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Developer retools retail game plan
Monday, February 14, 2000 By Teresa F. Lindeman, Post-Gazette Staff Writer
A few months ago, the Chicago developer hoping to spruce up two of Downtown Pittsburgh's central corridors stopped handing out its wish list of stores.
Urban Retail Properties Inc. is still promoting the proposed $480 million Market Place at Fifth and Forbes project, but the informational packages it drops off with real estate brokers no longer include the names of the hot retailers that the company would love to bring in. Brokers say they haven't seen a recent leasing plan in months.
There's a good reason for that. Urban Retail officials decided the plan showing Tiffany & Co., FAO Schwarz and The Gap on sites now used by local stores made it look as if there wouldn't be room for hometown retailers.
"That was not a leasing plan that was etched in stone," said Ross Glickman, Urban Retail's president of leasing.
Still, the glimpse proved tantalizing. More than a debate over the technicalities of eminent domain and tax increment financing, the Fifth and Forbes discussion became a question of whether a Crate & Barrel housewares store would be more important than, say, an Eddie Bauer store.
Nordstrom fans sat up and took notice when it became clear the Seattle department store was on the city's list of dream tenants.
Fascination with such details, in Glickman's view, obscures the real point: Urban Retail has a strategy it is convinced will turn Downtown into a retail/entertainment center that can draw people from around the region.
It's not an especially unusual idea. Cities nationwide are on a quest to find that mysterious magic fix that will make them relevant again. Many have focused on the fun-food-shop equation.
And, there's no getting around it: The most wonderful Downtown retail redevelopment could fail if a misguided leasing agent puts a high-end Harold's clothing store next door to a Big Lots.
To understand the theories behind selecting stores for a project like Fifth and Forbes, it's useful to look at a traditional suburban mall, a structure that many urbanites love to ridicule but which has its roots in the old-style shopping districts.
Typical malls are built around four or more large anchors. Smaller, specialty stores fill in the spaces in between, offering extras or alternatives to the big guys.
Many of America's downtowns, which gave birth to the department store concept, lost their retail anchors years ago.
But they've discovered they have nontraditional anchors that the suburbs don't -- baseball stadiums, theaters, museums. Even if they can't get department stores to come back, they can line up a nice mix of stores that give visitors more to do and a reason to leave a little more money behind. Retail and the entertainment centers combined have more power.
"There is this very strong interplay between the two that is increasingly becoming the Holy Grail for communities," said Michael D. Beyard, senior resident fellow for retail and entertainment at the Urban Land Institute in Washington, D.C.
A retail developer looking at Pittsburgh would notice right away the unusual number of department stores in the central business district. When a new Lord & Taylor opens later this year, Downtown will have as many as most malls, including two that can't be found in the suburbs. Saks Fifth Avenue and Lord & Taylor shoppers have to make the trip to town.
Kaufmann's, one of the city's historic old stores, attracts consumers with its estimated 650,000 square feet of selling space Downtown, more than any of its suburban locations.
Lazarus brought another name to the mix when it opened in late 1998, although the store may not be much of a draw on its own because the chain operates similar locations in the region's malls.
Downtown Pittsburgh also has several theaters, a convention center undergoing rebuilding and two new stadiums under construction.
In fact, a market research report released earlier this month found the current mix of retail and entertainment generates 3.38 million visits worth almost $107 million in annual shopping and dining revenues Downtown.
A mere 6 percent of the existing retail space is sitting empty, a pretty strong sign that the market is healthy.
Why keep tinkering?
For some, the issue is making Downtown attractive to people other than office workers and close-in residents who look to the area for basic services.
There's also the money thing.
Market researchers at Urban Marketing Collaborative, a division of J.C. Williams Group in Toronto, found there's potential for up to $117 million more in sales if the city brings in a huge movie theater and upgrades its store and restaurant offerings. The Pittsburgh Downtown Partnership hired the firm to take a look at the retail potential for Downtown.
Still, if the city is going to displace businesses and demolish structures that have been useful for years, it had better be to make way for something good.
That may be one reason so many people are focused on bringing in a Nordstrom department store. In the past decade, the store with the great reputation for service has been a sales grand slam for malls around the country.
Pittsburgh officials and Urban Retail Properties view Nordstrom as a great anchor tenant. They envision an elegant store on the block of Fifth Avenue bounded by Wood Street and McMasters Way where it would work to draw shoppers farther west.
Others have suggested a Nordstrom would also work directly across Fifth from Lazarus, maybe even with an AMC Entertainment Inc. movie theater perched on top.
"Nordstrom can do business wherever they are," said John Williams, a senior partner with Urban Marketing Collaborative. "They are an incredible powerhouse."
But, if he were laying out the project, he wouldn't put Nordstrom so far east.
"The stores on the other side would suffer greatly," Williams said.
Nordstrom officials have said they want to be in Pittsburgh, although they haven't committed to a specific site. A company spokeswoman seemed skeptical about the idea of an upstairs movie theater that would be accessible through the store.
"We do look at anything that could increase foot traffic," said Paula Stanley-Weigand, but that kind of plan would be a problem with Nordstrom architecture. The company likes to use central escalators topped by atriums that bring in natural light.
"We would look at that idea, but we would look at it really carefully," she said.
There is a similar situation in Indianapolis, where the Nordstrom store rises through the first three floors of Circle Centre mall. A theater on the fourth floor has its own entrance and doesn't connect with the department store.
In that case, Stanley-Weigand said Nordstrom has an atrium lit by artificial light. "It's not our preferred design," she said.
Even if Nordstrom isn't part of the redevelopment project, Urban Retail believes it has another anchor that will effectively pull customers down Fifth. The company has recruited an 18-screen AMC theater to give people something to do when they come Downtown.
While one report calculated the movie theaters could bring 1.26 million to 1.62 million new visitors Downtown annually, this remains a point of philosophical debate.
"I'm not sure that's a project that pulls the entire trade area into Downtown," said Art DiDonato, a broker with Oxford Development Co. People who want stadium-style seating and fancy sound systems already have those options in North Versailles, over at South Hills Village and, soon, at the Stacks at the Waterfront development in Homestead.
Both the Nordstrom and the AMC theater proposals call for tearing down buildings that have risen along Fifth Avenue over a period of several decades.
But even retail leasing agents focused on making stores happy should take a hard look at saving as much as they can, advised Beyard.
Shoppers heading Downtown want a dose of the urban architecture unique to older cities, he said. That historic character is, in fact, one of cities' advantages over the suburbs.
"Generally, we've found the best strategy is to reuse as much as possible," Beyard said. In the long term, he predicted, projects that handle the old structures with care will be more profitable.
Once the department stores and the movie theater are in place, Urban Retail plans to sign up a number of restaurants and retail stores that don't have other locations in southwestern Pennsylvania.
Its original wish list dropped names such as P.F. Chang's and Cheesecake Factory restaurants, Ann Taylor, Restoration Hardware and Urban Outfitters.
The recent report from Urban Marketing Collaborative also threw out some suggestions, including Pottery Barn, Wolfgang Puck restaurant and Tower Records.
"These are the hot ones nationally," said Williams.
While some names on the wish lists are already in area malls, retail professionals argue that won't hurt if there is a critical mass of one-of-a-kind places.
For local flavor, Urban Retail has begun meeting with business people it would like to see contribute to the mix, including Candy-Rama officials, representatives of Sincerely Yours card shop and the Camera Repair shop, and Robin Fernandez, owner of Metropol and Rosebud.
Williams suggested leasing agents also might want to bring in local stores that specialize in importing goods from Italy, Asia or Africa.
A final plan would have to fit the demographics of the area, said Glickman.
"You're not going to bring in a price point that is higher than the market can afford or is lower than the market will spend," he said.
No leases can be signed until City Council approves the project and the company can offer a detailed blueprint of available sites and a breakdown on the rental costs.
But several real estate brokers report there is interest from national retailers. Urban Retail has been actively promoting the project for at least two years, and Glickman said publicity in the Pittsburgh-area media has attracted the attention of local and regional retailers.
If City Council approves the project, Glickman expects it won't take long to start putting definitive names on those leasing plans.
"We have retailers that are champing at the bit," he said.
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