With new CEO, JC Penney pulls plan for downtown Seattle store
Penney signed a lease last May for two-thirds of the Kress Building, but since then the giant retailer has gained a new CEO with a more suburban-focused store strategy.
Seattle Times business reporters
Turns out, JC Penney isn't coming to downtown Seattle after all.
With a new CEO at the helm, Penney no longer plans to open a store in the Kress Building at Third Avenue and Pike Street, local real-estate sources said Wednesday.
Plano, Texas-based Penney signed a lease last May for two-thirds of the building, but now that space is being shopped around for sublease to take it off Penney's hands.
"This had nothing to do with Seattle or the location. The timing just did not match up with their new CEO," said Seattle Pacific Realty broker Elizabeth Best, who represents Penney in its search for a sublease tenant.
Ron Johnson, who directed Apple's retail strategy before becoming Penney's leader in November, aims to redo the 1,100-store chain. Last month, he laid out a vision that includes redesigned store interiors with more specialty-shop areas for brands such as Sephora and MNG by Mango.
"They have quite a few ideas for their suburban stores and they want to focus on that," Best said. "They're not focused on their urban concept stores anymore."
At 48,000 square feet, the downtown store was to be much smaller than a typical suburban mall location. It was part of an effort by former CEO Myron "Mike" Ullman to expand Penney's presence in urban areas, similar to Target with its smaller CityTargets.
Depending on how long it takes to find a replacement, Penney's about-face could be a setback for the area around Third and Pike, just as a recovery in the broader economy appears to be gaining momentum.
"We thought the urban concept store was very exciting, but the new CEO has a new vision," Downtown Seattle Association president Kate Joncas said in an interview Wednesday at the organization's annual "State of Downtown" breakfast forum, where she gave a mostly upbeat presentation.
New York-based Retail Opportunity Investments Corp. bought the Kress Building for nearly $29 million last October, before Johnson's arrival at Penney. Efforts to reach Stuart Tanz, ROIC's president and chief executive, were unsuccessful Wednesday.
Penney has not talked publicly about its plans for the Kress Building, nor did it return calls or emails to its corporate offices Wednesday.
City records indicate representatives of the Kress Building's previous owner applied for permits in late August to alter the building's interior to accommodate Penney. But those records also suggest pursuit of those permits halted about two months later.
Penney's lease is for 10 years, with options to extend it for up to 30 more.
Best said she's looking for a tenant to sublease the space for 10 years; she cited medium-priced apparel and home-goods chains as among the most likely possibilities to replace Penney. The Kress Building has a supermarket, Starbucks cafe and several other food-related tenants.
For about 50 years, Penney had a store in downtown Seattle on Second Avenue between Pike and Union streets; it closed in the early 1980s. The old Penney building eventually was torn down and replaced by the 24-story Newmark residential tower.
Discount retailer Target will open a store at the base of the Newmark in July, while Nordstrom Rack prepares to move next month to Westlake Center from the Broadacres building at Second Avenue and Pine Street.
The Penney chain has stores at Seattle's Northgate Mall, Alderwood in Lynnwood, Bellevue Square and Westfield Southcenter in Tukwila.
As of Wednesday, ROIC's website still listed Penney as an anchor tenant in the Kress Building.
Amy Martinez: 206-464-2923 or email@example.com