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Anchor stores wanted Downtowns try to land department stores but find other ways to revitalize Sunday, December 31, 2000 By Teresa F. Lindeman, Post-Gazette Staff Writer
Atlanta's last surviving downtown department store -- a six-story Macy's built in 1927 -- was in danger of becoming a switching station filled with telecommunication equipment and very few people.
So city officials were relieved to announce this year that they'd reached a deal to keep a smaller, 125,000-square-foot version of Macy's in the historic structure's bottom three levels. Only the top three would be turned over to the telecom industry.
"Half a loaf is better than none," a chamber of commerce official told the Atlanta Journal and Constitution newspaper.
Several hundred miles to the north, Pittsburgh is enjoying the hoopla and hustle that accompany the opening of a brand new, 135,000-square-foot Lord & Taylor. The city's second such ribbon-cutting in two years, the retailer gives Pittsburgh's urban core an abundance of department stores -- four of them offering a total 1.1 million square feet of sales space.
No wonder Mayor Tom Murphy likes to use this measure when comparing Downtown Pittsburgh's retail vitality with its peers nationally. None of the other PG Benchmarks cities can claim as many downtown.
Most can't seem to support the big merchandising giants. There aren't enough people who want to shop downtown for the coats, comforters and cosmetics that are department stores' stock in trade.
Pittsburgh has an opportunity to be different. The city has already demonstrated a fashionable awareness of the numbers that retailers love: More than 130,000 workers, visitors and students plus millions in government incentives.
But a rocky sales start for the 2-year-old Downtown Lazarus was decidedly not And, after being offered millions of dollars in incentives, Nordstrom has said "no thanks" to a site along Fifth Avenue. On the heels of that news, the mayor abandoned his $522 million plan to overhaul Fifth and Forbes avenues into a sleek shopping and entertainment district.
Is Downtown retail viable here? Or did the city just buy itself a little more time?
Much ado about Nordstrom
Don't take a rejection from Nordstrom too personally. More than one city has started talks with the Seattle-based retailer only to find it didn't make the final cut.
Denver, which is barren of department stores, had some conversations a few years ago. A powerhouse mall not far away clinched the deal, instead.
Most recently, of course, Cincinnati and Pittsburgh got the word the day before Thanksgiving that neither would get a Nordstrom in the near future.
Cincinnati was further along, ready to start work on a cleared piece of prime land. Now the plan is to pave the parcel and add temporary parking. Then Queen City officials plan to sit back and think about what to try next.
They really wanted Nordstrom. The retailer is coveted by many urban planners. Just this summer, an Atlanta city councilman suggested that Nordstrom would be the perfect tenant for a new office tower there.
But it's not so much because downtowns are desperate for good service and good shoes.
"It isn't a matter of bringing a department store," said Stanley Eichelbaum, president of Marketing Developments Inc., an international consulting and research firm in Cincinnati. "It's a matter of bringing differentiation to Downtown and an attraction.
"Many department stores would not fill that bill, but Nordstrom did."
The chain's loyal fans seem willing to go to the ends of town to shop there. Planners reason that anything that draws people that well could contribute to a vibrant downtown.
For now, the prestigious retailer has taken a step back to fix its internal problems, so the discussions on how to revitalize downtowns will go on without it for awhile.
Mixing it up
"I think the Nordstrom decision could be something that basically turns disappointment into opportunity for both Pittsburgh and Cincinnati," said Arn Bortz, a real estate developer with Towne Properties in the Queen City.
If nothing else, both river towns will have to think hard again about what they really want.
Most cities have given up dreams of returning to the 1920s, or even the 1950s, when hundreds of merchant families around the country set up huge stores in city centers and kept adding new departments.
Atlanta now counts 13 malls in its metropolitan statistical area, with two or three more either proposed or under development. Most of the 100,000-plus people who have jobs downtown don't need to shop there.
"We've got to adjust our thoughts," said Eichelbaum.
If the goal is to make a downtown vibrant again, Bortz reasoned, the failure of a multimillion-dollar deal for Nordstrom could leave extra resources to invest in other projects. Helping entrepreneurs, for example, could create more jobs. That, in turn, could make retailers want to be near them.
Even if Denver can't get Saks Fifth Avenue or Macy's West to risk being downtown, it has found restaurants and bars eager to be near Coors Field baseball stadium and the convention center. The central business district had 170 restaurants in 1993 and now claims 270.
Portland, Ore., couldn't find another department store to be part of its Pioneer Place expansion, but the developers snagged the first Robert Redford Sundance Cinema to share the place with Saks, J. Crew and Williams-Sonoma. A city official estimated sales there at a very healthy $600 per square foot.
Cincinnati officials like to discuss the success of their Tiffany's jewelry store, which put its only regional location in the Fountain Place mall downtown.
"To equate retail with department stores, I think, would be a mistake," Bortz said.
Got to have it
And, yet. City officials show time and again that they will sacrifice to keep their department stores and often go out on a political limb to get new ones.
"We would love to have more merchandise retail than we do," said Ben Kelly, communication manager for Downtown Denver Partnership. "But we recognize it will be many years before downtown Denver is a viable place for a department store."
Denver has been told by retailers that it basically needs more people living downtown. Stores selling basic jeans, suits, underwear and towels tend to serve the needs of nearby residents. Unless department stores are unique to a region, they're unlikely to lure people from suburban malls sitting in the midst of thousands of homes.
"Right now our retail is oriented to people who are down here to do something else," Kelly said.
The truly 24-hour downtown -- a mantra for planners -- seems to need office workers for day, tourists and theatergoers for evenings, and residents to keep activity going on weekends and to keep an eye on things at night.
Eventually, Denver's goal is to build the residential community to the point where there are in-town customers for places such as Dillard's and Nordstrom.
Milwaukee also is counting on housing growth, in its case to save the last downtown department store, an historic Boston Store.
"Sales had gotten to the point where they couldn't keep the store open," said Dan McCarthy, the city's urban development manager. He estimated Milwaukee's downtown worker population at about 70,000.
Milwaukee is working to make downtown more attractive. It has invested in an expansion of its art museum and its performing arts center, and is tearing out an elevated highway to make the area more appealing.
In addition, officials put together an incentive deal that will keep the Midwestern city's anchor from closing for a while anyway. "Our $33 million has bought 10 years," McCarthy said.
He said the move also saved 750 administrative jobs handling corporate duties for Carson Pirie Scott, a division of Saks Inc. "I'm not sure the same kind of transaction would have occurred if it didn't have that component," he said.
But a strong retail district is a priority. Milwaukee also hired a consultant recently to come up with ways to revitalize a 240,000-square-foot, 20-year-old enclosed shopping strip known as the Grand Avenue, in part by better integrating it into the adjacent streets and sidewalks.
Too big to abandon
Even before he heard the end of Pittsburgh Mayor Murphy's statement scrapping the development plans for Fifth and Forbes, Art DiDonato was on the phone with clients to discuss ideas for their downtown properties.
For the past three years, landlords were hesitant to do much until it became clear what the city was going to decide.
DiDonato is excited about the possibilities that have opened up for enhancing the deteriorating area. "I think the city's going to be fine. I think there's enough talent locally to try to get something changed," said the director of retail leasing for Oxford Development Co.
But he also gives credit to Pittsburgh's concentration on bringing in department stores. The big places effectively anchor the district.
That was one of the goals back when the strategy was evolving, said Steve Leeper, former city development director who now runs the Sports & Exhibition Authority.
The city was very sensitive to the case of the 14-story Gimbels department store, which closed in the mid-1980s and sat mostly empty for years. When it appeared likely that Lazarus would close the old Joseph Horne flagship store at Stanwix Street and Penn Avenue, the city took action.
Leeper argues that the city's controversial, multimillion-dollar deal to build a new Lazarus store at Wood Street and Fifth also helped assure the Horne's building wouldn't sit empty. Highmark Blue Cross and Blue Shield offices moved in there and stores such as Old Navy took space on the first floor.
It was a setback when Lazarus reported sales of only $20.6 million during its first year, nowhere near the $41 million needed to trigger its rent payments to the city. "We were not obviously joyful at the sales figures of Federated and Lazarus," said Leeper. "But we believe that's going to change."
Now, officials from other cities say, Pittsburgh faces the same choices they do. How much retail space is necessary as part of the often limited land mass? What kinds of stores will serve the communities who actually use the city center, whether those are tourists or residents of nearby neighborhoods? How can it hang onto the department stores that it already has?
As one Cincinnati official put it, "There is no magic bullet for Downtown revitalization."
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