Designer stores, boutiques, galleries and other forms of retail are playing a much more significant role in attracting customers to casino-resort properties.

From refreshed gift shops and boutiques to high-end designer stores, retail has become an integral part of the casino-resort

When Pinnacle Entertainment imploded the Sands Casino Hotel in Atlantic City last year, it took less than eight seconds to turn the 21-story building into a 33,000-ton pile of concrete and rubble. But the $1 billion-plus gaming resort that will rise in its place symbolizes a rebirth in retail that’s been in the works a long time.

As gaming companies dream up projects on an ever more grandiose scale, they are allocating vast tracts of real estate for retail shops and restaurants that will entice people to visit and stay on their property.

In addition to Pinnacle’s planned development, a number of other high-profile projects are underway in Atlantic City, all of them showcasing retail. Morgan Stanley has hatched plans for its own $1 billion-plus resort casino with 500,000 square feet of retail, dining, and entertainment space, and has named Revel Entertainment Group as developer. MGM Mirage has launched development of a major resort casino project at Renaissance Pointe, adjacent to the Borgata Resort Spa Casino, which it co-owns with Las Vegas-based Boyd Gaming. Budgeted in the $4.5-$5 billion range, MGM Mirage’s new project will feature a 500,000-square-foot retail experience and a modern and versatile convention center.

The Pinnacle Atlantic City project will include a mall with shops and restaurants appealing to a broad segment of consumers, similar to the Venetian’s Grand Canal Shoppes or the Shops at Mandalay Bay-both in Las Vegas. “We believe there’s a huge unmet demand as it relates to retail,” said Kim Townsend, CEO of Pinnacle Atlantic City.

Atlantic City's retail embrace

The idea of embedding retail spaces as standalone venues within or adjacent to casino properties has taken the industry by storm. Nearly every new project or renovation in the works has an anchor-styled mall as one of its centerpiece attractions. “If we create an environment within an environment and make it a part of the entertainment experience, then people will come,” Townsend said.

Townsend, a gaming industry veteran who returned to Atlantic City after spending a number of years in Las Vegas, is passionate about making the city a mecca for shopping as well as dining, gaming and entertainment.

The long-term decline in gaming revenues dictates a push toward retail, which is something old-style casino-hotels are ill-equipped to respond to. “All of these properties were built as casinos, not resort entertainment complexes,” Townsend said. “When we started looking at Atlantic City, one of the core elements of our business strategy was retail.”

The revitalization of Atlantic City as a shopping hub has been kick-started by two projects, The Pier Shops at Caesars and The Walk, which together have created “a trend of increased retail which is vital to the success of Atlantic City,” Townsend said.

The Walk, a 55-store, 320,000-square-foot retail outlet mall opened in 2003, is currently undergoing an expansion to expand from five to 15 blocks. Stores and blocks are expected to open in phases, according to The Cordish Company, which owns the mall. The expansion will feature an upscale boutique hotel, offices, apartments and more stores and restaurants.

The Pier Shops at Caesars, which opened in 2006, combines high-tech and luxury shopping in a sprawling 464,000-square-foot shopping complex connected to Caesars via a bridge over Atlantic City’s famed Boardwalk. The complex, built on a pier jutting 900 feet into the Atlantic Ocean, sits at the midpoint of the Boardwalk, which attracts over 18 million visitors a year.

Taubman Centers, Inc., which earlier this year assumed management and leasing responsibilities for The Pier Shops at Caesars, said the project is 98 percent leased and committed, with about 75 percent of the nearly 100 stores now open.

The Pier Shops features stores such as Gucci, Coach, Louis Vuitton, Bottega Veneta, Salvatore Farragamo, Tiffany & Co., Apple, Burberry, A/X Armani and Scoop. It was developed by Gordon Group Holdings LLC, which also developed The Forum Shops at Caesars in Las Vegas and has pioneered the “entertainment retail” concept in the United States with destination retail projects that include San Francisco Center, Bridgemarket in New York City, the Beverly Center in Los Angeles, and Pearlridge and Kahala Mall in Honolulu.

In its push to build grander shopping complexes, Atlantic City is fashioning itself after Las Vegas, which until recently had the Fashion Show Mall and little else. That’s changed dramatically with the advent of galleria-style malls. “Retail in Las Vegas has grown at the same rate as hotel rooms. We’re about half of what Vegas is doing [in retail sales],” said Townsend. “The Pier Shops is doing OK; we are rooting for it because every place that does better provides more opportunity for everyone else.”

To a large degree, the success of these efforts depends on having the architect and leasing agents work together to fulfill the property’s vision, with the architect deciding what the standards are for the look and feel, such as the type of ceilings and the exteriors of walls and shops, and the leasing agent deciding how the space should be subdivided and which retailers should go into which space.

At Pinnacle, “we may do our own gift shop that has logoed merchandise but most of our retail will be in the mall and will be leased out,” Townsend said. The mall will include both restaurants and shops, as opposed to a shopping-only experience. “Co-mingling restaurants with the retail stores adds excitement to the overall experience,” she said.

A national trend

In every gaming market throughout the United States, retail has become one of the most important amenities casino properties can offer.

In Las Vegas, retail growth continues apace. The 300,000-square-foot Shoppes at The Palazzo will be part of Phase II of the Venetian Casino Resort, complementing The Grand Canal Shoppes at The Venetian. Las Vegas Sands Corp. is billing The Shoppes at The Palazzo as “the greatest up and coming retail opportunity in the country. The Shoppes at The Palazzo will offer approximately 15 new restaurants and 80 high-end and mid-level stores from the most recognizable brands to the hottest newcomers and unique one-of-a-kind boutiques drawn from all over the world,” the company said.

Anchored by an 85,000-square-foot flagship Barneys New York, The Shoppes at The Palazzo will be home to several exclusive retailers making their Las Vegas debuts, including Tory Burch, Christian Louboutin, Diane Von Furstenberg, Van Cleef & Arpels, Catherine Malandrino, Chloe, Anya Hindmarch, and Michael Kors. The restaurant offerings will feature a variety of cuisines from a star-studded collection of chefs, including Mario Batali, Emeril Lagasse, Charlie Trotter and Wolfgang Puck.

The Palazzo is scheduled to open its gaming, hotel and a selection of its restaurant and entertainment offerings to the public in December 2007, while The Shoppes at The Palazzo will debut in January 2008.

On the Native American front, the Mohegan Tribe of Connecticut’s Project Horizon expansion at its flagship Mohegan Sun Resort & Casino will feature a House of Blues experience including a retail outlet; Project Horizon also calls for 115,000 square feet of additional retail and restaurant space.

“We view retail as an important component of our overall offering to customers,” said Ray Pineault, senior vice president of administration at Mohegan Sun. Skanska has been awarded the $350 million construction contract for Project Horizon, with an estimated completion date of 2010. Tenants for the retail space haven’t been selected at press time.

Gaming companies are also moving to create a more exciting shopping experience for their own gift shops and boutiques. Isle of Capri Casinos has launched a new 2,000-square-foot retail boutique at its Pompano Beach, Fla. racino. The boutique, called, is located directly off the casino floor beside the main entrance and has unique architectural features including custom fixtures, bamboo flooring and a hand-woven hemp rug imported from Africa, matching the décor of the casino and its four restaurants. features designer apparel from Tommy Bahama, Tadashi, Tori Richards, Nat Nast and other well-known designers. The store also features a selection of popular fragrances for men and women, an exclusive collection of Murano glass necklaces and one-stop shopping for exceptional children’s items.

“The opening of adds one more attraction to the Isle’s choices for fun entertainment, and created a shopping destination for stylish South Floridians who love to shop in fine boutiques,” said Doug Shipley, general manager and vice president of racino operations for the property.