CINCINNATI - David Birdsall’s ambitions have grown since taking over the failed real estate project known as Kenwood Towne Place.
So has his bankroll.
Birdsall is now planning to spend more than $200 million to complete The Kenwood Collection, a mixed-use retail project that announced Saks Fifth Avenue as its first anchor tenant Wednesday.
That price tag is $80 million higher than Birdsall’s initial estimate for the mixed-use project that whose half-finished office building has marred the Kenwood landscape for nearly five years.
“We originally bought it to finish it,” said Birdsall, president of Phillips Edison & Co.’s Strategic Investment Funds. “We bought it because we thought it was a good deal. Period. It wasn’t until we got into it that we thought, ‘Could we do something else?’”
Birdsall credits Mark Fallon, a leasing specialist at Jeffrey R. Anderson Real Estate Inc. in Norwood, with seeing the potential to recruit a new cluster of luxury retailers to Kenwood. With Saks in the fold, Birdsall is convinced that other luxury retailers will follow and Kenwood will draw shoppers the way Chicago’s Michigan Avenue does now.
“It’s so fun to be able to work on something in your hometown that is going to be impactful and beneficial to your hometown,” he said. “Very rarely in your career do you get to do that. It’s going to be good for your investors, good for your city and great for your company. In horse racing, they call that a trifecta.”
Birdsall spoke about his recruitment of Saks Fifth Avenue. Here are excerpts:
Q: What does Saks have here that they couldn’t have had downtown?
A: One, you have synergy. Two, you have free parking, covered free parking. Three, you have the highest concentration of wealth right here in this area. Four, you have the visibility of I-71. I could go on and on. You have a 1 million square foot mall that’s in the top 10 percent of all malls in the United States with a flagship Macy’s in it, a Nordstrom and a Dillards.
Q: Saks has been closing its full-service stores in Dallas, Tampa …
A: Pittsburgh …
Q: Right, would that have happened here eventually?
A: I don’t know. You’d have to ask Saks that, but what I can tell you is that we were able to convince them to commit to the region. Cincinnati really is an international city with nine Fortune 500 companies and a lot of those companies have international operations. So, they have a luxury shopper than knows how to shop.
Q: Will the Kenwood Saks generate more revenue than the downtown Saks?
A: It’s going to be bigger than the downtown store. It’s going to have more offerings. I can’t comment on sales projects, but I hope it does better. That’s the intent. You don’t move to do worse.
Q: How about your retail center as a whole?
A: We expect this mall to be on par with being able to generate the same amount of dollars per square foot that Kenwood does. We expect this to be as high a performer that Kenwood is and Kenwood is one of the highest performing malls in the United States. I mean, the fact of the matter is, everybody comes to Kenwood.
Q: A part from Saks, what will they find at the Kenwood Collection?
A: There will probably be another 30 to 40 smaller shop tenants. All of the other tenants are staying. We expect to have Mitchell’s. We expect to have Crate and Barrell. We expect to have Container. They’re going to be great tenants for us. Then we’ll add two levels of retail. It’s going to be higher end, boutique, new to market retailers that you would find in other great shopping districts in the United State, whether that’s Michigan Avenue, Soho, Madison Avenue, Las Vegas or Miami.
Q: What will be the retail mix? Fashion? Restaurants?
A: It’s going to be primarily a fashion retail center, but we’re going to have restaurants as an additional anchor to draw people in. Food is an important component of any type of shopping center offering and this will be no different. Plus, we’re going to have nine stories of office and we’re going to have to feed those people.
Q: How is that 240,000-square-foot office building leasing up?
A: We’ve signed Neace Lukens. We’re currently negotiating (letters of intent) on an additional 100,000 square feet of users. We’re being very specific. Because of the kind of tenants we’re putting downstairs, we want to be very specific who we’re putting upstairs. That has to work otherwise you get out of balance. But the tenants we’re talking to are technology companies, financial companies and consumer products companies.
Q: Are you trying to concentrate companies with high-income employees?
A: What’s been interesting is, especially with the technology companies we’ve been talking to, they actually see a building like this as a recruiting tool.
Q: What will this project mean for Phillips Edison & Co.?
A: It’s great for the Phillips Edison brand because it takes us to the forefront of being a retail solutions company. We’re really good at the turnaround and the grocery-anchored shopping centers and now we have a component of the company
that can take on some very operationally complex projects and make money for our investors. There’s very few companies that can do that, very few that have the skill sets that can take on something like this.