Deal Me In
Tenants and developers continue to bet on casino retailing venues
Although by no means recession-proof, the gaming industry is still attracting crowds—and for retailers continuing to expand in the downturn, casino sites are in the cards.
In fact, experts say it is the retail that often serves as the kick-start to a casino complex. The American Gaming Association (AGA), which represents the commercial casino-entertainment industry, found that retail provides a casino operator with competitive advantages and marketing appeal, driving volumes of new visitors to the door. And according to 2008 research conducted by Loganville, Ga., consumer marketing firm Richard K. Miller & Associates, “Spending on entertainment and amenities has surpassed gaming at casino destinations.”
On the Las Vegas Strip, non-gaming amenities have become an important line item in the industry’s profit picture. The Nevada Gaming Control Board posted non-gaming revenue on the Las Vegas Strip in 2005 as accounting for 58% of total revenue, compared to just 47% 10 years ago.
While the Las Vegas Strip is not representative of all U.S. gaming, it does continue to lead industry trends. And the trend clearly is to beef up the amenity ante that surrounds the casino, which means layering plenty of retail and restaurant—and hotel—uses into the mix.
“Overnight stays will be what drives the retail and restaurants in casino environments,” said Jeff Green, president of real estate consulting firm Jeff Green Partners, Mill Valley, Calif., and a longtime retail consultant to the casino industry. “The retail will do better if the casino has a larger hotel component.”
Mohegan Sun, in Uncasville, Conn., is considered one of the most spectacular casinos in the Northeast, boasting more than 3 million sq. ft. of gaming, meeting/convention and arena space, some 40 retail outlets and a 1,200-room luxury hotel. “Mohegan Sun is a prime example of a successful retailing environment,” said Green. “It features the right combination of amenities, plus it is within a reasonable drive time to a geographically large and affluent customer base.”
That is key, emphasized Green. Just as casinos that rely entirely on the revenue they derive from gaming will find the deck stacked against success, so too will the retail that depends solely on casino visitors.
“To be successful, the retail must appeal to nearby residents,” he said. “That is why retailers are best served by being adjacent to casinos, but accessible, rather than being embedded into the casino.” Optimal, he said, is combining the best of both worlds—making it easy for the casino visitor to shop while still incorporating retail fundamentals such as visibility, accessibility, ingress and egress, and parking.
RED Development, based in Scottsdale, Ariz., and Kansas City, Mo., has combined the best of all worlds in its shopping and entertainment destination in Sparks, Nev. The Legends at Sparks Marina, which opened in fall 2008, features retailers such as Scheels All Sports, Best Buy, Nike and Saks Off 5th, a Yard House restaurant, an IMAX theatre, a planned arena and, of course, a casino.
“Sparks/Reno, Nev., is blessed with millions of visitors a year,” said Dave Claflin, RED’s VP of marketing. “The trick for us was to take what we learned in building the Legends at Village West in Kansas City and adapt it to the Northern Nevada area. We took our mix of one-third company store, one-third full-price and one-third restaurant and entertainment, and turned up the volume by adding in a casino as part of the development.”
Another project, IndianaLive!, developed by Power Plant Entertainment Casino Resorts Indiana, LLC, an affiliate of Baltimore-based The Cordish Co., has also integrated a state-of-the-art gaming facility with landmark restaurants such as Cafe Live! by Wolfgang Puck and significant retail. The casino opened in a temporary pavilion in June 2008 near Indianapolis, and the grand opening of the full experience is planned for this month.
The Cordish Co. has a division devoted to gaming and lodging, as well as entertainment and mixed-use, and has a number of similar projects either open or under way. The company developed two Seminole Hard Rock Hotel & Casino projects, one in Hollywood, Fla., and one in Tampa, Fla., and Cordish has partnered with Indianapolis-based Simon Property Group in a bid to develop a destination casino in Maryland at Arundel Mills.
“As a Baltimore-based company, we are tremendously excited about the potential to bring a first-class casino to our home state,” said Joseph Weinberg, head of the Cordish gaming division and managing member of PPE Casino Resorts Maryland LLC, the entity developing the Arundel Mills site.
Arundel Mills, often called Maryland’s busiest attraction, features 1.3 million sq. ft. of retail space, including a 24-screen cinema and a dinner theater.