A new $550 million Mediterranean-style shopping mall, years in the making, will open its doors Friday in South Florida's posh Coral Gables community with a garden runway show by Chanel, followed by shopping in some of the most exclusive boutiques in the world.
The Village of Merrick Park mall has signed on eight retailers that will open their first U.S. shops or restaurants, including Ann Gish, Artefacto, Baldessarini and Cafe Ibiza. That's in addition to dozens of other small stores, Neiman Marcus and the Miami area's first Nordstrom.
The developer, Rouse Co., expects its newest project to join the elite collection of ritzy malls that capture the wealthiest shoppers in the nation.
Rouse will follow Merrick Park with a $1 billion expansion of its Fashion Show mall in Las Vegas on Nov. 1.
That mall will have room for eight new or expanded anchor department stores, more than any other mall in the United States. There will be catwalks for live shows and big screen TVs beaming the latest in haute couture. There will also be dozens of upper-upscale shops.
Fashion Show and the Village of Merrick Park show the newest face of Rouse.
"As a strategy, we've been pretty deliberate and clear since mid-1990s that our direction was a portfolio of quality," said Jerome D. Smalley, executive vice president and director of development at Rouse. "We wanted the top centers in the top markets. We identified opportunities that delivered to us those properties through acquisition, redevelopment of existing assets or new development. ... These two [malls] will go right to the top of our portfolio and the top of the industry."
Rouse has 53 retail centers around the country, with four more under construction and two undergoing renovations.
That number includes eight purchased in May from Rodamco North America NV for $1.5 billion. The purchase was considered expensive but a coup for Rouse and the two other companies that split Rodamco's assets. Among the upscale properties Rouse got was Water Tower Place in Chicago.
But retail experts agree that the Las Vegas and Coral Gables malls are like no others the company has developed or acquired in the past. And, despite the lackluster retail environment, especially for department stores, the malls are likely to join the nation's top performers.
Company officials are counting on the two to boost income for the Columbia-based real estate investment trust and further elevate Rouse's image in retail circles.
"Both projects are somewhat of a departure for the Rouse Co., as both are very upscale," said Steven B. Greenberg, president of the Greenberg Group Inc., a Hewlett, N.Y.-based real estate adviser to specialty retailers. "Their tradition has been to develop more middle- to upper-market regional malls. These two projects clearly are very upscale. ... They spent years finding appropriate sites. And they are absolutely right."
Greenberg was so sure of the Rouse malls' success that he recommended that his upscale clients open shops in them.
That's important to Rouse. If it is to earn a return on its investments, the company can't afford vacancies in its multimillion-dollar malls. They need an exclusive collection of shops to meet sales projections, the basis for the rent Rouse charges.
Fashion Show will have new or expanded anchors including Neiman Marcus, Saks Fifth Avenue, Macy's, Dillard's, Robinson-May, Nordstrom and Bloomingdale's Home. There will also be 130 new shops and restaurants. Lord & Taylor and a food court will open next year, all catering to 35 million annual visitors to the region, one of the fastest-growing residential areas in the nation.
Rouse will pay about $350 million of the development costs, with the remainder coming from the tenants. The company will spend $275 million on the Village of Merrick Park.
For its money, Rouse expects sales at Fashion Show to jump from $550 a square foot to $750 to $800 a square foot by its third year of operation. Merrick Park should do $600 a square foot in sales. Rouse's Smalley says those are conservative estimates but par for the nation's top-tier malls.
Rouse and some analysts think the malls will add to earnings immediately and continue to add as the properties mature.
Tenants will pay close to $90 a square foot in rent in some cases, which is expensive but not unusual for high-end malls, according to Mark Millman, of Millman Search Group, an executive search and retail consulting firm based in Owings Mills. Millman has worked to find senior-level managers for Rouse at Fashion Show.
Rouse has found tenants -- the majority of spaces are leased in both malls -- that cater to the wealthy and should be able to afford the rent, said Jennifer Millman, Millman's director of the shopping center division. In many cases, they are exclusive to the region, she said.