Simon Property Group, Inc. (SPG - Analyst Report) recently stated the plan of opening new Saks, Inc.’s upscale department store chain – Saks Fifth Avenue – immediate to Saks’ existing store at The Galleria, a world-renowned mall in Houston. Simon Property also disclosed its plan to initiate renovation work at this shopping center.
Scheduled to open in late 2015, the new two-story Saks Fifth Avenue store will span around 198,000 square feet. Until the opening, Saks Fifth Avenue will operate from its existing store. Upon opening of the new store, the existing outlet of Saks Fifth Avenue will be refurbished to a new and vivacious two-level mall wing that will add 35 upscale retailers and several restaurants in that wing. This wing will also connect the new Saks Fifth Avenue store and other retail outlets.
As a matter of fact, The Galleria offers 4 department stores and over 350 other stores that span over 2.2 million square feet and generate more than $1.25 billion in sales. Owned by Simon Property’s affiliate and Institutional Mall Investors LLC (IMI), this property is also U.S.’s fourth largest shopping center. Besides Saks Fifth Avenue, The Galleria boasts the outlets of other noteworthy retailers such as Neiman Marcus, Apple Inc. (AAPL - Analyst Report), Valentino,Tiffany & Co. (TIF - Analyst Report) and Gucci.
To further boost the property’s value, Simon Property intends to renovate the parking area of The Galleria and construct a multi-tenant building along Westheimer Road for a select group of luxury retailers. Additionally, Simon Property intends to build a new 300-unit luxury residential property with all modern amenities at the corner of West Alabama and Sage that will provide residents an indoor connection to The Galleria.
We remain upbeat about with the relocation plan of the Saks Fifth Avenue store and related renovations. Apart from adding one hundred thousand square feet of luxury retailers, this move is expected to draw more visitations as well as increase rent and occupancy at The Galleria. This, in turn, will enhance Simon Property’s profitability going forward.
Simon Property currently carries a Zacks Rank #3 (Hold).