Nevada has another industry that has grown phenomenally and offers new excitement for both locals and tourists.
While it may never rival gaming, Nevada’s retail industry has experienced amazing changes in the past 50 years. Las Vegas has been the leader in the evolution of retail centers in the state. Resorts have added shopping malls with the glitz and glamour to rival casinos, while shopping centers and malls with more tranquil themes and a variety of amenities have sprung up in the suburbs. Retail experts predict the community, which now has an impressive array of retail centers, will offer even more shopping options in the next two years.
Some of the new projects are described as “lifestyle centers,” an industry buzzword coined about 15 years ago. The International Council of Shopping Centers (ICSC) defines lifestyle centers as open-air shopping centers with at least 50,000 square feet of space dedicated to upscale national chain specialty stores. They feature fountains, park benches and greenery in a retail setting designed to look like an old-fashioned American Main Street. Lifestyle centers have entertainment venues and quality restaurants, and usually include multiplex movie theaters.
“The lifestyle center usually serves as a multipurpose leisure-time destination,” the ICSC said in a recent report. By the ICSC’s strict definitions, the nation has only 100 lifestyle centers, a 300 percent increase from two years ago.
In August the Wall Street Journal reported that these open-air centers have become so popular that owners of enclosed malls are tearing off the roofs and giving their properties a new look. However, Las Vegas also has enclosed mall projects in the works.
“There is a feeling out there that enclosed malls are a thing of the past,” said Patrice Duker, a spokeswoman for ICSC. “That’s not true. However, you are going to see malls evolve, with more landscaping and entertainment and different tenant mixes.” Retail experts say Nevada’s exceptional growth has resulted in a demand for malls and shopping centers of all sizes.
Old-timers in Las Vegas and Reno recall when shoppers had few choices and bought merchandise at downtown stores that were basic by today’s standards. Las Vegas entered a new era with the opening of the enclosed Charleston Plaza and Boulevard malls in the 1960s. Reno went through a similar evolutionary process when retail moved into the suburbs with the opening of the Park Lane Mall. Las Vegas had other breakthroughs in new concepts when the Fashion Show Mall opened on the Strip in 1981 with high-end anchors such as Neiman Marcus. Later The Forum Shops at Caesars Palace gave the community a dazzling variety of shops.
Southern Nevada Retail Booming
Las Vegas retail experts say the area’s growth, an improving national economy and low interest rates are the forces behind the boom in retail-center construction. At midyear, more than 4.3 million square feet of retail space was in the planning stages, according to a Voit Commercial Brokerage report. This was a 54 percent improvement compared to the plans for new space at the end of the second quarter of 2003.
During the same period, the Las Vegas area saw retail center vacancy rates fall from 4.1 percent to 3.6 percent. In another good sign, 220,000 square feet of retail space was absorbed in the second quarter of this year, more than double the amount in the same quarter of 2003.
The market for smaller strip and neighborhood centers remains strong, and they are proliferating because of residential growth, said Terri Sturm, chief executive officer of Territory Inc., a Las Vegas-based developer. Neighborhood centers are usually about 30,000 square feet and are anchored by a grocery store. Over 60 percent of the 247 centers in the Las Vegas area fall into the neighborhood-center category, Voit Commercial Brokerage reported. No statistics are available for the smaller strip centers, which are unanchored.
“There is a lot of activity in the market,” Sturm said of retail development in Las Vegas. “The industry is very healthy. It’s all related to growth.” Her company has developed 2 million square feet of retail space in four Las Vegas centers, which are 100 percent leased. Its largest center is Centennial Center, a 900,000-square-foot power center which includes Home Depot, Sam’s Club, Circuit City and Office Max.
Southern Nevada also has 67 community centers, which are larger than neighborhood centers and have more anchor tenants, as well as 25 power centers, which exceed 200,000 square feet with at least three or four major anchors. Over 40 percent of the new space planned for the area will be in power centers, according to Voit.
“The biggest challenge today is that residential developers are buying up all the land, and you are going to see fewer and fewer really big centers built,” said Voit executive Kit Graski. “You are going to see (retail) services farther and farther away from housing. That’s what has happened in California.”
Las Vegas-based CENTRA Properties and Turnberry Associates of South Florida are joining forces to build a destination for locals that will also attract tourists from the nearby Strip. The partnership’s Town Square Las Vegas will change the look of Las Vegas Boulevard at the south end of the Strip. Located at the intersection of I-15 and the I-215 Beltway, the center will feature a variety of specialty retail shops, anchor stores, restaurants, movie theaters, entertainment venues, offices and a hotel. Town Square is scheduled to open in the spring of 2006. In a retail world with a myriad of definitions, the project is also referred to as a “super regional mall” because it will offer 1.2 million square feet of space.
“The project will attract the nearly 2 million people who live within a 20-minute drive,” said Jim Stuart, who operates CENTRA along with his partner Kenny Sullivan. The partners originally planned to build an industrial center on the site, but changed their mind after they saw the success of the huge Fry’s Electronics store nearby.
Town Square Las Vegas will feature lush landscaping, a carousel and soda pop fountains, and a swanky “boutique” hotel with 200 rooms. Rave Motion Pictures plans an 80,000-square-foot multiplex with stadium-style theaters, high-back armchair seats and other amenities. The developers will also incorporate 180,000 square feet of office space into Town Square Las Vegas.
The project – and the impressive room-sized model featured on this month’s cover – were unveiled earlier this year at the ICSC convention in Las Vegas. Town Square drew interest from a variety of restaurant operations and retailers, including a large-format bookstore and a gourmet grocery store. “Kenny and I thought it was time to create a legacy – an enduring project the community will enjoy,” said Stuart, who took a tour of lifestyle centers nationally. “Every great community has a great gathering place. This is a once-in-a-lifetime opportunity to build a project that is dead center in the Valley.”
The partners are counting on Turnberry Associates’ national expertise to ensure success. The company, which has developed more than $5 billion in commercial and residential real estate projects, is building The Residences (condos and hotel rooms) at the MGM Grand and Turnberry Place, luxury high-rise condominiums just off the Strip.
Turnberry executive Drew Barkett admits he was skeptical when CENTRA first approached him about cooperating on the venture. He changed his mind after researching the site. “Not many sites have this kind of traffic. There is an average of 400,000 cars per day – and 80,000 cars is considered great. This is going to be one of the hottest projects in the United States.” The project may be hot, but Turnberry will make it cool in the summer, with canopies, shade trees, misters and other amenities to ward off the desert heat.
“I have been in the business 16 years and I have never seen this demand,” Barkett said of the interest from prospective tenants. “This center will be a place where you can feel like you are at home. It will be a great place to gather.”
Seven miles south of the Town Square Las Vegas site, the Simon Property Group, a major national developer of shopping centers and malls, plans a mixed-use development with an 800,000-square-foot, two-level enclosed mall. The Indianapolis-based company is in negotiations with Olympic Land Corp. to purchase 125 acres for the development, which will be bounded by Las Vegas Boulevard on the east and Interstate 15 on the west. Plans for the development also include a hotel and casino, residential towers, office space and other amenities, said Tom Schneider, executive vice president of Simon. No timetable has been set for the project.
“This is an extremely well-located project in the heart of the growing population on the south side of Las Vegas,” he said. “Within a few miles of the property there are a dozen master-planned communities, including Anthem, Southern Highlands and Seven Hills.” Schneider said Olympic will have an ownership interest in the project, but other developers will also be involved.
In April, American Nevada Company opened The District at Green Valley Ranch in the master-planned community of Green Valley in Henderson. The District differs from other retail projects by offering luxury condominiums above the shops. “The concept was to create an urban village,” said John Kilduff, president of American Nevada. “We wanted to bring an old-time Main Street look to the Las Vegas Valley. The project has been very well received.”
The 25-acre project has 88 condos in addition to 200,000 square feet of retail space and 80,000 square feet of Class A office space. Some of the offices are on the second level with the condos. The architecture is designed to complement the Green Valley Ranch Station, which has multiplex theaters and a spa in addition to its casino and restaurants.
Because it needs to draw from a nearby large affluent population, this type of upscale center will only work locally in the vicinity of Green Valley Ranch and its neighboring communities (including McDonald Ranch, Anthem and Seven Hills) or within Summerlin in the Northwest Valley, Kilduff said. “You can only build this type of center in a few locations,” Graski explained. “You have to have the right demographics, right developer and right location.”
Triple 5 Nevada closed escrow on 65 acres this summer, which will be used for a mall project on Centennial Parkway near the intersection of U.S. Highway 95 and the I-215 Beltway in the extreme northwest area of the Valley. The 2-million-square-foot Great Mall of Las Vegas will feature a variety of retailers and multiplex theater complexes. Triple 5 purchased 40 acres of the land from the Montecito Companies, which is developing the 200-acre Montecito Town Center. Triple 5 has not revealed all the details of its project, but sources say it plans to have at least one entertainment venue in the mall. The Canadian-based company is known for its giant Mall of America in Bloomington, Minn. It also built the 97-acre Boca Park Center and the adjacent Boca Park Fashion Village on Rampart Boulevard in Las Vegas.
Montecito Companies’ partners Frank Nielsen and Robert Schulman are cooperating with other developers to build their multi-use Montecito Town Center. They believe they have found the right location to serve growing northwest Las Vegas. “There are many new residents in the area, and they are starved for commercial services,” Nielsen said.
The partners have nearly completed Montecito Crossing, a 300,000-square-foot center anchored by a Kohl’s department store. This center will be complemented by Montecito Marketplace at Elkhorn Road and Durango Drive. Construction will start in December and finish in late 2005. It will be anchored by a Smith’s supermarket and include a variety of markets and specialty stores, a supper club and other amenities. The Centennial Academy, a private school (kindergarten through eighth grade) opened this fall in Montecito Crossing. Centennial Hills Hospital, a 400-bed facility developed by University Health Systems, will open within two years. Sierra Health Services also plans a 50,000-square-foot medical building in the Montecito Crossing, which is scheduled for completion by the end of 2006.
The Howard Hughes Corporation plans to start construction on a 400-acre enclosed mall, which will be the heart of its Summerlin Centre residential project east of the I-215 Beltway and north of Sahara Avenue. The corporation, which launched the Summerlin master-planned community 15 years ago, is in the early stages of development on the 1,000-acre community. It plans to build condos, lofts and other high-density residential projects.
The mall, which does not yet have a name, will have four anchor tenants and a row of restaurants facing a boulevard and a central park, said Tom Warden, vice president for The Howard Hughes Corporation. “This will be our urban village and it will be the crowning jewel of Summerlin,” Warden said. “This will be a destination for all of the people in Summerlin. Plans for the project, which will also include offices, are still being formulated. It could be completed in two years, Warden said.
Reno-Sparks Market Strong
Although Reno does not have the same level of retail construction activity, several large projects are planned, said Kelly Bland, senior vice president of Colliers in Reno. “We are seeing continued residential growth. As the community expands, it is creating new sub-markets for retail centers,” Bland said. “There are a lot of proposed projects in Reno and Sparks, but not all will be built.” These centers don’t all fit the ICSC’s strict definition of a lifestyle project, but the developers are using the concept as a blueprint.
Vacancy rates in the Reno-Sparks area, which is about one-fifth the size of the Las Vegas area, are higher than in Southern Nevada, Colliers International reported. However, its 7.8 percent vacancy rate is close to the national average. The area is experiencing rapid growth in retail center construction in areas such as Spanish Springs, north of Sparks. Colliers forecasts that 750,000 square feet of retail space will be completed and 900,000 square feet absorbed this year.
Bayer Properties of Birmingham, Ala. is hoping to draw from both the Reno-Sparks and Carson City areas with its new The Summit Sierra lifestyle center at Mt. Rose Highway and South Virginia Street. The first phase of the center will be between 600,000 square feet and 750,000 square feet and will occupy 72 acres, said Bayer Properties executive David Silverstein. Dillard’s is the anchor tenant, but the other 50 or 60 retailers have not been announced. Many of the stores will be new to the Reno market.
Construction started in August, with the first phase scheduled for completion in the fall. Two or three more phases are planned. “This is a strategic location in a growth corridor,” Silverstein said. Freeway improvements in the area will reduce the commute to Carson City, which is now about 35 minutes, and bring shoppers from that community. According to Bayer’s Web site, 700,000 people will be living in the vicinity of the center by 2010.
Red Development is planning a 1.2-million-square-foot open-air center on 100 acres on Sparks Boulevard near Interstate 80 – a growing residential and commercial area in which a baseball stadium for a Pacific Coast League franchise may be built. Construction is scheduled to start next summer and will take about a year. “The center will be designed to attract tourists with a combination of upscale retail shops and entertainment attractions that will give it a Disneyland-type atmosphere,” said Red Development executive Steve Graham. The center will have a canal running through it offering water taxi rides. “This project will be beyond a lifestyle center,” he said. “Our center will be very close to the freeway, which is important for our retailers. This is a perfect site.”
Red Development, based in Scottsdale, Ariz. and Kansas City, Mo., was formed in 1995. It has built nine retail centers throughout the U.S. and plans to build another 10 by the end of 2005.
Reno has a number of smaller shopping centers in the 100,000-square-foot range scheduled for completion late this year or early next year, Colliers reports. Two power centers in the 600,000-square-foot range are also scheduled for completion next year. Lewis Operating Company is building Damonte Ranch, a power center located on 50 acres at the intersection of Steamboat and Damonte parkways in southern Reno. Home Depot and RC Willey are two of the anchors, Bland said. The center is expected to open in the summer of 2005. The tenants for the Sparks Galleria, a power center in Spanish Springs, have not been announced, although Costco may locate in the center, which will be completed in late 2005 or early 2006.
The new shopping centers are expected to address a weakness in the Reno
economy. The area has experienced strong population growth in recent years with new industry moving in, but the retail market has not kept pace, Bland and other retail experts say. They believe the centers will give the region’s retail industry a fresh look by providing a greater variety of stores and more convenience for consumers who won’t have to drive as far to find a place to shop.
