Simon Property Group Inc. (SPG - Free Report) revealed its plan to add a luxury hotel and residential tower to The Galleria in Houston. The move is part of a multi-year transformation project of this iconic property that is not only the largest shopping center in Texas but also the fourth largest in the U.S.
Specifically, the hotel and residences are slated to be co-located in one building on the corner of Sage and W. Alabama Streets. The site will enjoy direct access to shopping and dining at The Galleria and would be close to the office buildings in Houston's Uptown District.
Notably, The Galleria is undergoing a massive transformation that commenced with the construction of a new 200,000 square feet flagship Saks Fifth Avenue store next to its present site. This new Saks store is scheduled to open this month following which the existing Saks store will be renovated as a new multi-level mall extension.
Anchored by Saks Fifth Avenue on one end and Neiman Marcus at the other, this extension will comprise around 110,000 square feet of space and accommodate 35 new retailers as well as restaurants. These will all open in 2017.
Together with the renovated holdings, the shopping center includes a 14,000 square feet, free-standing retail building construction called 'The Jewel Box'. It is already completed and presently houses The Webster, which a luxury fashion boutique (opened in Jan 2016) and is on track to add a Michelin-starred Chinese dim sum tea house – Yauatcha – later this year.
Spanning 2.4 million square feet, The Galleria is home to 400 stores and restaurants, two high-rise hotels, and three office towers. Its excellent positioning allures premiere brands. The presence of top anchors such as Saks Fifth Avenue and Neiman Marcus adds to its appeal.
In fact, The Galleria’s 30 million annual domestic and international visitors, together with retails sales ranking among the highest in the nation speak volumes about this property. Naturally, investments in such a sought-after retail location are expected to positively impact this retail residential real estate investment trust’s (REIT) revenue growth. And with the Uptown area having a strong demand for residential space, the latest additions of a hotel and residential tower seem to be a strategic fit.
Simon Property currently has a Zacks Rank #3 (Hold). Investors interested in the retail REIT may consider stocks like CBL & Associates Properties Inc. (CBL - Free Report) , Regency Centers Corporation (REG - Free Report) and STORE Capital Corporation (STOR - Free Report) . Each of the three stocks carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>