Simon Property Group Inc. (SPG - Free Report) has been making concerted efforts to drive footfall at its properties. It recently announced the opening of boutiques by iconic luxury brand Tom Ford at two of Simon's premier properties - The Galleria in Houston and Phipps Plaza in Atlanta.
Specifically, at The Galleria's luxury wing in Houston, the 4,000-square-foot store of Tom Ford joins Chanel, Valentino, Louis Vuitton, and Saint Laurent among others. Moreover, at the Phipps Plaza, the Tom Ford boutique, encompassing 4,500 square feet of space, comes up with the new Valentino boutique, newly-expanded Gucci and Jeffrey stores, and the first-in-market Saint Laurent. Both boutiques will open by Holiday 2019.
At a time when the e-retail sector has been witnessing overwhelming growth, leading to a decline in mall traffic, with store closures and retailer bankruptcies becoming rampant, affecting retail landlords, including Kimco Realty Corp. (KIM - Free Report) , Macerich Company (MAC - Free Report) and Taubman Centers, Inc. (TCO - Free Report) , Simon Property is making immense efforts to boost the value of its retail properties through refurbishments.
The company is investing billions to revamp its properties. Its transformational plans include addition of hotels, restaurants, residences and luxury stores. Particularly in October 2018, Simon Property broke ground at the Phipps Plaza property in the Buckhead district in Atlanta on a transformative mixed-use redevelopment.
Slated to open in phases, beginning 2020, the revamped Phipps Plaza will include the Nobu Hotel and Restaurant Atlanta. Moreover, Phipps Plaza will have a 90,000-square-foot Life Time healthy living and entertainment area. In addition, it will have a 13-story Class A office property, One Phipps Plaza, which will comprise 350,000 square feet of space.
The Houston Galleria, which is owned by a joint venture between Simon and Institutional Mall Investors, spanning 2.4 million square feet of space, registers 30 million visitors each year. It houses 400 stores and restaurants, two high-rise hotels, and three office towers.
Ultimately, the aim is to transform retail shopping centers in a way such that these spaces appear as a one-stop destination where people can not only shop but also entertain and socialize. Eventually, such measures will likely help boost traffic and drive sales.
Apart from these, Simon Property recently announced that more than 15 stores will be opened by Hope & Henry by the end of third-quarter 2019 at Simon centers throughout the United States. The move will help enhance Hope & Henry’s brick-and-mortar presence after its debut on Simon's turnkey retail platform — The Edit@Roosevelt Field — in 2018. The brand, which focuses on high-quality clothing, was previously restrained by online distribution. The move is in sync with Simon Property’s strategic measures to help online retailers fortify their physical presence, besides taking steps to support omni-channel strategy.
Nevertheless, implementation of such measures requires a decent upfront cost and therefore, would limit any robust growth in its near-term profit margin.
Simon Property currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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