UNIQLO MOVING INTO BARNES & NOBLE, WHICH CLOSES AT 2015’S END; H&M TO OPEN THE AREA’S FIRST HOME STORE AT DENVER PAVILIONS
By Tamara Chuang
The Denver Post
Posted: 10/06/2015 06:15:33 PM MDT
This New Year’s Eve, the Barnes & Noble store in downtown Denver will take its last breath. But the two-story hole it leaves in the Denver Pavilions won’t be empty for long.
As expected, Japanese casual wear retailer Uniqlo — as in unique clothing — will transform the space into its own men’s and women’s branded clothing store by next fall. The 27,500-square-foot store will be the first Uniqlo in Colorado and a rare move for the retailer, whose more than 40 outlets are on the East or West coast (although a Chicago store opens this month).
It’s also among the Pavilions’ recent coups, such as the second Henry’s Tavern to open outside the Pacific Northwest, and H&M Home, which are in only a few stores nationwide and opens here Oct. 29.
Credit a long-term strategy to make Pavilions a destination that appears to be paying off for owner Gart Properties. Gart convinced Uniqlo to sign an exclusive agreement that it won’t open elsewhere in Colorado for one year.
“That’s very good for us because at the Pavilions, sales are great. But when we have something that nobody else has, we get double miles for that,” Gart Properties president Mark Sidell said.
Transforming Denver Pavilions into a shopping destination has taken patience. Before Henry’s Tavern opened last month, the spot sat empty following Virgin Megastore’s departure in 2009. Gart also let the third floor of the former Niketown remain vacant after H&M took the rest.
“The kinds of uses that we could have done in there didn’t ring the bell for us. It’s a great place to have an office, but that wouldn’t help the rest of the tenants,” Sidell said. “Our strategy is a little more curated.”
Pavilions opened in 1998, when the neighborhood was a mix of empty storefronts, souvenir shops and parking lots. And while the center transformed the area, high-profile tenants such as Niketown and Virgin Megastore were struggling when Gart Properties acquired the 350,000-square-foot shopping center in 2008. Gart, which started as a sporting goods store that merged with others to become The Sports Authority, then went through the national financial crisis.
“It was a routine thing to get a call in those days from tenants that sales were down 30 percent and they wanted their rent to go down 30 percent,” Sidell said. “Because we have experience on both sides of the cash register, we were able to take a thoughtful look at how retailers were performing and if they were going to come back.”
That’s when it first did a special deal with Niketown to keep the large tenant past its expired lease until H&M signed on.
“We gave them a rent concession in order to be able to control our destiny and recapture the space,” Sidell said.
H&M is expanding into the vacant 10,000 square feet above its store, to bring its Home concept to Colorado.
“There is absolutely no question that the Garts have a clear understanding of what it takes to curate a space and have a successful retail mix. But they also understand how it impacts the neighborhood it’s located in,” said Tami Door, president and CEO of the Downtown Denver Partnership.
Denver’s international appeal — and nonstop flights to Tokyo — helped the city attract Uniqlo, said Stuart Zall, owner of The Zall Co., which handled the deal for Uniqlo.
“When (Uniqlo) introduces a brand to a market, they really want the most bang for the buck,” Zall said. “If they’re going to capture the market with just one store, the Pavilions is the place to go.”
Zall handled the deals for H&M and Forever 21 at the Pavilions and said those stores still have great numbers — if not the best for the state. “There’s a good track record. There’s great buzz. It speaks well of Denver to be getting (Uniqlo) before many cities larger than it do,” he said.
Denver’s downtown saw its strongest growth in retail rents in the past year, according to a new report by broker Marcus & Milli chap. Rents jumped 22.8 percent to $31.44 per square foot. Comparably, average retail rents for the Denver area grew just 0.7 percent to $15.97 per square foot.
“It’s phenomenal growth that has a lot to do with population growth and the demographics. Retail follows apartments, and we’re seeing a lot of multifamily development,” said Drew Isaac, Marcus & Millichap’s national retail group director. “There’s a move to urban locations. Everybody wants to be in the city now.”
Choosing and keeping unique tenants became even more deliberate after H&M opened first at Pavilions — then added nine Colorado stores in three years.
“It’s fair to say that we learned a lesson from that,” Sidell said. “It caused us to be much more deliberate with our conversations with Uniqlo.”
Henry’s Tavern signed a 10-year lease — and agreed not to open another restaurant in the state for a decade.
While H&M didn’t sign an exclusivity deal for its Home store, the Pavilions location is just one of about five nationwide.
But with curation comes tough decisions. Barnes & Noble, which was an original Pavilions tenant, shuts down after Dec. 31.
“We enjoyed serving our customers there and invite them to visit one of the other nearby Barnes & Noble locations, including Glendale, Westminster and Denver West Village,” said David Deason, Barnes & Noble’s vice president of development. “We are looking at other locations in the Denver area and hope to have a new store there in the future.”
The bookseller’s lease expired nearly two years ago, but concessions allowed it to stay on, keeping the space occupied until Gart found a long-term tenant.
“It’s not that we don’t love bookstores,” Sidell said. “We asked them if they would stay in a smaller format.”
Gart has livened up the Pavilions by opening it up with lighting, escalators and more entrances. Roll-up doors on Henry’s Tavern open into 16th Street. Forever 21 store added doors on Welton Street. The center’s occupancy rate is “in the high 90s,” Sidell said.
“The Pavilions has struggled over the years, and I think it takes a group like Gart that has a national scope and the capital to play at a national level,” Isaac said. “I was just down there a week ago, and it’s as busy as I’ve ever seen it.”