It doesn’t take long to realise how big shopping has become in the desert destination of Las Vegas – a land that casino gambling once ruled.
Digital signs inside the Forum Shops at Caesars Palace urge visitors to “Shop as the Romans Do” along a nearly 63,000 square metre footpath, complete with a Roman streetscape and talking statues.
About 29 million people visited the Forum Shops while 42.9 million visited Las Vegas last year. That means one out of every two checked out Forum Shops. Retail and nongaming attractions – along with Vegas shows, 149,000 hotel rooms, and top restaurants and bars – brought in more than US$11.2 billion in revenue in 2016, double the US$5.2 billion that table games and slot machines generated.
The appetite for retail is evident up and down the Strip.
MGM Resorts International executives have held discussions to replace the 22 million-gallon Bellagio Fountains with a boutique shopping and restaurant promenade, the Las Vegas Review Journal reported last month.
In 2014, Treasure Island Hotel & Casino drained a lagoon that was used to stage a pirate show in front of the property to convert it into retail, and, in 2015, Bally’s converted a garden into an outdoor mall, the Grand Bazaar Shops, a short walk from Caesars Palace.
The tables turned in 1999 when retail and other nongaming revenue collectively surpassed casino gambling for the first time. The gap has kept growing.
“Retail operations provide greater options for tourist spending, and are a natural evolution for a destination like Las Vegas,” said Brent Pirosch, director of gaming consulting for commercial real estate firm CBRE Inc., who is based here. “While gaming has been fairly flat for years, nongaming attractions jack up revenue and profits, and changing them is “a cost-effective way to refresh a property.”
In 2000, the average trip expenditure for shopping was US$94. By 2016, it was US$156.91, according to the Las Vegas Convention and Visitors Authority.
Retail is so hot along the Strip that it is common to find multiple locations of the same brand.
Mike Mixer, executive managing director in Colliers International’s Las Vegas office, said there have been at least three US$1 billion-plus sales transactions in the last 12 months for mall properties on the Strip: Crystals at CityCentre, Fashion Show Mall, and the Miracle Mile Shops at the Planet Hollywood Resort. “Both high-end luxury and discount retailers are enjoying success,” Mixer said.
Real estate firm JLL highlighted a pair of casino mall projects at the International Council of Shopping Centre’s RECon convention here last month. One of them is the Showcase Mall, which sits on the Strip just north of the MGM Grand Hotel with its recognisable 100-foot-tall Coca-Cola bottle and giant M&Ms that front the property.
“Vegas is evolving, and retail is evolving,“ said Michael Hirschfeld, co-leader of JLL’s National Retail Tenant Services. “The brands now want to be here because the people are here, and based on the stats, they’re here shopping.”
Many of the drugstores and restaurants on the Strip are the most profitable locations of their chains nationwide.
“Some high-end luxury retailers on the Strip can justify their high rent and opulent space design by getting their marketing departments to classify a portion of the store’s operating expense as brand marketing,” Mixer said. “Similar to Times Square in New York City, many see value in the everyday exposure the Strip offers.”
It’s ironic that the original idea of adding retail was a hedge. Las Vegas had to rebrand itself as more than a gambling mecca when the advent of California Indian casinos threatened its desert empire, starting in the 1980s.
Twenty-Five years ago in May 1992, Simon Property Group Inc., unveiled the Forum Shops, a first-of-its-kind retail destination with luxury stores and celebrity-chef restaurants such as Wolfgang Puck’s Spago.
It now houses more than 160 retailers and restaurants and remains among the top-performing enclosed retail centres worldwide, with more than US$1,600 in sales per square foot.
Sources: Philadelphia Inquirer and Daily News