EXCLUSIVE: Simon Property Group Lifts Its Luxury Appeal
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The Simon Property Group, sensing strong demand for its space and higher-income customers still spending big, is elevating its luxury appeal through much of its portfolio.
The nation’s largest owner and developer of shopping centers — from off-price outlets to tony upscale enclosed and open-air malls — currently has a particular focus on the Atlanta market.
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“Phipps Plaza has been changing substantially,” Vicki Hanor, Simon’s senior executive vice president of luxury leasing, told WWD in an exclusive interview. “Pre-COVID[-19], we added Gucci, Saint Laurent, Valentino, Tom Ford and Dolce & Gabbana, and earlier this year, enlarged Bottega Veneta and Balenciaga stores. We have an additional 14 luxury brands coming to Phipps,” Hanor said.
Among them are fall 2022 openings for Amiri, Givenchy and Alexander McQueen, and on Monday, Simon revealed that Hermès is moving into Phipps Plaza with a 7,000-square-foot store that’s scheduled to open at the end of the second quarter of 2024. Dior is also under construction and plans to open in spring 2023. The center is anchored by Saks Fifth Avenue and Nordstrom.
At the neighboring Lenox Square mall, also owned by Simon, Ferrari and Tag Heuer recently opened; Louis Vuitton is currently undergoing an expansion, and David Yurman recently expanded. Lenox Square is anchored by Bloomingdale’s, Macy’s and Neiman Marcus.
“Hermès is synonymous with artisanal craftmanship and rich heritage,” said Hanor. “The addition of Hermès at Phipps Plaza is another exciting step in the luxury evolution our consumers expect in Atlanta.”
Hermès will be adjacent to the redevelopment under construction at Phipps Plaza that includes a Nobu hotel and Nobu restaurant, an office building, a food hall, a Life Time Fitness center, and a community park space. The French luxury brand is being designed with a unique feature: An exterior patio where food and beverage will be offered.
“The first floor of Phipps is 95 percent luxury, including the new brands. There has been so much demand for space that we have run out of traditional space, and now we are starting to lease in the lobby of the office building” under development.
“This is going to be one of the best luxury properties in the U.S. Phipps today is incredibly productive. It will be way more productive after we open these boutiques.”
While the first level of Phipps is almost entirely luxury, the second houses less expensive retail tenants, though Hanor said it’s still “highly productive.”
“Atlanta is just an incredibly hot market,” Hanor said, referring to luxury goods, not the weather. “It has a great demographic. There is high demand and it has high-quality shoppers. I lease luxury across the U.S. but I liken the Atlanta market to Las Vegas. It’s a very dynamic market. It pulls from so many miles away.”
She cited growth in Atlanta’s entertainment and sports industries as major factors driving luxury sales. Phipps, as well as Simon’s Lenox Square, are both in Atlanta’s Buckhead community, which is affluent. The two malls share a street corner. Executives at Saks and Macy’s Inc. said last month that Atlanta is among the strongest markets in the country.
“These are two legacy centers that have both been around for a long time,” Hanor said. “For the first time ever we have luxury brands that want to be in both centers. Traditionally they would pick either Phipps or Lenox. But there are five luxury brands in both, including Gucci and Tiffany. What is fascinating is traditionally, they would want to locate in the Neiman Marcus wing of Lenox, but they have started to [enter] into the main area of the mall.
“The luxury story at Lenox is just as strong as Phipps,” Hanor said.
She pointed out that in Indianapolis, Gucci and Louis Vuitton were recent additions at the Fashion Mall at Keystone, and that there is also a heightened focus on luxury at the Stanford Shopping Center in Palo Alto, California; Copley Place in Boston; King of Prussia, Pennsylvania; The Shops at Riverside in Hackensack, New Jersey; the Houston Galleria: Town Center at Boca Raton, Florida; the SouthPark mall in Charlotte, North Carolina, and in Las Vegas, The Forum Shops at Caesars Palace and The Shops at Crystals.
She said Atlanta, in terms of luxury sales, is a top five market for Simon, along with Las Vegas, Houston, Austin and Miami.
“The higher-income consumer is in good shape,” David Simon, chairman, chief executive officer and president of the real estate company bearing his name, said last month when the firm issued its second-quarter results.
“Brick-and-mortar stores are where the shoppers want to be,” Simon added. “Outpacing e-commerce across the world and the broad retail spectrum, demand for our space is extremely strong. Worldwide retailers need to grow, and they’re doubling down on the U.S. International tourism is returning. Domestic tourism is strong.”
