Fashion Show Owners Dreaming Big

LAS VEGAS -- Major changes could soon be in store -- again -- for Las Vegas' Fashion Show mall, including the addition of a casino and one or more high-rise hotel/residential towers, a representative of the property's owner said Friday.

"We've got an existing, successful mall with successful retailers who we have to think about," said Dan Sheridan, local executive vice president with General Growth Properties. "Really, we have no choice but to look at" further growth at Fashion Show.

No decision has been made on which, if any, proposed changes will occur, but Sheridan said General Growth will determine a direction by summer. He said it's "unlikely" the 24-year-old property will remain as is.

The Chicago-based real estate investment trust acquired the popular Strip shopping center and the master-planned Summerlin community in mid-November upon completion of its $12.6 billion acquisition of The Rouse Co. of Columbia, Md.

Prior to that deal, Rouse and its tenants spent approximately $1 billion to construct Fashion Show's nearly 900,000-square-foot western expansion, as well as a 117,000-square-foot eastern renovation that included new stores, restaurants and the mall's signature 128-foot-tall exterior feature called the Cloud.

Those projects opened in November 2002 and October 2003, respectively, making Fashion Show one of the nation's largest shopping centers at approximately 2 million square feet. It had 822,700 square feet of retail space when it opened in February 1981.

Despite recent improvements, Sheridan said, Fashion Show's location on Las Vegas Boulevard South is too valuable for a world-class shopping center alone. Gaming analysts recently said land on the Strip could sell for $15 million to $20 million an acre.

"The (epicenter) of the Strip is moving north," Sheridan said.

Talk of expanding Fashion Show "is about keeping that location relevant in the context of what else is going on around there. ... We'd be stupid not to look at additional uses," he said.

Fashion Show is directly north of Treasure Island, west of the Wynn Las Vegas and northwest of Las Vegas Sands Corp.'s planned Palazzo resort. The latter will include another mall owned by General Growth, which also controls the adjacent Grand Canal Shoppes at The Venetian.

One block north of Fashion Show, Donald Trump and partner Phil Ruffin are building two high-rise hotel-condominium towers as Ruffin contemplates plans for a new megaresort at the New Frontier site he controls.

Boyd Gaming Corp. could also redevelop its Stardust site north of the New Frontier, a move that would add another megaresort between Spring Mountain Road and Sahara Avenue.

In a Feb. 3 research note, Merrill Lynch Vice President and analyst Steve Sakwa said General Growth is wise to renovate and expand. Over the next five to 10 years, he said, the company should spend about $400 million per year to build new centers and upgrade its older ones.

"The dual benefit of improving the existing centers with expanded offerings, as well as limiting future competition, makes these prudent uses of the company's capital," Sakwa wrote regarding General Growth's portfolio in general. Sakwa's report did not address hotel or casino components, however.

General Growth ended 2004 with $25.6 billion in assets, including nearly $48.4 million in cash. Financing an expansion is not an issue, Sheridan said. And despite an apparent lack of open land around the mall, new development would not require demolition of now-occupied space at Fashion Show, he added.

A two-story, 138,000-square-foot space on the mall's north side has been vacant since spring 2003, when May Department Stores Co. decided not to build a planned Lord & Taylor department store at Fashion Show. That site would be suitable for a high rise, Sheridan said, adding more development could occur on the roof of the existing center.

Sheridan was uncertain if General Growth would take on partners if it decides to build hotels or a casino. Founded in 1954, the company has for decades focused on shopping center ownership and management.

But John Bucksbaum, General Growth's chief executive officer, said the Rouse acquisition was the first of many steps that could soon diversify his company's holdings.

Rouse was the parent company of The Howard Hughes Corp., the experienced community developer behind Summerlin.

"As we see a blurring of lines in things we're doing, having a relationship with builders could give us some crossover opportunities," Bucksbaum said earlier this month.

Sheridan added it's too soon to say if Fashion Show's proposed residential component would include traditional housing for year-round tenants, time-share units, or a combination of the two.

"We're looking at all of our options," he said.