Show?

It was a grand total of six months. The reason being, in short, I was recruited away by the developers of what was once Desert Passage and is now the Miracle Mile Shops. It was a compelling offer that gave me the opportunity to participate at the ground level of really groundbreaking change and conversion.

Who owned it at the time?

In early 2004 a group of three companies acquired it from TrizecHahn. They were TriStar Capital, RFR Realty and Robert K. Futterman & Associates.

What was going on at that time?

Desert Passage had been open since August 2000, and it had endured some growing pains and some challenges. It was owned by the same company I worked for and it was also up for sale. When you consider the Aladdin Hotel, it opened as a property that was not necessarily an upscale luxury destination. Desert Passage was originally conceived with an upscale tenant mix. There was a disconnection between the two entities. (The Aladdin was) dealing with bankruptcy issues. There was a time the property as a whole was in great transition: occupancy challenges and tenants who were at the crossroads of what they intended to do and what they were actually doing. There was some turnover to deal with. The center was at a phase where change was going to be best for it.

What was the occupancy rate when you started?

It was hovering in the upper 70s to 80 percent range. It was underutilized, and it wasn’t maximizing the true value of the property.

What was the problem?

Although the hotel enjoyed high occupancy, many of the patrons used it as a place to sleep — but their dining and shopping and entertainment options were sought elsewhere. The property as a shopping venue never got a chance to maximize its value at the time. I guess it was fortuitous and opportunistic for the new owners to take advantage of that and assess where the opportunity was.

Was it because the people staying at the hotel weren’t into upscale shopping?

That’s part of it. But overall, when you consider the central location of the property — (the reason it wasn’t doing as well as it should) was the fact was that it wasn’t getting its fair share of the customers traversing up and the down the street. It wasn’t the destination that we needed it to be to generate the kinds of results that we needed. Those results are both in retailer support as well customer support. We still had a wish list of retailers that we wanted to attract, and we were having a hard time convincing them this was a destination for them to be a part of.

Why wasn’t it a destination for people passing by on the Strip?

We were able to have good success in terms of traffic, but not the results. There were better options on the Strip. We didn’t have enough retail credibility at the time.

Why weren’t they buying?

Originally the center was leased with a high-price-point tenant mix. Quite frankly, there were other players in town doing a better job with that: The Forum Shops (at Caesars) was the best of the best and still is; the Fashion Show mall. We were at a place we were trying to rebrand as something that would be attainable by going after the midlevel market as opposed to competing with the tried-and-true luxury players in town.

What did you do?

We began by looking for signature tenants and convincing them that our strategy was going to change. Our strategy was to renovate the property — (it) needed to be brought into a contemporary theme. The restrictions (on the property) that predated us made the architecture of the mall the story of the property as opposed to the retailers being the story. (The renovation) gave us a fresh look. Retailers were able to be the brand they wanted to present as opposed to the brand they were dictated to present. The architecture should serve as a complement to the retail tenant mix. That was the beginning of the evolution of the Miracle Mile Shops.

What was done?

The renovation was completed in May 2007. That was when we converted to the Miracle Mile Shops from Desert Passage. It was probably in excess of $60 million, and when you add the tenant improvements, there were increases as well. We decided we needed to change the face of the property, the curb appeal of the property so that the millions of those who traverse, walk and drive in front of the property have a better understanding as to what this property is. It is 1.2 miles around, 170 shops, restaurants and entertainment venues (in 475,000 square feet), but the story wasn’t being told sufficiently to the customer that was right at our doorstep. We decided to take that on and make the entrance to the property much more user-friendly.

What was the change?

The name Desert Passage wasn’t descriptive enough to tell the average customer of what was going on inside. We used the name Miracle Mile Shops — the retail connotation Miracle Mile has from other destinations across the country. On the exterior, we did some things to make it more inviting. We have two 6,000-square-foot video walls that have given us an opportunity to tell a story to the Strip.

What else did you do out front?

We created a plaza experience where people felt comfortable about that being a place to dwell. This was done in concert with the conversion of Aladdin to Planet Hollywood.

How did the takeover of Aladdin by Planet Hollywood help?

We recognized the only way we could be successful as a retail destination and hotel-casino destination was that we needed to pool our efforts and resources. We looked at the property as a whole like it was a campus. We look at the hotel and casino as part of what makes the whole property compelling, and we like to think we offer the same to support the hotel.

How did the remodel affect business?

It has been quite remarkable. Our sales were sustained 15 months during construction where we experienced increases. Additionally, we had gotten to a high-water mark of the low $700s (a square foot in sales per year) during that phase just prior to the recession. With that, we had a number of retail success stories where plenty of our merchants were enjoying top of the chain results. We have been able to prove results in sales and develop results in traffic. We continue to reach new highs to date, but we think it has a lot to do with the appeal of the property as a destination.

How have you been doing?

We finished 2009 at just over 22 million visitors, which is 2 percent over the prior year, which was during the recession, and year to date in 2010, we are at 7 percent over last year.

What is your shopper profile?

Our tenant mix is shopable midprice with a broad appeal, and our customer matches the average visitor to Las Vegas. We are 90 percent tourists and 10 percent residents. We are 85 percent leisure traveler and 15 percent meeting and convention traveler. We are 50-50 male and female. Our median age is 38, and the average household income is almost $90,000.

What were sales when you came here in 2004?

We were probably in the low $500 range when we first got on board. We had increased our numbers a couple of hundred dollars a foot through that journey, and more important, we were able to make substantial strides in our overall traffic. We had a $60 million annual sales increase from the time the property was taken over to the end of the calendar year 2009. We acquired or created a total of 77 new lease deals or 244,000 square feet of new lease activity. Much of that had included space that had never been leased before and so those are the kinds of things that showed what we were able to accomplish.

Did you think a turnaround was possible?

The property has always had good bone structure — a great location and lots of possibilities. We needed to develop some momentum by bringing in some signature retailers that were going to allow us to beget more. The combination of explaining ourselves to the marketplace and making the overall experience worthwhile — something as simple as the décor. We changed the flooring. It was a cobblestone. People would complain it was hard to walk on around the property. We changed that completely.

Was it the price point falling that had the biggest effect?

The price point had a lot to do with it from the early days of the property when we had a disconnect with what the customer wanted versus what we had to offer. During that transition period where we had a lot of interim leasing going, we were bringing the kinds of uses that were popular — “destination first to the marketplace” kind of tenants that gave us credibility.

Who did you attract that you didn’t have before?

H&M and Champs, Lucky Brand Jeans, Quick Silver and Benetton. The combination of going after a more youthful and exuberant inspirational market has given us the momentum that we need.

What are the traffic numbers going back in history?

At the time in 2004 it was a very solid number, we were at 15 million. We have gone from 15 million to 22 million at the end of 2009. In 2007, we were at the low 20 million. We were able to increase our numbers during the recession. In 2008, we had 20 (million) to 21 million. We never took a step backward in our traffic numbers.

What about sales?

Our high water mark was 2008. By the fall of 2008 is when we saw things decline. In 2007, we were in the low $700s. During the recession, everyone took a dive. People stopped spending. We still maintained traffic, but the customer wasn’t spending to the same level.

What occupancy rate did you have right before the Wall Street collapse and right after?

The mid-90s. Surprisingly we maintained stability because most people believed that the formula of Miracle Mile Shops was the one that was going to persevere. We had most people looking to just regroup and reorganize as opposed to bailing and leaving the center. We didn’t have the kind of resistance in terms of wanting to leave that we encountered when we first took over the property.

So where did you end up with sales during the recession?

In 2009, we finished the year down 10 percent from 2008. We were still in the mid-$600 range. We, like everyone, had to regroup and find ways to minimize the downturn. Our slogan at the time was that if we could finish down 10 percent by the end of the year, down 10 was the new up to find a consolation prize to the whole experience.

What about 2010?

Remarkably from December 2009 to April 2010 we had five straight months of sales increases. We finished March up 16 percent with a number of our stores achieving the highest sales volume since they have been here. You combine that with a year-to-date total of plus 10 percent in terms of overall sales per square foot. We are very encouraged by these results along with that we probably have 60-plus tenants that are in the double-digit sales increase category year to date. That is very heartening for us to achieve those results.

Is it because of CityCenter?

CityCenter is part of it. During these times when customers are looking for value for their dollar, we offer the right product at the right place at the right time for the right price. Those factors make us uniquely positioned to be a destination and be relevant to a large portion of the customer base that makes its way to town. You combine that with the hotels doing what they have to do to lower room rates, fill hotel rooms and make it affordable for people to continue to seek out Las Vegas as a destination. As a result, we offer something they want.

So in a way you have been helped by the recession?

In retrospect, it ended up that way. It seemed like we were more of a desired alternative than ever before. The critical mass that was coming to Las Vegas was gravitating to us, and not only coming and visiting but also spending dollars. You see that as a result of what is going on up and including 2010 results. That is encouraging, and we use that momentum to go after our wish list of operators. Once upon a time, it was a race for luxury and can you top this as to what are the most luxurious options that you find? The recession has caused people to take a fresh look at that as a priority. We stayed to a formula throughout. When we initially started with the Miracle Mile concept, the goal was to allow those who do that luxury best to continue do what they do, and we will focus on mainstream America.

Are you in better position than others going forward in 2010 and 2011?

Selfishly, we think so. We think we are and we are not content with what is going on today. We are continuing to look for “first to the marketplace” or at the same time comparable uses that make us an all-encompassing destination. As long as the value is the name of the game, we have a seat the table. As we continue to grow, we are very encouraged by our prospects.

Do you think you will continue with that strategy?

The strategy is solid and something we can continue to grow with. In five to 10 years, we will provide a selection and be unique and desirable. I don’t think affordable will ever go out of style, and we will continue to look to that and grow accordingly.

Do you see the Forum Shops, Shoppes at the Palazzo, Grand Canal Shoppes, Fashion Show mall and Crystals as your competition?

They are competitors to some degree because we have some common merchants, and as you look at our campus, everyone has a hotel and casino. What we want to be able to do is offer an alternative where our collection of shops provide an overall mind-set that I am going to find an affordable series of choices — that I am going to be inclined to find something I am looking for at a price point in my range.

Is there an oversaturation of high-end retail?

One would think that when you consider where demand is gravitating to and how much duplication there is. It stands to reason that there very well can be and at this point, you look at how some are faring these days there is certainly a danger of that.

What about Crystals and CityCenter’s effect on you and the potential from Cosmopolitan?

We welcome Crystals as an addition to the Strip. The whole CityCenter concept is a wonderful thing. We are rooting for CityCenter to be successful. It has a formula, being a higher-end luxury. It is a destination everyone wants to see. The fact we are in proximity gives us a chance to offer a series of alternatives (visitors) may be inclined to experience. But the (Planet Hollywood) Towers just got on board, which is another 1,200-room tower connected to our property. The conversion of Planet Hollywood to a Harrah’s property and the whole thing that is being done to blend the whole thing is important. We believe CityCenter is a factor, but not the sole factor. Cosmopolitan brings opportunity for critical mass in the area and helps us tell the story we are trying to tell that this is a destination that should be experienced.

How has the Harrah’s takeover of Planet Hollywood affected you?

It is very positive in a variety of ways. The fact that we have a spirit of cooperation with Harrah’s is a very strong stabilizing thing to work with. Harrah’s has the formula down on its worldwide database marketing program and its demographic is very similar to ours and as a result we are in constant search of ideas and ways for us to take maximum advantage of those things. Harrah’s, which has multiple properties in the area, is a way in which we can be positioned as the latest jewel in the crown of its network. We in turn are very encouraged about what Harrah’s brings to the table and the spirit of partnership.

What does it do?

In terms of cross-promotions, we are looking forward to that. (Harrah’s has) a rewards system in which frequent gamers are given incentives, and through our brand of goods and services it has another vehicle which to offer to its customers. It helps us generate sales and them retain loyalty.

So Harrah’s properties have the Forum Shops and you?

We cover both end of the spectrums of that affordable, wide range of choices and entertainment instead of just having high-end options for their customers.

What stores would you like to add?

We have a wish list of tenants and some of them are already in the marketplace. We think we would welcome everything from Apple to Yard House to California Pizza Kitchen, the Cheesecake Factory. Our H&M store needs to gain some size to keep up with the demand as well. We are continuing to cultivate that list. We are a few weeks away from the annual shopping center conference, and we would like to see what the marketplace is offering. To name a couple of more — Top Shop and Calvin Klein are names that we would like include in our tenant mix.

How much ability do you have to add stores?

We are at 475,000 square feet. We are still in the 91 percent occupancy range, but we have the opportunity to consider conversion on a case-by-case basis.

And it was 95 percent occupancy before the recession?

Yes. We had some vacancy comings and goings and the best thing I can say about what we experienced we were able to absorb some vacancy with results that were very quickly remedied. Trader Vics closed and Hawaiian Tropic Zone closed. With those two locations we had a bidding war. In 2009 we lost them both and replaced them both. Trader Vics is now occupied by Cabo Wabo restaurant. Hawaiian Tropic Zone will be replaced by PBR rock bar — Professional Bull Riders and they are slated to open in July. We are excited about the potential of that use to add to our collection.

What about the Wyrick Theater?

The Wyrick Theater closed in December and we executed a deal on the first of April for now what will be known as the SaxeTheater. David Saxe owns and operates the very successful V Theater, which is probably one of our, if not the top-producing operator within the center. He has demonstrated an ability to know how to market in this marketplace and operate an entertainment venue in a shopping center, which is not a typical scenario and do it to a level of excellence. When we were looking at our options of who to consider, we concluded our best opportunity was right within the confines of our property.

What is going in there?

He is going to have another series of entertainment choices. It is a 450-seat venue that enables him to attract a theme show and leaves himself the option of having headliners and a number of opportunities that otherwise would not be available to us and it would be hard notch to fit. It is large enough and intimate enough to bring some compelling options. He is slated to open in early June.

What was the problem?

The predecessor was an entertainer and magician and was very capable at what he did, but David Saxe is more of a businessperson.

Does this type of concept work there?

It is concept that we think will not only work but bolster the experience of the shopping center. The kinds of traffic he has been able to generate can do nothing but help our retail and dining experience.

What about Krave nightclub and Harmon Theater being in bankruptcy?

We are working with them to sort of weather the storm while keeping our options open. When you look at Harmon Avenue today and the look of the development of the Clark County (undeveloped lot) and look at Harmon Avenue complete with all the construction and CityCenter being the end of the rainbow, that whole corridor has upside possibility.

Are some of these problems and losses related to the recession?

Everyone had problems related to the recession. There were those that were positioned to weather it and those where that was the last straw.