CREJ - Retail Properties Quarterly - February 2016
When Saks Fifth Avenue closed its doors after 20 years at the Cherry Creek Shopping Center in 2011, it was up to the mall’s general manager, Nick LeMasters, and his team to re-imagine the space on behalf of the property’s owner, Taubman Properties. “Every time a store closes, it represents great opportunity,” LeMasters said. “When they closed, it was out of our control because it was part of their national strategic plan. So immediately we began to strategize around repurposing that space." The 1.1-million-square-foot mall prides itself on offering a variety of lines that are unavailable anywhere else in the market, which attracts many of the 18 million annual visitors. Of the 160 stores, more than 40 are exclusive. “With a lot of malls, you find duplication,” he said. “So those 40 stores make us distinct.” As fewer big department stores remain, malls need creative thinkers to determine how to best capitalize on the freed space. The additions must complement the existing tenants while bringing something new and exciting to the mall mix. Cherry Creek found its solution with a new luxury wing that is anchored by a 70,000-sf, four-story RH Gallery. The space is a furniture gallery concept that showcases the brand’s new business concepts, RH Modern and RH Teen, in addition to the classical Restoration Hardware concepts and outdoor living. “RH Denver is a first-of-its-kind retail concept that blurs the lines between residential and retail, indoors and outdoors, physical and digital,” according to RH. “Conceptualized as a grand-scale, multilevel classical contemporary building filled with fresh air and natural light to reflect Colorado’s outdoor lifestyle, RH Denver features decomposed granite courtyards with trickling fountains, Juliet balconies, an expansive garden terrace, a grand double staircase with massive skylight soaring 70 feet overhead, and a rooftop park and conservatory with a grove of Quaking Aspens and views of the Rocky Mountains.” “It truly is a gallery,” said LeMasters while giving a tour of the space. “Each floor feels different and gives you a true experience as you walk through it. We’re very proud to be a partner of the project.” Restoration Hardware previously occupied a 13,000-sf shop in a different part of the mall. From demolition to the grand opening in October, the project took 2½ years. Cherry Creek mall handled the build-out and RH did the tenant finishes with all the architectural details. “The RH Gallery is a game changer for us,” LeMasters said. “I liken it to Ikea in the sense that people will drive great distances to come visit it specifically. It’s a tremendous draw.” Once the anchor tenant was secure, the puzzle began to fill in the rest of the luxury-wing tenants, which involved a combination of moving tenants and introducing new brands. For example, Tiffany & Co. and Free People both moved from smaller store footprints within the mall to the wing. Tiffany & Co. now offers its full product line and Free People became a flagship store. At the same time, the leasing team sought to add new brands that customers would recognize but previously were not available, such as Tory Burch. “We wanted a Tory Burch here for years, but we didn’t have the right space,” said LeMasters. “In many ways, Cherry Creek sells itself, but ultimately we both have to agree that the location makes sense.” The mall is merchandize by lifestyles rather than by categories. All the stores in the new wing were selected because they have the same “neighborhood” feel; that is, all high-end, luxury goods, from jewelry, clothing and accessories to upscale personal hygiene to home furnishings. “Our merchants like to be with other stores that they know overlap,” he said. “They want to be in the right neighborhood.” For example, the customer profile of RH Denver is similar to the customer profile of someone who shops at Tory Burch, so while they’re not the same type of products, the shoppers could be the same, he said. The same can be said of Louis Vuitton and Hyde Park’s customer profile, he said. The luxury wing features a lot of jewelry stores, including David Yurman, Hyde Park Jewelers, Tiffany & Co., Omega, Breitling, Roberto Coin and Nightrider. “The rising tide lifts all boats, and the critical mass means everything,” said LeMasters. “If someone is jewelry shopping, they come here for the depth and breadth to find exactly what they’re looking for. That is the real competitive advantage.” With this new wing, Cherry Creek is doubling down on the belief that, even in the days of e-commerce, luxe sells. LeMasters believes that people still want to buy high fashion – whether it’s men’s suits, ladies accessories or high-end home furnishing – in person. For these good, it is important to feel, test and see the product in person before purchasing, he said. “Women want to buy with confidence,” he said. “Brick and mortar provides that authenticity, and that’s what continues to make great malls.” As the density increases in Cherry Creek with 1,500 new dwelling units coming on line, attracting those affluent tenants to the mall to shop, eat and see movies is important to stay relevant. Going forward, the management team’s focus will be on the upper-moderate to upper price points and strengthening the food offerings. There are two new restaurants going into the wing: 801 Chop House, a Kansas-based fine-dining steakhouse and Rise Pies, a quick-serve, customizable pizza place that is new to the Colorado market. “We want to continue to find restaurants and merchants that you can’t find anywhere else in the market to give us a distinctive advantage,” LeMasters said.