Thursday, October 26, 2006

Seattle vs Bellevue - Round One

Seattle and Bellevue seem to be competing for the fastest growing skyline. In fact, there is a severe crunch to get buildings up. The funny thing is, a construction boom like this hasn't taken place since the tech boom of the 1990s. And even funnier? The only thing constricting construction isn't the lack of investors or interested buyers or anything like that. It's a shortage of high-rise construction cranes! The company that builds them is based in Salem, Ore., and there are apparently only 60 or so allotted for the Puget Sound region. Unfortunately, there are more than 60 high-rises that want to be built, so companies have to reserve them at least a year in advance before they plan to start even breaking ground. It's simply ridiculous, but in a simply delectable way.

The astounding wealth of this area is becoming as big of a concern as it was during the tech boom, and it's strikingly evident in the area's retail landscape. While we have typically been known to be stuck in our North Face jackets and our silly Birkenstocks (with a flash of flannel for good measure), there are several developers who are trying to change that. Two of the biggest are Kemper Freeman Jr. and Schnitzer Northwest. Kemper's family is the original developer of Bellevue Square, and it remains one of the few good shopping malls in America not owned by a development trust (all of the others are also upscale, including South Coast Plaza in Costa Mesa, CA, and The Somerset Collection in Troy, MI). His Bellevue Collection is the most exciting thing to happen to the Pacific Northwest retail scene in, well, forever. However, he has had his fair share of setbacks. He has tried to land Saks Fifth Avenue as a tenant for the longest time, but negotiations in 1992 fell through. In 1999, at the height of the tech boom, he came extremely close, enough to talk about it to the press, but I guess the bubble burst and it fell through again. Now the rumor is that they're looking at one of the parking garages, seeing about tearing it down and building a fourth anchor department store at the mall. The other rumor is that J.C. Penney is leaving and Saks could take over, but I highly doubt that scenario. We'll see how that goes, but in the meantime, he has been consistently criticized for not matching the interior of the mall to the caliber of the stores, which he rebukes by saying he wants all the attention on the stores themselves. Further criticism has been raised after he started raising the rent, driving out local tenants and leaving only large national chains to survive. However, considering that the Nordstrom there is one of the top locations in the nation, and the Abercrombie & Fitch is within the chain's top three, it's hard to argue with the rising rent. Smaller local retailers have been forced to move elsewhere, but I guess that's how things go. Apparently, if people aren't buying it, it won't be staying at Bellevue Square! The center has consistently had averages much higher than the national numbers in terms of sales per visitor, length of stay per visitor, and sales per square foot. I honestly love Bellevue Square, and especially the Lincoln Square Cinemas. I'm just waiting to see how things develop...

In the meantime, Kemper has a lot of competition on his hands coming from Schnitzer Northwest, a developing firm intent on taking full advantage of all the Eastside's abundant wealth. In fact, pointing out this abundant wealth was how Schnitzer Northwest was able to land their anchor tenant, Neiman Marcus, for their new two tower development, the Bravern, right next to the Meydenbauer Convention Center. Their developer was originally planning an upscale shopping center and was trying to court Kate Spade to open a boutique there. That fell through, but Neiman Marcus (which owns Kate Spade) was intent on coming back to the Seattle region after their failed Galleries of Neiman Marcus concept failed miserably from the time it opened in Westlake in 1999 to the time it closed in 2002. Neiman Marcus does extensive research before they open new locations, and they were looking at places like Rainier Square and Seattle City Centre before Schnitzer pointed out that, according to the Puget Sound Business Journal, 9 of the 10 wealthiest zip codes in the Puget Sound region were located on the Eastside (the tenth, surprisingly, is in Snohomish). Convinced, Neiman Marcus agreed to anchor the mixed-used development, opening March 2009. Personally, I think Seattle's vast tourist base would have been a healthier option for the store, but what do I know? Now The Bravern is hoping to use Neiman Marcus' symbol of wealth to attract similarly upscale retailers. By the time I graduate from college, I'll be able to see how that turns out!

Across the lake, downtown Seattle has had a relatively upscale retail history. In the 1980s and 1990s, there had been boutiques for Hermes, Gucci, and Burberry, as well as high-end department store I. Magnin in the retail core. Those have all since closed, but others, namely Escada, St. John, Louis Vuitton, and Barneys New York, have all found enough business to survive. In fact, Barneys has found business so good that they are moving to Pacific Place next year, taking over Pottery Barn, which is about to close. This is a strategic move that puts them directly opposite the Nordstrom flagship, and right next door to Tiffany & Co. and Cartier. Their old spot in Seattle City Centre mall along 5th was somewhat less visible, only pedestrians walking towards the "luxury" intersection at 5th & University would have seen it. Interestingly, their new spot in Pacific Place isn't actually too much larger in term of square footage, but it does command a lot more foot traffic, which is what Barneys wants, considering Seattle's influx of Asian tourism. Supposedly, fast-fashion retailer H&M is looking into the old Barneys location. Now that could be exciting!

1 comment:

Kyle W. said...

Personally, I don't believe that there is a big enough market for high end retailers in the Seattle metro area, and I know many people will agree with me. Im currently an editorial manager at Vogue Magazine and I look all over the country for research on what the best fashion metro areas are and they usually turn out to be the obviouses New York, LA, Miami, Boston, Chicago, San Fran, Hawaii.
However, I am aware of the fantastic wealth of your area but people choose to spend money differently in different areas and in the northwest especially seattle its lavish homes and luxury cars, not a $15,000 Hermes Birkin bag which everyone in LA, NYC, and Boston want badly!!
However Neiman Marcus is in many areas (even Kansas City) and they are able to survive so I think Neiman Marcus will do fairly well. Im not so sure about the other tenants going in such as Jimmy choo and Hermes.