A hopeful glimmer for Neonopolis
There may be light at the end of the tunnel for Neonopolis, a neon-themed mall in downtown Las Vegas known more for darkened storefronts than attracting tenants and shoppers to the city’s once-proud Glitter Gulch.
General Growth Properties, one of the nation’s largest real estate investment trusts with more than 200 malls in 45 states, is considering whether it has room for the troubled shopping center in a national retail real estate portfolio that includes Fashion Show mall on the Strip and Summerlin Centre, an upscale mixed-use mall under development near the Las Vegas Beltway at Sahara Avenue.
The prospect of a company worth nearly $16 billion investing in a struggling downtown Las Vegas property raised hopes at City Hall, which owns the parking lot underneath the mall and an $18 million note payable if the shopping center meets certain revenue goals.
But a General Growth spokesman said just because company officials recently inquired about Neonopolis doesn’t mean they’re ready to buy a struggling mall the current owners acquired last year for $25 million.
“We have meetings of this kind all the time with cities across the country,” General Growth spokesman Jim Graham said. “That doesn’t mean anything will come out of it.”
Nevertheless, city officials can’t help envisioning Neonopolis transforming from a retail black hole to a trendy festival marketplace-style development that would link the tourist-friendly Fremont Street Experience to an up-and-coming entertainment district featuring small live music venues and hipster bars.
Scott Adams, director of the Las Vegas Office of Business Development, said he’d like General Growth to bring Sin City the type of festival marketplaces it developed in places like Boston, New York and Jacksonville, Fla.
“They basically invented that kind of project,” said Adams, describing pedestrian-friendly malls with unique stores, entertainment and dining with an atmosphere that is different from a large enclosed mall with a traditional anchor store and culturally homogenized chain stores. “That is kind of what Neonopolis was initially envisioned to be.”
Rohit Joshi, a representative of Neonopolis owners Wrirrula Hayward, said he is excited General Growth is interested in the mall, but stopped short of saying a sale is imminent.
Joshi said he thinks the mall has the potential to succeed once the downtown residential market attracts enough people to touch-off a retail resurgence.
But so far half of the approximately 220,000 square feet of leasable space at Neonopolis remains vacant and Joshi is running out of ideas to attract and retain tenants.
“If I knew I would tell you,” he said of what would breathe life into the mall. “All I can tell you is we’ve tried extremely hard.”
Michael Kammerling, senior vice president of retail at Grubb & Ellis in Las Vegas, said there is some truth to the notion that Neonopolis is ahead of the market.
“The time will come one day … when the right player will turn that Neonopolis around,” he said.
Kammerling said the mall, located the bustling intersection of Fremont Street and Las Vegas Boulevard since 2002, is, “a project that was before its time.
“The big challenge is can you make it enough of a draw to bring people in who aren’t already coming to downtown,” he said.
New high-rise residential towers, the Las Vegas World Market furniture market, a proposed brain research center and development of the Fremont East entertainment district could also help make Neonopolis viable. A downtown stadium could also attract more foot traffic. But so far a stadium downtown is just a concept and would take years for builders to find a site and construct the structure.
“The question is, what happens between now and then?” Kammerling said.
Whether General Growth, a public company that has the burden of maintaining quarterly increases in the value of its stock, has the patience it would take to revive Neonopolis remains to be seen.
Kammerling said that in general managers of a large public company prefer even inaction to risk, which can cost people their jobs if they make a mistake.
And buying Neonopolis, a multistory structure with an imposing facade and a troubled past, would be a risk even for a proven company like General Growth.
“If you are going to go three floors up in a shopping center there has to be something up there,” said Kammerling, describing the challenge of attracting customers shop the upper floors of a vertical mall even on the Strip, let alone downtown. “Even the third floor of the Forum Shops (at Caesars) doesn’t do as well as the first floor.”
