In Nevada, it seems like shopping centers are built overnight – one minute its an empty piece of land, and the next, a retail power center. The retail industry is consistently moving forward and providing opportunities and challenges that affect all Nevadans in some way. From casino and resort retail developments to power centers and mixed-use developments, the retail market in Nevada is booming.
What’s New?
Les Hiscoe, vice president of retail for Shawmut Design and Construction’s retail group, has the unique job of serving the high-end and luxury audiences primarily in Las Vegas. The company has specialized in developing relationships with retailers such as Louis Vuitton, Apple Computer, Chanel, Burberry, Polo Ralph Lauren, Tiffany & Co. and Cartier. Hiscoe’s job is to interface with the client and bring together a design that serves both the needs of the retailer, but also reflects the casino or property where they located within the Las Vegas market. Though Hiscoe’s office is located in New York, he visits Las Vegas monthly, and is able to see the changes firsthand. It’s Vegas, baby – and the location itself requires retailers to create something special – and, at times, over the top.
The industry is facing something new in the Las Vegas market – an increase of high-end shopping. As properties set themselves apart by appealing to high-end clientele, so does the offering of retail shopping that’s attributed to the location. Most of the high-end shopping in Las Vegas is inside or adjacent to a casino, which means the style of the building impacts the style of the retailer. After all, it’s not simply about purchasing a product, but experiencing the ambiance, as well. However, just like the carefully crafted image that many of these retailers sell, the inside of the retailer’s four walls requires consistent redevelopment, renovation or redesign. Sometimes it’s an update because of a new location, such as those being placed at the new Venetian and in the second Wynn tower. Other times the redevelopments are needed due to high-traffic areas. The more popular the retail offering – the more often it needs to be renovated and upgraded.
Larry Hunt, senior property manager of Summit Sierra Lifestyle Shopping Center in Reno, said, “What’s new is what’s inside the stores.” Hunt manages the Summit Sierra for Bayer Properties out of Alabama, and his job requires him to do everything from coordinating security and maintenance, to interacting daily with the tenants and customers. The property is far from static, and is in the process of building a 16-screen theater and 12 additional retail locations.
Hunt said it’s about how each individual store keeps its products fresh and different. However, Summit Sierra Lifestyle Shopping Center is located in Reno and is still a relatively new development. Currently the property features 70 specialty stores, many of which could only be found in Sacramento before the lifestyle shopping cener opened. These retail spaces include three anchor stores and nine restaurants, along with the theater currently under construction. According to Hunt, the expansion and construction of 12 additional retail locations is due to the positive response the Summit Sierra has received since opening.
Emerging Trends
Matt Bear, co-owner of Venture Development Group, said the trend toward the mixed-use idea of work, play and shop in one location will continue. While he is familiar with mixed-use development, Bear’s company specializes in giving the consumer access to everyday needs, and not just specialty items. No matter how much people want to work, play and shop, Bear’s philosophy is that people still have to make choices in obtaining the items they need for everyday living. With access to many unique retail options, such as lifestyle shopping centers, ultimately people still have to buy the basics. Though Bear believes there is a need for providing lifestyle centers, Bear warns against overdeveloping these types of centers and saturating the market. “Projects should grow organically,” Bear said. “Projects will grow where they want to grow.”
In the world of high-end retail, “the current trend is simple designs that are clean with crisp lines,” said Hiscoe. According to Hiscoe, one trend cycle is currently incorporating more technology, particularly in specialty stores. However, certain brands, such as Ralph Lauren or Tiffany’s steadfastly maintain an image that remains unchanged, particularly since these individual styles reflect the reputation and tradition of those brands.
Carl Marcello is the managing member and broker for Las Vegas Development Group, a commercial real estate development and brokerage firm. According to Marcello, there is more need for mixed-use retail throughout Las Vegas. The right mixed-use retail offerings are capable of serving both locals and the tourism community. However, Marcello acknowledges the importance of recognizing Las Vegas as a young town, in terms of the number of families. “People want a place to where they can walk around, see a movie and grab a bite to eat without having to go to a casino,” Marcello said. With this idea, he believes the town-square style of development will provide this opportunity for local residents.
The trends having the greatest impact on Summit Sierra Lifestyle Shopping Center are the higher level of customer services that each store offers and the efforts made to keep products updated. While Summit Sierra is striving to provide an overall positive experience to the shopper, the center has no formal system set up for customer service. Instead, each store is able to maintain its autonomy within the group, without having to adhere to an unsuitable customer service policy. However, Hunt said he is usually the first person who hears about unpleasant shopping experiences.
“Customer service is key to each store’s success, so it’s not difficult to have the conversation that may rectify future problems,” said Hunt.
The “wow” factor is another emerging trend. “Summit Sierra attempts to provide everything from hanging baskets of flowers to architecture and water features,” said Hunt. Not only is the design put together to promote the easy flow of traffic and access to each store, but the surroundings were designed to please those shoppers who aren’t in a hurry. “It’s not just about function, but form plays a big part in how Summit Sierra presents itself,” said Hunt.
Advantages/Challenges
Currently, the retail industry has the lowest vacancy rates, and Las Vegas is the No. 1 market for chain stores to move into. “Las Vegas is bringing in 6,000 to 7,000 residents each month which means these people need retail services,” said Marcello. In addition, the area receives 50 million tourists each year. This combination increases the need for mixed-use retail venues. With Southern Nevada’s many advantages comes a challenge that most developers are currently facing – land. Finding land to develop in the right places and for the right price is becoming more and more difficult. The increase in construction costs have also provided additional challenges in buying, developing and keeping a property at a price that doesn’t become cost-prohibitive for the end-user. “Another challenge is maintaining great employees, and obtaining enough staff to keep up with the vibrant economy,” said Marcello.
The recruitment of qualified employees is becoming a popular challenge in many industries. “One must find great people who will work well with the company’s philosophy for customer service,” said Hiscoe.
Actually, the balance is fairly unique as employees must be both technical and able to understand every aspect of construction, while still being able to work with clients. Typically, staff who have advanced technological skills are often lacking when it comes to valuable management experience, according to Hiscoe. Ultimately, Shawmut has committed to a robust recruitment program that allows the company to consistently seek out and mentor the best in the business. In fact, Hiscoe recounts a baseball metaphor he once heard from a recruiter, “It’s a numbers game. Major League Baseball lists 720 professional baseball players. Each year, only 27 make the All-Stars team and yet, 2 million kids join Little League each year.” He continues to maintain that all-stars can be found, but a committed effort is needed to find them.
“As a developer, the challenging thing about suburban retail is that it’s homogenous,” said Bear. Venture Development Group has to figure out where the population is moving to, and whether its members are underserved or overserved. Primarily, Bear said, it’s a matter of determining who the customers are and finding good real estate at prices his company can afford, coupled with good traffic in an area of town that’s underserved. And like Hiscoe, finding a great staff for the project is a central key to success. Not only is finding the right team imperative, so is a continuing commitment to upgrade his current team.
As with any new project, challenges are associated with getting the word out about businesses located in new developments, as well as properly promoting the products and services offered. Before the lifestyle shopping center opened, many of the stores now found at the Summit Sierra could only be accessed by driving over the mountains between Reno and Sacramento, according to Hunt. Part of his job is to communicate to those potential shoppers that they no longer have to make that drive. That effort has coalesced into developing a series of creative events designed to reach out to the community and funnel traffic to the stores and restaurants. By hosting special events, local residents can participate in the festivities with more convenience. In the process, those residents also become more educated and aware of the food and shopping opportunities found at Summit Sierra.
The success of Summit Sierra originates from the merchandise mix and the location. The company worked with the Nevada Department of Transportation (NDOT) and the city of Reno to create one of the best traffic-light situations Hunt has ever seen. The traffic flow is smooth due to the planned lights and roundabouts.
Future of Retail Development
Marcello has visions for the future. Some are in conjunction with current trends, and some are somewhat out of the mainstream for Las Vegas. Having grown up in Rhode Island, Marcello has been impacted by the East Coast’s architectural and cultural identity. Because mixed-use is the future of retail, Marcello foresees the opportunity to bring “more character to development.” This means less stucco and more color. His ultimate dream is to build a Las Vegas Little Italy that would appeal to both locals and tourists. This opportunity will provide young families with a place to visit where they can enjoy a diverse and unique retail offering, while providing a destination for tourists similar to communities in New York and San Francisco.
For now, Marcello said the future will bring more diversity to shopping. “We haven’t seen it all, and don’t have it all, yet,” he said. While places such as The Forum Shops at Caesars have taken high-end retail to the forefront, he said, high-end retailers from the East Coast, such as Barneys, still don’t exist in Nevada. However, he promised, “They’re coming.” More chain restaurants will be moving into the area, but he also predicts more unique one-of-a-kind restaurants will move to the Strip corridor, as well.
Hiscoe expects that retail will continue to be impacted by the fact that, “society in general is crunched for time.” In fact, he said, this topic is brought up constantly in his industry. “There will be an increase in the number of lifestyle centers,” said Hiscoe. “The upscale retail centers in Las Vegas seem committed to keeping pace with this reality.” Casinos have become more than just a place to gamble, they are recreational lifestyle centers. The casino and resort clientele can see a show, shop and eat – all at one location.
Retail design will continue to be influenced by tenants who want to provide what the public demands. Instead of consumers adapting to what the tenant is offering, the consumer actually has serious power in determining the outcome of a building’s design and the services its tenants offer. “When Starbucks first started, their locations not only did not offer drive-through options, the company did not want them,” said Bear. However, the customer dictated that they indeed wanted drive-through windows, and now, Starbucks rarely builds a location that doesn’t offer this option.
At the Summit Sierra, Hunt said the future is all about introducing additional high-end options to the local consumer. He said that since the Summit Sierra has opened in Reno, there has been an increase in the interest of high-end retailers considering locations in this area. This added interest inspired the addition of 12 more retail locations within the lifestyle shopping center.
It’s clear that the retail industry is booming in Nevada. Regardless of the challenges, changes and ideas industrious professionals are busy creating offerings that can stand the test of time, while still accommodating the audience.
