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Originally published April 27, 2008 at 12:00 AM | Page modified April 27, 2008 at 7:07 PM

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Neiman Marcus attracted to Bellevue's rich demographics

The Northwest might be more known for Gore-Tex than Gucci, but Schnitzer West and its crosstown rival, Kemper Development, are betting that Bellevue will support new retailers pushing pricey fashion merchandise even as a slumping national economy puts a crimp in many people's spending plans.

Seattle Times business reporter

The Bravern

Description: A mixed-use project being built on five acres along Interstate 405 in downtown Bellevue; includes two office buildings that Microsoft has leased, two condominium towers totaling 455 units and 305,000 square feet of retail space anchored by Neiman Marcus.

Scheduled openings: November 2008 for the first office building, March 2009 for the second office building; fall 2009 for Neiman Marcus and other retailers; late 2009 and early 2010 for the condos.

Other retail tenants: Jimmy Choo, Wild Ginger, John Howie Steak and David Barton Gym.

Source: Schnitzer West

Bellevue's spending power

To persuade Neiman Marcus to open a department store in downtown Bellevue, Bravern developer Schnitzer West presented demographic data two years ago comparing the spending power of residents within a 10-mile radius to that of other upscale shopping destinations nationwide. Here's how the area stacked up:

No. 4: For average annual household income.

No. 4: For percentage of households with annual incomes of more than $100,000.

No. 5: For projected population growth from 2005 to 2010.

Neiman Marcus then commissioned its own study to find out if Bellevue-area shoppers were inclined to buy pricey fashion merchandise. Here's how it ranked based on key "psychographic" measures:

No. 1: For Suburban Splendor, successful suburbanites of upward mobility living in growing neighborhoods of affluent homes

No. 2: For Urban Chic, well-educated professionals living an urban, exclusive lifestyle, who tend to own expensive single-family homes and are Internet-savvy and civic-minded

No. 3: For Wealthy Seaboard Suburbs, established quarters of affluence in coastal metro areas, where nearly half of the people employed are managers or professionals

Note: Shopping destinations in the comparison group are Bal Harbour in Miami, Cherry Creek in Denver, Copley Place in Boston, Fashion Island in Newport Beach, Calif., Fashion Valley in San Diego, The Galleria in Houston, Lenox Square in Atlanta, Michigan Avenue in Chicago, Northpark Center in Dallas, Rodeo Drive in Beverly Hills, Somerset Collection in Troy, Mich., and South Coast Plaza in Costa Mesa, Calif.

Source: Schnitzer West, citing data collected by Claritas and The Strategic Edge for Neiman Marcus

When the Bellevue-based development company Schnitzer West was trying to make a go of its Bravern project two years ago, five members flew to Dallas to meet with top executives at Neiman Marcus.

The Schnitzer team presented data showing that Bellevue has more nearby residents who can afford a $4,000 Stella McCartney dress and $1,300 pair of Christian Louboutin pumps than Miami's Bal Harbour or Fashion Island in Newport Beach, Calif."Within the first few minutes of our meeting, we got the 'So what?' " recalled Tom Woodworth, a senior investment director with Schnitzer. "But that definitely caught their attention."

After its own research revealed Eastside residents have the ability — and desire — to buy designer labels, Neiman Marcus signed on to become the Bravern's biggest retail tenant.

Since then, Schnitzer's massive mixed-use project off Interstate 405 in downtown Bellevue has announced four smaller tenants, including a Jimmy Choo shoe store, two restaurants and a New York-based gym with the motto "Look Better Naked."

The Northwest might be more known for Gore-Tex than Gucci, but Schnitzer and its crosstown rival, Kemper Development, are betting that Bellevue will support new retailers pushing pricey fashion merchandise — even as a slumping national economy puts a crimp in many people's spending plans.

Kemper Development's Bellevue Square, whose tenant roster includes Nordstrom, Macy's and J.C. Penney, is undergoing a $42 million renovation to give it an "urban-gardenlike" feel, with Italian limestone floors and railings made of wood and glass.

Chairman and Chief Executive Kemper Freeman said the remodel has helped attract two new upscale retailers: Lacoste, which plans to open its first Northwest store in May; and Burberry, the London fashion house that once had a store in downtown Seattle.

"We're having really good luck with our leasing efforts," Freeman said. "The market is ready for them, and they're excited."

Going into the Bravern

Neiman's opening next year will end a more than decadelong effort to bring an ultra-upscale department store to downtown Bellevue.

In the early 1990s, Freeman had nearly signed Saks Fifth Avenue to replace the beleaguered Frederick & Nelson department store at Bellevue Square, but the deal fell through.

Freeman, who then replaced Frederick & Nelson with smaller shops, held onto the hope of attracting another major department store, and he admits to feeling "disappointed" when Neiman Marcus chose the Bravern — though "in a different way than people might think," he said.

The Bravern is three blocks from Bellevue Square, which as Freeman noted is a long distance in downtown Bellevue, where one block equals two or three downtown Seattle blocks.

"Retail does better when it grows on itself. It's a tragedy that we're presenting a separate node for retail," Freeman said.

Neiman Marcus chose the Bravern after considering Bellevue Square and a couple of downtown Seattle sites. The retailer found no "A-plus location" in Seattle, and thought the Bravern's open-air, pedestrian-friendly layout would be "more interesting and appealing" to its customers than Bellevue Square, said Wayne Hussey, senior vice president of store development for Neiman Marcus.

Neiman's choice stood out for another reason: Until then, Schnitzer was known for developing the tree-lined North Creek office park in Bothell and downtown Bellevue's Civica Office Commons.

"They didn't have any experience with retail," Hussey said. "But they did hire some very strong consultants, and they came up with a very strong plan."

Also, Charles Staadecker, a Seattle-based real-estate broker who helped Neiman Marcus evaluate the retail landscape, said Schnitzer was the "most aggressive" during negotiations. Staadecker raised the notion that Schnitzer agreed to more favorable rental terms than competing sites. Those terms have not been disclosed.

"The lease rates for a Neiman Marcus store alone do not create an economic model that's viable," Staadecker said. "But when you combine it with all the specialty stores that surround a Neiman Marcus, it becomes a very attractive retail development."

Neiman's arrival pleases Brad Shane, a Bellevue resident who runs a chain of pawnshops called Pawn X-Change.

"My wife and I like the nice things in life," Shane said.

For now, though, they hop a plane to New York, Las Vegas or Los Angeles when they feel like doing some serious shopping.

"There needs to be more high-end retail here," he said. "There's no Gucci store here, no Hermès, and these are core brands." About 35 restaurants and shops will join Neiman Marcus at the Bravern, Woodworth said.

Roughly 10 will cater to the most well-to-do shoppers; another 10 will be slightly less pricey; and the rest will be "lifestyle" offerings along the lines of an Anthropologie or Tommy Bahama, he said.

"When we began, the percentage of retailers who weren't sure about their products selling here was about 40 percent. Now, it's only 2 or 3 percent," Woodworth said. "Everybody knows that Bellevue is a very viable upscale market."

Freeman fires back

Meanwhile, Freeman said he'll begin construction within a year on an expansion of downtown's Lincoln Square, paving the way for a hotel-and-condo tower, an office building and about 300,000 square feet of retail space.

Also, he said he is talking with luxury retailers about going into a new collection of storefronts planned for the south side of Macy's along Bellevue Way. If successful, the tenant mix would remind well-to-do shoppers of Union Square in San Francisco or Michigan Avenue in Chicago. Chanel, Prada and Gucci are the types of retailers he has in mind.

Freeman seemed to obliquely refer to Schnitzer's inexperience as a retail developer when he spoke of retailers as "being nervous enough coming all this way to the Northwest."

"These high-end retailers think civilization stops heading west at Chicago," he said. "It would be harder to attract them without a successful track record."

Art Wahl, a Seattle retail specialist for the real-estate brokerage CB Richard Ellis, said retailers will play Bellevue Square off the Bravern when negotiating for space in Bellevue.

The developers "are going to split a market that may or may not be very deep right now," he said, referring to the tough retail environment nationally. "If retailers aren't hurting here, they're certainly hurting in other parts of the country."

Still, upscale retailers regard the Seattle area as one of the last major markets not yet "infiltrated" by competitors, said Steven B. Greenberg, a retail consultant in Hewlett, N.Y., whose clients include Lacoste. He called the Bravern a good addition, noting that it "seemed to light a fire under Bellevue Square. Competition very often breeds success," he said.

Speaking of Seattle and Bellevue interchangeably, Greenberg recalled that in the past, "a lot of national retailers looked at Seattle as a community that was quietly affluent, meaning that people dressed down.

"But recently," he said, "we've seen them develop more of a fashion sense."

With a laugh, he added: "Throw away some of that Gore-Tex!"

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

Copyright © 2008 The Seattle Times Company

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