News | Luxe additions position Galleria for a bright future

February 25, 2015

By Erin Mulvaney | Houston Chronicle 

A quarter-billion-dollar investment in the landmark Houston Galleria and the addition of luxury retailers so cutting edge you'll be forgiven for never having heard of them offer further evidence of the city's rising prominence as a destination for the biggest of spenders.

"The Galleria is one of the top retail assets in the country, if not the world," said David Simon, who heads the real estate giant that owns it, during a visit to the city on Wednesday. "In a center like this, you can never stay still."

Though the upgrades were announced nearly a year and a half ago, the $250 million scope of it was never clear before Simon arrived to formally unveil three new Galleria tenants: The Webster, a hip boutique making its first foray outside of Miami; La Perla, an Italian brand famous for its slinky and expensive lingerie; and Céline, a French ready-to-wear designer of coveted handbags, shoes and apparel.

The first stores will open this spring, part of a broader overhaul that will include a new Saks Fifth Avenue and a standalone building described as a "luxury jewel box" that will house The Webster and a to-be-announced restaurant. A planned redesign of the high-end stretch from Neiman Marcus to the new Saks will further spotlight the fashion icons Louis Vuitton, Prada and Chanel that have a presence there.

Escalators will be moved out of sight lines to create a clear view for shoppers of all the storefronts, the floors will be white marble and black granite and the glass storefronts will be framed with a combination of wood and metal panels. Seating areas will also be added and kiosks will be replaced with permanent art.

Construction on the high-end portion of the mall is set to begin in April.

"We felt like we have to invest, we have to make it better," said Simon, chairman of the board and CEO of Simon.

Simon, based in Indianapolis, owns more than 200 malls and shopping properties across the U.S. and in Asia and Europe. Locally, it owns Katy Mills, Houston Premium Outlets in Cypress and Tanger Outlets in Texas City.

But the Galleria is a jewel box of its own. The property boasts 81 stores exclusive in Houston, 26 of which are exclusive in Texas. It's an international destination that draws 30 million visitors a year, 10 million of whom are international, to its 400 stores and restaurants, two hotels and three office towers arrayed over 2.4 million square feet.

Annual sales of $1.4 billion

The mall generates $1.4 billion in annual sales, and Simon said each department store grosses more than $100 million in sales. Both Saks Fifth Avenue in Houston and Neiman Marcus rank No. 2 in sales out of all stores in their respective companies. Only Saks in New York and Neiman's in Dallas outpace the Houston Galleria.

The tenants announced Wednesday will join the likes of Jimmy Choo, Versace, Gucci and Saint Laurent. Varvatos, Rolex and Tourbillon opened in 2014.

Ed Wulfe, chairman and CEO of local retail development and brokerage firm Wulfe & Co., cited an increase in luxury consumers and merchandise nationwide. Anchored by the Galleria, Houston's Uptown area has become a major retail center nationally.

"They are serving the new wave of luxury customers," Wulfe said. "It's just a growing trend. The goal is to capture the latest trends and clients."

Joining the scene this spring will be La Perla. The Italian designer has more than 150 boutiques worldwide, including sites on London's Sloane Street, New York's Madison Avenue and Milan's Via Montenapoleone.

The Webster is expected to follow in November. The store, which opened in 2009, runs from its flagship in an art deco former hotel in Miami's South Beach. The store has established itself in the fashion world thanks in part to French it-girl Laure Heriard Dubreuil, who edits and buys for the collection.

Céline is set to open its Galleria shop in 2016. In addition to having hundreds of stores worldwide, the brand is sold at Barneys New York, Bergdorf Goodman, Harrods in London and Galeries Lafayette in Paris.

'Long-standing relationship'

In addition to other brands coming to Houston, Chanel renewed its lease and in December reopened in its updated 5,000-square-foot boutique. The store now boasts a modern décor and luxury that caters to local and international clients, said Barbara Cirkva, the brand's division president of fashion, watches and fine jewelry, in an email.

"Chanel has had a long-standing relationship with Houston and with Texas," Cirkva said. "Houston has a very loyal local clientele, but also a clientele that is very international, thanks to fantastic medical services and natural energy research."

The Galleria has been the anchor, catalyst and linchpin behind the region's retail growth , said Robert Sakowitz, a retail analyst with Hazak Consulting. When the Sakowitz department store opened across from the future site of the Galleria in 1959, he said, the area was still a "cow pasture,"

Sakowitz attributed the recent expansion in luxe retail to Houston's soaring economy. He said the city experienced a similar boom in the 1970s before the oil bust the following decade.

Sakowitz said the Galleria anchors a concentrated international shopping magnet that includes Highland Village, Boulevard Place and the under-construction River Oaks District. He said it's one of only a handful of places like it in the country.

"We have a tradition of people in Houston bringing luxury merchandise and it's just grown," he said. "It's become a place those designer names want to be."

Ron Kurtz, president of American Affluence Research Center, also cited the local growth in the number of millionaires.

"Houston has certainly benefitted from a good oil market," Kurtz said. "They also get international visitors from Mexico and wealthy people seeking luxury items."

Simon said the company will continue to invest in the Galleria, which was developed by Gerald Hines and opened in 1970.

He said the next step to improve will the food court area and hopefully to bring a residential component to the top of the new Saks building.

"We want to bring it into the 21st century," Simon said. "We don't take the community's support for over 40-plus years for granted. We will always invest in this project."