City officials, seeking to fill a void that's not even there yet, have set their sights on Neiman Marcus to possibly plug a big Downtown retailing hole that will be left when Lord & Taylor pulls out.

		Previous article Lord & Taylor leaving Pittsburgh (8/31/03)

Kravco Co., the suburban Philadelphia developer hired this year by Mayor Tom Murphy to take another shot at fixing the troubled Fifth and Forbes retailing district, has been pursuing the upscale Dallas-based chain for a while.

Some believe Lord & Taylor's exodus actually could help swing Neiman Marcus Pittsburgh's way by providing 135,000 square-feet of ready-made, upscale retail space in the heart of Downtown.

Prior to parent May Department Store Co.'s announcement that it was shedding the Pittsburgh store and 31 others, there was a concern that the city would be forced to give up too much to land Neiman Marcus. Following Wednesday's decision, Murphy and his aides had two conversations with May, and a face-to-face meeting between the city and the St. Louis-based company is scheduled "for the near future," according to May spokeswoman Sharon Bateman.

Kravco and the Murphy administration also spent some time discussing their options Wednesday. Mayoral spokesman Craig Kwiecinski said it was "premature to speculate on what may occur" when asked if the city planned to go after Neiman Marcus.

Midge McCauley, the Kravco executive tapped to lead the Fifth and Forbes project, also emphasized that it would be wrong to say Kravco and the city now have an agreed-upon strategy for replacing Lord & Taylor.

But, she added, "Neiman [Marcus] would certainly be someone we would want to talk to." She declined to comment when asked if Kravco had spoken to Neiman Marcus since Wednesday.

Known for its extravagant Christmas catalog and upper-crust clientele, Neiman Marcus has looked at Pittsburgh in the past. It toured Downtown last year, checking out potential locations.

It also has some ties to the city. Burton Tansky, the president and chief executive officer of Neiman Marcus, is a 1960 University of Pittsburgh graduate who this summer was named to the university's board of trustees. Tansky's sister, Eva Tansky Blum, is a senior vice president with PNC Financial Services Group.

Neiman Marcus spokeswoman Stacie Shirley yesterday was not willing to address the possibility of a new store in Downtown, saying "I won't tell you if we are looking at a certain place until we are going there."

Before the city can land a Neiman Marcus or a similar store, it needs to know what May plans to do with the building, a former Mellon Bank headquarters known for its neoclassical interior and 15-ton Italian marble columns.

May's agreement with the city's Urban Redevelopment Authority obligates the retailer to occupy the building through November 2005. If it leaves before that date, May might be asked by the URA to pay back the $11.75 million "soft" loan that helped finance Lord & Taylor's opening in 2000.

If it keeps the store open through 2005, May is not obligated to pay back the loan unless sales exceed $35 million a year -- a level that's not likely. It failed miserably to even come close to that benchmark in both 2001 and 2002, when it generated $11.2 million and $9.1 million in sales, respectively.

Angry about Lord & Taylor's decision, Pittsburgh City Councilmen Alan Hertzberg and Gene Ricciardi yesterday said they plan to introduce a measure next week barring the URA from authorizing the type of "soft loans" used in the Lord & Taylor and Lazarus development deals.

Ricciardi also asked URA director Mulugetta Birru to forward Council the financial details of the Lord & Taylor incentive plan by today so members can discuss the subject at their meeting Monday.

Lord & Taylor's problems Downtown may have something to do with its merchandise overlapping with sister store Kaufmann's across the street.

When Lord & Taylor opened in November 2000, it was touted as an upscale retailer that would offer merchandise the city's other stores didn't carry. But many shoppers could barely distinguish between the store with the upscale name and its middle-ground sister chain Both chains are owned by May.

"For consumers who were so familiar with shopping at Kaufmann's all those years, there was not that much incentive to go to Lord & Taylor," said Steven Baumgarten, a retail industry analyst with regional brokerage Parker/Hunter Inc., Downtown.

It didn't help that, as the lone Lord & Taylor in the region, the chain didn't advertise much and often found itself lost amid the flurry of ads from sister Kaufmann's as well as Lazarus.

Another drawback was its image -- Lord & Taylor often came across as a sort of dowdy retailer with little pizzazz or few exclusives to set it apart from the masses. It was that loss of cachet, the company admitted Wednesday, that led it to decide to close 32 stores in several markets so that it could focus repositioning itself as a prestigious retailer again.

The Downtown store's slow sales can also be tied to the languishing activity along Fifth and Forbes avenues -- an area now marked by vacant storefronts and lackluster stores. May was hoping the area would change for the better.

When agreeing in September 1998 to buy the building for $9 million and spend $32 million renovating it, May officials did so "in consideration of the URA's agreement to use its good faith efforts to cause the redevelopment of the Fifth Avenue/Forbes Avenue corridor into a major shopping environment consisting of top national fashion retailers (such as Gap, Gap Kids, Eddie Bauer, Ann Taylor, J. Crew, Barnes and Noble, etc.) restaurants and an AMC multiplex theater," according to a letter of intent signed by May and the URA.

That controversial $522 million plan, backed by Chicago-developer Urban Retail Properties, collapsed in November 2000 amid objections from property owners, concerns from preservationists and lukewarm interest from Nordstrom, the project's anchor.

But the URA's Birru said Lord & Taylor's departure will not hurt efforts to improve Fifth and Forbes. He pledged to work with Kravco and May to find a new department store for the space. "Another department store is our best hope," he said.

While Neiman Marcus is one possibility, some local retail brokers predict that Saks Fifth Avenue will consider the building, too.

Saks, which has 100,000 square feet at Oliver Avenue and Smithfield Street, has been talking for years about expanding its store vertically or horizontally into space once occupied by a Revco drugstore that faces Fifth Avenue.

Moving across the street might suit the New York retailer, according to CB Richard Ellis/Pittsburgh retail broker Herky Pollock. "I think it makes sense," he said.

If the city is able to attract an upscale store such as Neiman Marcus to the Lord & Taylor space, it would likely do well here, said Parker/Hunter's Baumgarten.

"There's potential if it has very different brands than Kaufmann's and Lazarus. Downtown Pittsburgh does have upscale retailers like Saks Fifth Avenue and Larrimor's and they've been here quite sometime. There's room for another."