By Ben Johnson
When opportunity knocks, some do answer, and David Edelstein is among those. For 20-plus years Edelstein traveled annually to Las Vegas for ICSC’s RECon convention, and he came to regard Sin City as “one of the great real estate locations anywhere in the world.”
Edelstein, who is president of TriStar Capital, a New York City–based real estate investment firm, watched the 475,000-square-foot Desert Passage go up in 1999–2000. “Being in the real estate business and attending ICSC religiously every year, I thought the Desert Passage was a home-run location, and if it ever became available, it would be a tremendous opportunity.”
It did become available. And it has paid off handsomely for Edelstein. Today, years after a major repositioning, the renamed Miracle Mile Shops at Planet Hollywood Resort & Casino is host to some 80,000 visits daily, and annual sales run to about $825 per square foot, according to company officials.
Winning big in Las Vegas in this way is a far cry, to be sure, from driving a taxi in Edelstein’s native New York City, but that is exactly what he did on most nights in the late 1970s. Then, in 1981, a $15,000 loan enabled Edelstein to buy his first apartment building. In just a few years, he had developed residential and retail properties throughout the New York City boroughs of Manhattan and Queens. Then came the recession of the early 1990s.
“I lost everything when everybody was going bust,” said Edelstein. Fortune soon smiled on him again, though, when he met Steven Roth, chairman of Vornado Realty Trust. “I had a property I wanted to develop on Central Park West at 63rd Street, and I befriended him and we did a couple of small deals together,” said Edelstein. “That was a turning point — I survived the¬ downturn of the early ’90s to come out with my basis intact.”
Edelstein teamed up with Vornado to build a 40-story condo tower on Central Park West, and he meanwhile became friendly with two captains in the industry: Stephen Ross, chairman of Related Cos., and Robert Futterman, chairman of Robert K. Futterman & Associates. Edelstein worked on projects as far away as Florida, where he developed retail properties in South Beach.
Entertainment seems encoded in the 56-year-old sports and music enthusiast’s DNA, so the connection with Las Vegas was a natural fit. “I used to go to all of the boxing matches in the Caesars parking lot,” Edelstein said. “Being a boxing fan, being a sports fan, being a music fan, Vegas is the place to go.”
The story of his involvement in the Miracle Mile Shops is pure Edelstein, and it also bears witness to his get-it-done business style. The property was never actually marketed for sale, but Edelstein knew of its travails, and in 2003 he swooped in. “Through a friend, I got to the CFO of TrizecHahn and told him we would like to buy it,” Edelstein said. “He had already been in discussions with several larger REITs and large shopping mall owners, but they wanted to sign a contract and spend three to six months doing due diligence to see how they could possibly fix it.”
In contrast, Edelstein offered to plunk down $10 million hard money, with no due diligence, and he promised to close in only 60 days. He and partners RFR Realty and Robert K. Futterman closed on the deal in January 2004, and renovations commenced and shovelfuls of dirt began to fly. His first step was to hire Russ Joyner, former manager of Fashion Show Mall, in Las Vegas, and the man instrumental in the opening of the Hollywood & Highland development, in Los Angeles.
A major revamp was in order, so Edelstein hired Gensler, the firm that master-planned the huge City Center project across the street. “We wanted to de-theme the mall,” Edelstein said. “The retailers were struggling, because they had to have these Moroccan-themed storefronts, and they could not merchandise properly.”
A new name was needed too. “Desert Passage didn’t mean anything, and we finally hit upon a name that was simple and elegant and spoke to what we are, not just a shopping center,” said Edelstein. “We called it Miracle Mile Shops because it’s a mile and a quarter around, from entrance to exit, and it’s a miracle because it’s Las Vegas and anything can happen there.”
Edelstein says he has learned a lot about people and markets throughout his career, and that he has put it all on the line at Miracle Mile Shops. “We knew that 80 percent of the 40 million people that visit Las Vegas every year are going there with a budget of $500 to $600, coming for one event, and they have free time. It’s an affordable place to go and shop and have fun.”
With that in mind, he created what he describes as an “edgy, urban street environment” that allows its merchants to express and market themselves. Most important, he blew out the front of the shopping center and opened it to the Las Vegas Strip, complete with mega-LED signage.
When the dust settled on the renovation in early 2007, traffic surged. Today Miracle Mile Shops has 170 stores with modestly priced merchandise, and it also brought in Las Vegas’ first H&M. “We were the leader in bringing in a lot of these brands,” said Edelstein. “And we knew our market was the mid-priced market, and, knock on wood, it has been successful.”
Much like the retail market itself, Edelstein is in a constant state of evolution. He is spending some $2 million to build new escalators near the bridge over Las Vegas Boulevard at Harmon Avenue. “We will capture all of that traffic coming across the bridge, and it will land right at our doorsteps,” he said.
In many respects, luck played a big role in Edelstein’s Las Vegas success story. “Who would have thought that the Cosmopolitan, City Center and Westgate would be built all around us? Literally, $10 billion worth of new hotels with 18,000 hotel rooms have been built within a 9-iron of the mall,” he said.
Not surprisingly, Edelstein the entrepreneur is involved in several new projects. He hopes to work with the city of Miami Beach on a three-block development of retail and pedestrian-friendly gardens behind Lincoln Road. And he is developing a boutique hotel in New York City’s financial district. The opening of his $400 million W South Beach in 2009 elevated him to chic status, but his hippest endeavor to date is the potential development of a rock Hall of Fame project in Las Vegas he is working on with Rolling Stone magazine co-founder Jann Wenner and which will feature live music.
Edelstein thinks he may have a bit of work to do to impress the younger generation. “My 15-year-old laughs at me when I think I’m cool,” he quipped. “He starts talking about Afrojack and David Guetta, and I’m still talking about The Who, the Eagles and the Stones.”
From the May 2012 issue of Shopping Centers Today.