The Domain features an array of the world’s most renowned retailers and 10 first-class restaurants.

By Allison Landa

Editor’s Note: This column showcases prominent REIT projects currently under development.

Simon Property Group (NYSE: SPG), a REIT focused on regional malls, is branching beyond its core sector and into a new multi-use project in development that includes not only retail but also apartment, lodging and office space.

The first phase of the project, The Domain, made its debut March 2007 in Austin, Texas. The property encompasses 700,000 square feet of retail, 75,000 square feet of Class A office space and 390 residential apartments. The second phase, Domain Crossing, will be located directly south of The Domain and will open in spring 2008. Domain Crossing will add an additional 350,000 square feet of retail stores, restaurants and apartments, as well as a movie theater and other entertainment options.

The Domain also introduces a clutch of new-to-Austin shops. “It is so well-received because, out of the 75 retailers, almost half are new to the Austin area,” Simon spokesman Les Morris says. “It’s a very unique property.”

Though some of The Domain’s top retailers may be making their first local appearance, Simon is no stranger to the Austin area. Existing area projects for the company include the 450,000 square foot The Shops at Arbor Walk, the 1.1 million square foot Highland Mall, and the 1.4 million square foot Barton Creek Square. In August 2006, Simon opened the Round Rock Premium Outlets, an 80-acre center with 125 designer and name-brand stores.

PROPERTY STATS Address: 11410 Century Oaks Terrace, Austin, TX 78758 Start date: February 2005 Completion date: March 9, 2007 and spring 2008 Specs: An open-air, mixed-use lifestyle center featuring 700,000 square feet of luxury fashion and restaurant space in combination with 75,000 square feet of Class A office space and 390 apartments. Cost to build: $245 million Key features: 30 new-to-Austin retailers; nine restaurants and specialty food retailers; wireless internet connectivity; 3,526 parking spaces; landscaping that incorporates more than 350 live oak and cedar elm trees; more than 70 pieces of locally created artwork.

Building The Domain was a fairly pain-free process, according to Simon’s Chief Financial Officer Steve Sterrett. “Material prices have stabilized over the last year. We did not have significant construction challenges,” he says. “However, the site was tough to build on. There’s a fair amount of rock underground in Austin, so we had to do some work to prepare the site.”

Construction of the $245 million project began in February 2005 and spanned slightly more than two years. It was developed in conjunction with Endeavor Real Estate Group and residential partner Columbus Realty. Financed corporately by Simon, the project is unencumbered with no mortgage.

Simon owns a total of 285 properties spanning approximately 201 million square feet in 38 states, and considers The Domain a jewel in that crown. “It wasn’t a cookie-cutter project,” Sterrett says. “It’s a unique showcase that we’ll take investors and interested parties to for a long time.”

Sterrett puts The Domain in a category similar to Simon’s Coconut Point development, a 500-acre retail, residential and office property in Estero, Fla. Coconut Point, which encompasses 1.2 million square feet of retail plus 35,000 square feet of office space and 290 condominiums, opened on Nov. 10, 2006.

“Both are part of the current generation of open-air, moderate-to-better retail in a pleasing setting,” Sterrett says.

Morris sees that natural environment as a major plus for the property. “Visually, The Domain is a great project,” he says. “It represents some of our best thinking relative to a mixed-use property from a lot of different perspectives: the setting is striking and we’ve been able to preserve beautiful oak trees and incorporate 70 pieces of art, including sculptures and illustrations and tile mosaics. It fits well within Austin, which has a well-deserved reputation as an artists’ capital.”

The Domain encompasses 700,000 square feet of retail, 75,000 square feet of Class A office space and 390 residential apartments.

Morris says The Domain’s 75,000 square feet of apartment space is in high demand. “Our main developer says that we will sell out by the summer,” he says. “To give some sense of the reception of the demand, on a recent weekend there were 38 people looking at our apartments. Out of those, 18 signed leases. It’s not surprising when you think about all the restaurants and shops and amenities here.”

With regard to office space, tenants include law firm Castilo and Bennett, which leased nearly one complete floor of The Domain’s office space and moved in April 1, according to Morris. Another current tenant is Palomar Financial, a provider of strategic business services to smaller companies.

So far, the master-planned urban village is in huge demand and off to a great start, Morris says. “We’re very pleased with the huge response we’ve received.”

In the Pipeline: Here are some other key projects under development for Simon Property Group:   Name: Houston Premium Outlets Location: Cypress, Texas Start date: March 15, 2007 Estimated completion date: Spring 2008 Specs: 430,000 square feet of outlet retail space housing approximately 120 stores on 75 acres. Cost to build: No figure yet available Key features: An open-air, single-story upscale village-style shopping center with a Southwestern architectural theme; emphasis on high-quality designer brand retail. Name: Philadelphia Premium Outlets Location: Limerick Township, Pennsylvania Start date: September 20, 2006 Estimated completion date: Fall 2007 Specs: 430,000 square feet of outlet retail space housing approximately 120 stores on 78 acres. Cost to build: $114 million Key features: An open-air, single-story upscale village-style outlet shopping center with a colonial American architectural theme; emphasis on high-quality designer brand retail.