You’re walking south down las Vegas Boulevard, past a nondescript strip mall promising beer, wine and four-for-$9.99 T-shirts when you see it: the carved head of a bronze-helmeted warrior poking serenely out of a landscaped planter, faded 7-Eleven banners flapping in the background. With only scaffolding visible behind it, the warrior looks out of place but not out of place—another artifact beached on the Strip shoreline, divorced from logic and context.
And yet that warrior is there for a reason. He’s a sentinel guarding the approach to a development that, 10 years ago, saw the future of the Strip.
Kiosks pitching Grand Canyon tours, nail art and light-up tees might not seem the epitome of the Las Vegas experience. But they—and the other tenants of the Hawaiian Marketplace—are part of the story that in recent months has come to dominate the Strip: the triumph of physically and fiscally accessible shopping, dining and entertainment, outside of traditional casino resorts.
Naturally, there’s some major distance between the six artificial banyan trees that support the Hawaiian Marketplace’s canopy and Caesars Entertainment’s Linq, anchored by the 550-foot High Roller observation wheel. But the recent rise of outdoor retail on the Strip—and its promise to finally redeem Las Vegas from the Great Recession—has antecedents. A decade ago, the Hawaiian Marketplace hit on the same formula that the big casino operators are only now discovering. The little patch of Polynesia—a mix of kitsch and unpretentious good cheer—struggled to get traction, but today it looks downright visionary.
It was May 2003. Las Vegas was struggling out of a trough after a decadelong crest. The post-dotcom, post 9/11 recession was technically over, but no one knew it yet.
The mid-decade boom was still a year away. Steve Wynn’s new casino was two years from completion, and many were unsure what the future held. Visits to Las Vegas fell in 2001 and were flat in 2002. With its nose bloodied by the recession, the city had, for the first time in a while, doubts. Even before the slide, there was doubt about the future; in 2000, Wynn had bought the Desert Inn and the surrounding land for $270 million, or $1.2 million per acre.
In just a few years, land on the Strip would sell for $34 million an acre. But for now, when ambition seemed dangerous, a $170 million, 80,000-square-foot retail development seemed sensible.
Almost before the wraps were off, though, the Hawaiian Marketplace seemed woefully pedestrian. By May 2004, when it opened, anxiety on the Strip was being replaced by ambition. That fall, the Strip’s first condo-hotel development, the Residences at MGM Grand (now Signature), would break ground. Plans for more luxury condo and hotel projects, culminating in CityCenter, the Cosmopolitan, Fontainebleau and the Plaza, were coming.
As the Strip prepared for the opening of Wynn Las Vegas in early 2005, the Hawaiian Marketplace’s future seemed set: It would be the poor relation on the gentrifying south Strip until it was wiped away for more high-rise, high-priced condos. But then the Great Recession intervened, with plummeting land prices, and canceled projects up and down the Strip in 2008 and 2009.
Since then, Las Vegas has started a recovery. Visitation is higher than it’s ever been; gambling win, aided by an influx of Asian money, is coming back; and the Strip is adjusting to a world where the average domestic visitor is spending more on non-gaming amenities than before.
Unlike the aftermath of the 2001-02 recession, this recovery isn’t about a return to the megaresort. Instead, it’s led to the eclipse of the big-box casino. There are still plenty of them, and they are profitable. But the big operators don’t seem to be interested in building any more of them. Instead, they are opening their existing resorts to the street with retail/dining/entertainment corridors such as the Linq and MGM Resorts International’s forthcoming Park.
The new interest shown by the major operators in open-air retail parallels what has happened with nightclubs over the past 20 years. Once, tourist-corridor nightclubs were mostly stand-alone places such as Club Utopia, the Beach, Club Seven and Drink. But after the Rio and Palms proved that nightclubs could complement a casino’s offerings, the Strip bought into nightclubs in the biggest way imaginable. The prominence of, say, Hakkasan at MGM Grand couldn’t have been imagined in the late 1990s. Nightclubs were once marginal; now they dominate the marquee. Moral of the story: When the big players decide something’s right for them, they go all-in.
Developer Brett Torino was sold on the viability of a new retail development because of his past successes in the neighborhood. After buying Metz Plaza, a strip mall anchored by Fatburger in 1994, Torino built an adjacent Walgreens, which opened in 1998. Today, drugstores are ubiquitous on the Strip; at the time, though, Torino’s move was unconventional. In the go-go ’90s, anything but a megaresort on the Strip seemed a mere placeholder. The Boulevard was leaving behind its old days as a wide-open highway punctuated not only by hotels but by gas stations and curiosity-shop strip malls. Why was this man paddling against the tide?
“It was so successful,” Torino says of the Walgreens. “It was the first free-standing retail pad on the Strip. I could see the customers pouring in, and it became so clear that the area needed more retail that wasn’t part of a hotel.”
In partnership with Flag Luxury Properties, Torino had already acquired the land that the Hawaiian Marketplace stands on, along with surrounding parcels including the Marriot Grand Chateau and Harley-Davidson restaurant, from gaming icon Lyle Berman (he’s a Poker Hall of Fame member, co-founder of Grand Casinos and current CEO of Lakes Entertainment). Torino and Flag Luxury dubbed the acquisition “Metroflag.” Its core was an undeveloped retail plaza. For such a prime spot, Torino wanted something that could compete with the rest of the Strip. That’s why Hawaiian Marketplace is both a look ahead and a link to the theme-happy 1990s. With Paris, Venice and Egypt already represented, what better way to simultaneously stand out and fit in than to go Polynesian?
The Hawaiian Marketplace was self-consciously “inspired” by Waikiki’s International Marketplace, which had since 1957 drawn Honolulu tourists to its mix of history and kitsch. (Ironically, the International Marketplace closed late last year to make way for an enclosed mall; the faux Las Vegas version has outlived the original.)
Billed as “the first immersive, themed, stand-alone retail center” in Las Vegas (a narrow niche, to be sure), the Hawaiian Marketplace featured that curiously Vegas tendency toward the genuine replica: Artificial native-to-Waikiki banyan trees supported the overhead canopy that brought shoppers relief from the Mojave sun. A statue of King Kamehameha—only the second official reproduction of the 19th-century unifier of Hawaii to be authorized by the Royal Order of King Kamehameha—heightened the island sensibility, as did the animatronic birds that popped out of their Enchanted Garden birdhouse to perform traditional Hawaiian songs and recount tales from island folklore.
Entertainment, indeed, was a big part of what would set Hawaiian Marketplace apart. Team Aloha, a group of Hawaiian dancers, performed a variety of traditional and modern routines, with Samoan fire-knife dancers contributing to the tropical atmosphere.
It seemed like a can’t-miss idea. Yet there were problems. Originally, Torino designed the Hawaiian Marketplace so that the Strip sidewalk detoured through it, maximizing traffic counts for tenants. But the County Commission nixed the idea, Torino says; he couldn’t force Strip pedestrians to walk through his development, as was the case at Harrah’s Carnival Court. Because of this, tenants deep inside the marketplace struggled early on; in December 2004, the Las Vegas Sun reported that more than half had closed down.
“It threw off the whole dynamic of what we wanted,” Torino says. “Tenants who had leased prime frontage were now off the main walkway. The idea was good, but the rollout was less than perfect.” There was a market for casual retail and dining, but it wouldn’t be hand-delivered to the tenants, as was originally the plan.
But the Hawaiian Marketplace persevered, adding tenants and finding its place in the crowded Strip corridor. One notable tenant, Tix4Tonight, which sells discounted show tickets, reached its potential during the recession as visitors sought to get more for less. What made sense in 2004 makes even more sense today.
“People love to walk up and down the Strip and look and buy,” Torino says. “They don’t have a lot of money with them, and they want to stretch it. Walking down the Strip is a great way to do that. At the same time, there are a lot of retailers who have been excluded from the hotels, so there was a need for both the tourists and the providers.”
In December 2010, Torino and his partners sold Metroflag, including the surrounding parcels, to NBP Luxury, a consortium of investor groups. Under a management and leasing agreement, Florida-based Urban Retail Partners now operates Metroflag and the Hawaiian Marketplace.
The new owners saw value in both the land’s current income potential and possibilities for future growth. “The ownership group purchased the property,” says Metroflag general manager Paul S. Rappaport, “because it represented the most attractive underdeveloped property on the Las Vegas Strip. Moreover, ownership believes that the property is well positioned to benefit from the recovery occurring on the Strip through strong rental income from its existing retail and restaurant tenants, releasing potential and future redevelopment opportunities.”
There’s an interesting tension in Rappaport’s words between “future redevelopment opportunities” and “strong rental income from … existing tenants.” The allure of maximizing valuable land by going big is still hard to deny. But the logic of small and steady has much present value. In fact, the visionary nature of the scrappy little marketplace has even been noticed in the global financial sector. “Hawaiian Marketplace was the precursor to the non-gaming uses that have become more popular in recent years,” says Joshua Smith, a commercial real estate consultant with Colliers International Gaming Group. “Gaming operators are moving into constructing retail, non-gaming areas that are not within the four walls of the casino. They are looking to put retail on the Strip to draw people into their properties. This is to take full advantage of the dramatic shift that’s happened in the last two decades, as non-gaming expenditures have eclipsed gaming win.”
And therein lies the rub. As gaming operators transition into non-gaming, and developable land on the Strip gets scarcer, it’s likely that we won’t see another true independent such as the Hawaiian Marketplace in the future.
After selling the Hawaiian Marketplace, Torino stayed in the neighborhood, building Harmon Corner, the retail and dining development anchored by Walgreens. It doesn’t have fire dancers or animatronic birds, but Harmon Corner sports another kind of showstopper: the world’s largest full-motion LED screen. Longer than a football field, it’s becoming another iconic sign on a boulevard filled with them. But the next time you see something like it, it will probably be on the territory of a big casino corporation.
“The opportunities are played out,” Torino says. “There was a window where [a smaller developer] could get in to do something like this, and that window has closed. You can’t get land to build big projects, but there’s still a great need for retail.”
With the Linq open and park, Bally’s Grand Bazaar Shops and a retail corner at Treasure Island under construction, it’s clear that, as Smith and Torino say, the big operators are getting into accessible retail, doing for kiosks and storefronts what they did for DJ booths and bottle service a decade ago.
Because, let’s face it, a lot of the people who come to Las Vegas just want a slice of pizza, or a sign that reads “Jenny Punk Princess,” or a caricature or temporary tattoos or half-priced show tickets or, simply, a place to sit, have a drink, enjoy the shade and watch the spectacle around them.
Torino and his partners saw it first; it’s taken 10 years, but the rest of the Strip has caught up. Looking across the street at the chilly modernism of CityCenter as you stand amid the kiosks, the Hawaiian Marketplace might seem like a relic from Vegas’ past. But, if you look a little closer, you can see that it’s also a glimpse into the near future.