LAS VEGAS-With the Hard Rock Hotel and Casino here about to undergo a $1.2 billion renovation and expansion, including the adding of 950 additional rooms, the planned new retail space is seen as a small piece of an intricate puzzle that is making up the new face of retail in the city’s gaming corridors. A joint venture of Morgans Hotel Group Co. of New York and DLJ Merchant Banking Partners are adding two new towers for extra rooms, and about 35,000 sf of new retail and restaurant space.
The venture declined to speak about the exact nature of the new retail expected for the casino. “We’re still in the planning stages,” says a spokeswoman. However, local retail expert John Restrepo, a principal of the consulting firm the Restrepo Group, tells GSR that he expects the new space will match the current trend of providing high-priced retail stores that appeal to young 20-somethings. “With a hotel like the Hard Rock, you’re going to see them going for the Gen-X or Gen-Y market, it’s not like the stores you’re going to see at the Venetian, which serves an older customer. I’m talking stores like Barney’s, Ben Siegel, Wet Seal, those types of stores.”
Restrepo says casino retail, which he considers “high-density, mixed-use urban entertainment” shopping, is undergoing a dramatic shift in price point and size. “The resort corridor is being transformed,” he says. “All these kinds of high-retail, the Prada’s, the Armani’s, the DKNY’s, are growing in prominence here due to the demand by the diverse tourist. It’s a function of the rising economic status of the tourist and convention markets.”
He says years ago, Vegas didn’t get the upper-class visitors. “It was more for the blue-collar,” he says. “You’re seeing the high-end stores starting to come in. They hadn’t been here before, the demand wasn’t here. But with the success of the Forum Shops and Canal Shops at the Venetian, all of a sudden you have these retailers thinking of moving in.”
Another change, he says, is the size of the new developments. Before, casino hotels had some ancillary retail for guests. The success of popular indoor malls has drawn new interest in upping the size of projects, Restrepo says. “We’re going bigger and higher for retail centers on the main casino corridors, as well as new condominium projects cropping up all over,” he says. “I’m not sure if it will approach one million sf in one retail project, but you’re going to see 200,000 sf to 300,000 sf start being the norm.”
Frank Volk with Robert K. Futterman Associates agrees with Restrepo on the big mall popularity among gaming centers. He has the leasing assignment for the 300,000 sf of retail at the new $3 billion Cosmopolitan Resort Casino, at Town Square, a 1.5 million-sf super regional lifestyle center south of Mandalay Bay, and the 200,000 sf of planned new retail at the $1 billion resort redevelopment planned for the Tropicana. “Today, retail is a necessary component of a casino, whether it’s a separate mall that’s a couple hundred thousand sf or small shopping galleries at 75,000 sf,” he says.
Volk disagrees, however, that high-end is the end-all trend. “There’s definitely a stratification with price-point, casinos are trying to position themselves differently than their neighbors,” he tells GSR. “However, all retail types do well on the strip, even CVS and Walgreen’s do well on the strip. Yes, it’s great to be able to go to a mall and see a Gucci bag, but how many can really afford it? At the end of the day, there’s still a big market for T-shirts, hamburgers and baseball caps.”