Las Vegas Business Press

Monday, March 13, 2006

News

News Update

Big changes planned for Desert Passage

Construction begins this month on revamping the mall's public access to its merchants

BY TONY ILLIA
BUSINESS PRESS

Desert Passage Mall is undergoing a $50 million makeover, shedding its ornate Moroccan theme for a more contemporary look. The move is meant to make the 160-store shopping complex more competitive, while also aligning itself more closely with the Aladdin's $750 million Planet Hollywood re-branding effort.

The $300 million, 475,000-square-foot Desert Passage opened at the northeast corner of Las Vegas Boulevard and Harmon Avenue in August 2000. But the 9/11 attacks caused sluggish sales prompting its developer, Chicago-based Trizec Properties, to sour on the project. They eventually sold it to New York-based RFR Holding in December 2003 for $240.5 million, or $506-per-square-foot.

"It's been over-themed to a degree, and it has been to a detriment," said David Edelstein, co-owner of the Desert Passage. "Given what's being built around us, it's time for us make a change."

An architect's rendering of the entrance to Desert Passage is modern and upscale.

Desert Passage is currently 91 percent occupied with 1.25 miles worth of shops, restaurants, and entertainment venues. Rents range from $80 to $100-per-square-foot, but may climb higher once the improvements are done.

The makeover calls for revamping the mall's entrances, corridors, and valet and parking areas. Construction begins this month. Flagship Construction Co., the project's general contractor, begins work this month.

Other enhancements call for new flooring that makes walking more comfortable; a brighter interior; better lighting; and revamped glass storefronts. San Francisco-based Gensler and the Friedmutter Group of Las Vegas are the project architects.

The mall is expected to become more user-friendly and easier to navigate with the addition of a way finding system, interactive experiences, and better connectivity with Planet Hollywood. The exterior is adding people movers, outdoor sidewalk restaurants, and iconic LED signage similar to Times Square in New York City.

"It won't be heavily themed, but it will a little more sophisticated and entertaining," Edelstein said. "We are clearly defined as a middle market retailer with mass appeal."

Desert Passage has signed 43 new leases in the last year, with restaurants and retailers like Trader Vic's (fall 2006), Pampas Churrascaria (a Brazilian steakhouse opening in spring 2006), Urban Outfitters (fall 2006), and a Nascar store. Other tenants include Benetton, Marciano, Ben Sherman, BEBE Sport, Max's Cafe, Painted with Oil, Sin City Brewing Co. and The Coffee Bean & Tea Leaf, among others.

New York-based RKF Associates and The Related Group handle the mall's leasing. Desert Passage, which currently does $640-per-square-foot in sales, sees about 51,000 shoppers daily. The mall's performance has improved dramatically since RFR's acquisition. Desert Passage previously was only 68 percent occupied with rents of $40 to $50-per-square- foot at the time of its sale. Chicago-based Urban Retail Properties is the mall's third-party management company.

Desert Passage has "tremendous upside potential" thanks to its location on the "50-yard line" of the Strip, said George Connor, senior vice president of retail properties for Colliers International. But the mall was hurt by the Aladdin's problems, Trizec's stated interest in existing in the retail sector and an identity crisis among shoppers, he added.

Desert Passage's exterior improvements are expected to be completed by December, with the interior enhancements finishing in phases through mid-2007.

tonyillia@aol.com | 702-303-5699

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