Despite initial criticism, a retail gamble in Atlantic City is paying off
By JUDY DeHAVEN
Star-Ledger Staff
Atlantic City, NJ, MARCH 7, 2008 — There was the guy who bought a Jaguar for his wife, then went to the Coach store to pick up some leather goodies to fill up the car, because the Jag alone wasn't enough.
And the woman from Morristown who went shopping while her husband attended a convention in Atlantic City and, while browsing in the Baccarat store, saw a chandelier she just had to have. For $29,000.
And the wife of a former Atlantic City mayor -- which one, they won't say -- who dropped more than $2,000 on youth serum and cleansing products at the Cos Bar cosmetic boutique, including a little something from the ReVive line that cost $1,500.
These are stories from the Pier Shops at Caesars, the upscale mall built over the ocean in Atlantic City where cynics insisted no one could afford to shop. Not the regular gamblers anyway. And certainly not those who live in or near A.C. This is, after all, a place where T-shirts and cheap souvenirs are a thriving businesses.
But in less than two years, the Pier has proven gambling and shopping go together like chips on a poker table.
Since its soft opening with a handful of stores in June 2006, the Pier -- now with 83 shops and seven restaurants -- is performing in the top third of the portfolio of shopping centers owned and managed by Taubman Centers, the Bloomfield Mills, Mich.-based company that also owns the Short Hills Mall, according to Chief Executive Robert Taubman.
While Taubman does not divulge information about its individual malls, being in the top third means something. The real-estate investment trust's portfolio leads the country, with an average of $555 in sales per square foot. By comparison, the typical U.S. shopping mall generated $329 in retail sales per square foot in 2006; in New Jersey, the average was $421.
What's more, the Pier's connection to Caesars helped the casino report 5.1 percent revenue growth for 2007, the largest increase of any casino in a year when the overall market plunged 5.7 percent, due to stepped-up competition from neighboring states and a partial smoking ban.
"Caesars has done much better than the market, and we like to believe one of those reasons is the Pier," Taubman said.
"Absolutely," agreed Caesars General Manager Dan Nita.
The Pier, built across the Boardwalk from Caesars, was years in the making. It replaced the Ocean One Mall, which resembled an ocean liner on the outside with a food court and souvenir shops inside.
The Pier was developed by the Gordon Group, the company that helped revolutionize shopping in Las Vegas with the Forum Shops at Caesars Palace. Taubman had initially partnered with Gordon to manage the Pier, but paid $135 million last year to increase its ownership stake to 77.5 percent, from 30 percent.
At first, the Pier was supposed to open in 2004 at a cost of $80 million. In the end, the four-level complex cost $200 million and opened two years late, with only six stores ready for shoppers. In a few weeks, dozens more opened, from Tiffany and Louis Vuitton to Hugo Boss, Tourneau, Juicy Couture, Gucci and Apple. A third floor now houses eateries, two from the famed Philadelphia restaurateur Stephen Starr.
The rap on the Pier was people would come to look but not shop. But Taubman said shoppers in South Jersey, and even parts of Pennsylvania and Delaware, were desperate for a high-end mall. Its affiliation with Caesars also helped.
Caesars is owned by Harrah's, the world's largest gambling company and the biggest casino operator in Atlantic City. Harrah's is also the Pier's landlord. The company helps entice gamblers from across the country to the Pier by allowing them to redeem two "comp" dollars from the casino for $1 to spend at the mall.
"We have a great retail and dining option that has recognizable names that our customers aspire to," Caesars' Nita said.
The Pier is dimly lit on the inside. Its wooden floors were built to resemble an extension of the Boardwalk. At the far end, patrons are treated to a water show. On the third level, they can sit on beach chairs and look out onto the ocean, with all the comforts of air-conditioning in the summer and heating in the winter. Outside, locals still come to fish from the pier.
Still, a fourth level comprised of nightclubs and a wedding chapel has yet to open. And while there have been rumblings from tenants unhappy with the Pier, Taubman said it is all part of the growing pains of a typical mall.
"It would be completely normal to see a group of stores shake out over the next couple of years," he said.
Taubman is betting big on the gambler's appetite for shopping. His company is opening a mall as part of MGM Mirage's $7.8 billion CityCenter project in Las Vegas. And it recently announced it is acquiring a 25 percent stake in The Mall at Studio City in Macau, which has surpassed Vegas in gambling revenue.
"We have had tremendous interest in casino retail, and we're very, very pleased that we now have been able to really forge a presence in all of the three major (casino) markets in the world," Taubman said.
|
