Demand for Las Vegas retail space stands in contrast to most markets in the United States, even along traditional high-traffic streets. Many retailers are struggling to adapt to market changes, including the growth of e-commerce, the decline of large department stores and a growing preference for engaging experiences that transcend the routine shopping trip.
The liquidation of Barneys New York is the latest in a number of recent retailer capitulations, which include the closing of Gap, Tommy Hilfiger, Lord & Taylor and Polo Ralph Lauren stores in New York, for example. Failing retailers have closed stores in Las Vegas, too, but many brands, including Louis Vuitton, Chanel and Tiffany, still occupy multiple locations in casinos along the Strip, Mr. Hussain said.
Mr. Gindi attributes some of the consequences in New York to a surge in lease rates — Barneys’ rent roughly doubled to $30 million for its 275,000-square-store flagship on Madison Avenue — but he expects that corridors like Madison and Fifth Avenues will overcome their retail challenges when rates decline. Still, among the differences that set the Strip apart from other well-known high streets, rent is one.
The Strip has only about one-third of the annual traffic of Times Square, said Michael Hirschfeld, vice chairman of Jones Lang LaSalle in New York. But average costs to lease space on the Strip are $250 to $300 per square foot, compared with $1,500 to $1,800 for prime Times Square space, he added. He also pointed out that New York residents and office workers make up a sizable portion of the daily pedestrian traffic along Manhattan’s retail streets.
“In Las Vegas, the population changes every three and a half days, and people come from all over the world,” said Mr. Hirschfeld, who is working with Mr. Gindi on his Las Vegas project. “These are people who want to be in a fun environment and who want to experience and do things that they can’t do when they go back home to St. Louis or Léon, France.”
He added: “A lot of retail is evolving to what Vegas already is.”
The focus on retailing along the Strip coincides with a smaller emphasis on gambling among younger generations, which have gravitated toward other forms of experience-based entertainment. The share of gambling revenue on the Strip has declined for 35 years, dropping to 34.3 percent in 2018 from 58.6 percent in 1984, according to the Center for Gaming Research at the University of Nevada, Las Vegas. Over the same period, food, beverage, retail and entertainment spending rose to almost 38 percent from 25.2 percent.