THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, May 14, 1995 TAG: 9505130279
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Long : 147 lines
This week, a contingent of developers and Norfolk officials will converge on Las Vegas, where they'll peruse the shopping-center meat market of the nation. There, the major players - department store executives and mall developers - will be under one roof, wooing each other and proposing deals.
The shopping-center convention is a sea of opportunity for Norfolk's economic development ambassadors, who are seeking tenants for MacArthur Center, the city's planned upscale mall.
Macy's retreat from the downtown project, announced two weeks ago, makes Norfolk's department-store search twice as hard. Nordstrom's, MacArthur Center's premier anchor, is still in. But Macy's withdrawal means Bob Smithwick, Norfolk's economic development director, and the mall developers must woo two more anchors instead of just one. Construction won't begin until they snag a second anchor, an official with Taubman Co., the developer, said.
Recruiting those anchors will be difficult, but not impossible.
One plus is Bloomfield Hills, Mich.-based Taubman, the posh developer that recently backed the project after forming a partnership with Alexius C. Conroy of Connecticut. Taubman has agreed to contribute $170 million to finance the project. Norfolk is to put up the rest, about $100 million.
Taubman, which owns, manages or leases major malls in 20 cities, packs lots of clout in the retail world. It has the leverage to bring anchors to MacArthur Center, retail industry experts say.
There's another major plus for Norfolk's project. Several chains, like Southern belles Dillard and Parisian, are interested in expanding into Hampton Roads. Whether they sign up for space in MacArthur Center depends on a number of factors, mainly whether they believe this region's residents will pump enough money into their stores.
Other factors include compatibility with neighboring anchors in the mall and incentives the city and the developer are willing to contribute.
``You've got to give them the moon to get them to come today,'' Hunter Hogan, a commercial real estate consultant in Virginia Beach, said of department stores and other major retailers. ``It used to be that we'd sell them the real estate and that was it. Then, it got to be that we'd give them the land. Then, it got to be that they wanted us to pay for the building.''
Taubman's Chris Tennyson, vice president of corporate affairs, disagrees. Although Nordstrom got millions of dollars in incentives to come to Norfolk, he said he believes other department store chains will pay for their share because they consider MacArthur Center an attractive home.
``The better the opportunity, the more the retailer would participate in the cost,'' Tennyson said.
The developers have been courting potential anchors. Some possibilities are May Department Stores Co.'s subsidiaries, like Lord & Taylor and Hecht's. May, Jacobson Stores and Parisian are among the companies that have recently talked with the mall's developers.
Other prospects might include Dillard, a large Southern chain that has has been trying to break into this market for years. Or, it may even be a surprise, like Saks Fifth Avenue or others on the long list of chains that Taubman has encountered in the past.
``That's certainly a good list,'' Tennyson said. ``And I certainly think it would be safe to say that those are the ones we'd be interested in.''
But which ones are more desirable?
It's clear that Smithwick and the developers are looking for two things: new names to Hampton Roads and upscale operators. They'd prefer not to have a department-store chain that wants to open outlets in MacArthur Center and Lynnhaven Mall in Virginia Beach or another regional shopping center.
``I think we're looking for a mix of stores that's not there now - ones that have better merchandise,'' Tennyson said.
It's also apparent, however, that some chains have to be convinced that this region can support their department stores. Although Macy's initially thought Hampton Roads would be a good market, its new parent reviewed the demographics and expressed concerns.
Federated Department Stores Inc. indefinitely postponed Macy's entry into MacArthur Center because it needed more time to complete its 1994 acquisition of the retail chain, city officials said.
Many major retailers consider Hampton Roads a secondary market. And some companies have an outdated image of Norfolk as a blue-collar town.
Dallas-based Neiman Marcus won't be coming here because company officials don't deem the region desirable enough.
``We like Nordstrom,'' said Peter Farwell, vice president of parent company Neiman Marcus Group. ``But we have a different core customer. Our stores are more upscale. That's why Nordstrom might be interested in your area, but not us.''
Executives of Jacobson Stores Inc., a 26-outlet chain based in Jackson, Mich., also say Hampton Roads isn't a part of their expansion plans in the near future.
``That's not to say we won't end up there,'' said Kevin Binkley, company treasurer. ``There has been dialogue between Jacobson's and the economic development people about MacArthur Center. I know Jacobson has reviewed the material. Beyond that review, I don't believe we've taken any further steps.''
Binkley said he's concerned about Nordstrom as a neighbor. Both target the upscale customer, but Nordstrom may have the edge when it comes to quantity and variety.
``It wouldn't make much sense,'' he said. ``We're a little higher than Nordstrom in targeting customers. But they would come in with much larger stores.''
Jacobson's one-story outlets, carrying mainly apparel and accessories, contain 50,000 square feet to 120,000 square feet. The biggies - like Nordstrom, Dillard's and Macy's - usually sprawl out over more than 200,000 square feet.
May Department Stores, based in St. Louis, already has a strong presence in South Hampton Roads with Hecht's stores in Chesapeake Square Mall and Greenbrier Mall in Chesapeake, Military Circle shopping center in Norfolk and Lynnhaven Mall.
Even if Hecht's doesn't want to locate in MacArthur Center, other May subsidiaries, like Lord & Taylor, may. Real estate and city sources say there have been talks with May.
A May spokesman would not comment.
Another prospect is Parisian Inc., which is ``very interested'' in MacArthur Center, a company source said. The 35-store department store chain from Birmingham, Ala., also was considering Lynnhaven Mall, which plans to add a new anchor.
Dillard Department Stores Inc. of Little Rock, Ark., a 232-store chain, moved into North Carolina in the early '90s and tried to break into this market three years ago. One of the spots Dillard considered was the former Thalhimer store in Lynnhaven Mall, but Hecht's quickly grabbed the empty space.
Dillard officials did not return telephone calls last week.
The MacArthur Center is far from a pipe dream, officials say, but they acknowledge that building a mall downtown needs more convincing, more plotting and more time.
Skepticism about MacArthur Center is rampant. But that's not unusual for downtown mall proposal, Taubman officials say.
``It's every time,'' said Tennyson of Taubman. ``A downtown project seems very daunting to people.''
But Taubman has completed several urban malls successfully, Tennyson said.
Norfolk's Smithwick has a few choice words for skeptics.
``They don't know anything.'' ILLUSTRATION: Graphic
Drawing
MacArthur Center, planned for 17 acres in downtown Norfolk, is
expected to create 3,000 jobs. The $270 million project is scheduled
to open in early 1997.
POTENTIAL ANCHORS
IN
PROBABLY OUT
[For complete graphic, please see microfilm]
by CNB