Inside Asian Gaming

December 2014 inside asian gaming 27 to base rent in accordance with the respective lease agreements,” as LVS explained in its annual report. The reason is that Shoppes at Four Seasons—“the world’s highest grossing luxury mall,” according to Sands Retail, the retail arm of parent Las Vegas Sands—registers by far the highest sales per square foot among Sands China’s retail properties, $5,810 in the year ended 30th September, compared with $1,579 at The Venetian and $1,472 at Sands Cotai Central. But Mr Parker, who consults widely in the regional retailing industry, warns against measuring the appeal of a retail area by rents alone. “Retail rents are a function of the retailer’s and landlord’s expectation of retail sales at that location. You cannot compare rents from one location to another across Macau like you might residential or office space. Just because a rent is lower in a given location doesn’t make it a better value.” Retailers rely instead on a measure called occupancy cost, which is the ratio of rent to sales. “Retailers are in search of the lowest occupancy cost,” Mr Parker explains. “If the sales are high enough, the lowest occupancy cost might be in the location with the highest rent.” Also, for some retailers space may be the decisive factor. Shops average about 3,000 square feet at The Venetian and Sands Cotai Central and a little more than half that at Four Seasons. Forever 21 the expansion will include retail on its street frontage opposite The Venetian. Meanwhile, Sands China has the 330-store gorilla in the market, Shoppes at Venetian, and keeps striving to solidify its leading position overall. Sands Cotai Central is completing a $60 million mall expansion adding 150,000 square feet, bringing its total retail space to 400,000 square feet and the shop count to 140. The mall, opened in 2010, caters to families with a casual feel, children’s fashion brands, DreamWorks animated character interactions, and a youth role-playing theme park due to open next year. The company says plans to add up to 200,000 square feet to the mall are already on the drawing board. Renovations at Shoppes at Four Seasons, which opened in 2008, are creating 10 new outlets, pushing its total above 160. Plans call for completion in time for the holiday season. The project is boosting the mall’s area to 260,000 square feet, In Focus “You cannot compare rents from one location to another across Macau like you might residential or office space. Just because a rent is lower in a given location doesn’t make it a better value. … If the sales are high enough, the lowest occupancy cost might be in the location with the highest rent.” Morgan Parker International Council of Shopping Centers >> Galaxy Entertainment says its $2.5 billion Galaxy Macau Phase 2 will expand the resort’s total retail area to more than 1 million square feet encompassing both luxury and middle-market brands. “Retail is definitely important to us going forward,” Vice President for Public Relations Buddy Lam says. “It will make us a more complete destination.”