Credit: Simon Property Group
Credit: Simon Property Group
The investment is a more than decade-long effort to evolve Phipps Plaza into a mixed-use development and entertainment center. That plan came in response to other planned luxury shopping rivals but also the rise of e-commerce.
Hermès was a fixture of Simon’s adjacent fortress mall, Lenox Square, for decades but left Lenox in 2009 and opened in a different location in Buckhead. Tisha Maley, who was Simon’s assistant vice president of leasing from 2002 to 2013, said the Neiman Marcus store at Lenox expanded and absorbed Hermes’ space. She said Hermes left to join what was then known as the $1.5-billion Streets of Buckhead project, which aimed to be a “new Rodeo Drive” filled with swanky and exclusive retailers.
“Hermes was such a critical piece of that vision,” she said of the street-focused project, which stalled during the Great Recession and was scaled back to what’s became Buckhead Atlanta, one of Phipps Plaza’s biggest rivals. Today, the project is known as Buckhead Village District.
Abe Schear, a partner in real estate and leasing practices for Arnall Golden Gregory and not affiliated with Simon, said it’s significant that Hermes is choosing to return to a Simon property.
“(Hermès) clearly has decided that it wants to rub elbows with tenants that have customers who are affluent,” he said. “That has been something that’s been enhanced as (Simon) completely repositioned Phipps Plaza as a residential office project with a retail component as opposed to 20 years ago when it was only a retail project.”
Since 2014, Hermès has operated a 2,400-square-foot location at the Buckhead Village District. The Atlanta blog ToNeTo was the first to report that Hermès would close its store to relocate to Simon’s mall.
Hanor would not confirm the report that Hermès would close its current location. Requests for comment to Hermès and Buckhead Village District owner Jamestown were not returned before publication.
Hermès, known for its lavish artisanal products, is the type of brand that attracts other high-end companies. The luxury retailer’s Phipps Plaza location will be near one of the mall’s entrances and will feature an outdoor patio with a food and beverage installation. It’ll also be adjacent to the One Phipps Plaza expansion.
Maley, who now runs the boutique listing firm The Maley Co., said few cities can support three luxury properties within close proximity, since high-end brands tend to cluster. She said it might help the Buckhead Village District carve out a niche for itself separate from Simon’s malls.
“It’s probably an indication that they (Hermès) want to be with their peers,” Maley said. “Simon appears to have done a good job of attracting more luxury to both Lenox and Phipps, and I think there’s a bit of herd mentality.”
Hanor said the timing is right for a wave of luxury investment at both Phipps Plaza and Lenox Square, which she said were two of the company’s most productive properties in the country. She said the first floor of Phipps Plaza is 100% leased as is the Neiman Marcus wing of Lenox Mall.
“I think they (Lenox and Phipps) have only gotten stronger through the pandemic,” she said. “The demand for space is unprecedented right now.”
She said several other luxury brands — AMIRI, Alexander McQueen, Balenciaga, Bottega Veneta and Givenchy — have either opened stores this year at Phipps Plaza or will open locations at the mall by the end of 2022. A Dior location is also under construction and will open next spring.
Hanor declined to name the 14 other luxury retailers coming soon to Phipps Plaza, but she said they should all open within the next 18 months. She said timing all depends on when current tenants’ leases expire, freeing the store space.
Malls around metro Atlanta and across the country have struggled in recent years to attract shoppers. Spurred by the COVID-19 pandemic, several malls are being reimagined or redesigned to incorporate apartments, office space, entertainment attractions and other mixed-use aspects.
Last month, the Legoland Discovery Center announced it would close this month for a multi-million-dollar overhaul and reopen next spring.
Hanor argued Phipps Plaza and Lenox Mall have persevered through COVID-19 because luxury goods draw shoppers away from e-commerce.
“People are just tired of shopping online and shopping at home,” she said. “They want to be in the mall, they want to touch and feel the merchandise and they want to take it home with them. They like the experience and they like the exclusivity of being on property, and they’d rather do that than buy something mass-produced online.”
Due to demand, Hanor said some high-end labels have opened locations in both malls, which she said is a new phenomenon. Breitling, David Yurman, Gucci and Tiffany & Co. are among the brands with locations open or in the works at both Lenox Square and Phipps Plaza. Hanor credited Atlanta for the growth.
“Atlanta is a very hot market,” she said. ”It was hot before the pandemic and it’s even hotter now.”