CINCINNATI -- Saks Fifth Avenue has signed a letter of intent to relocate its downtown store to Kenwood by 2016.
Plans call for an 80,000-square-foot store fronting I-71 near Montgomery Road at Kenwood Collection, a mixed use office and retail project that was formerly known as Kenwood Towne Place.
“The reinvention of The Kenwood Collection continues,” said David Birdsall, president of Phillips Edison & Company’s Strategic Investment Funds (SIF), in a press release. “Securing a commitment from Saks Fifth Avenue is a major step in realizing our vision of creating a premiere shopping experience at The Kenwood Collection. Saks will be an anchor that allows us to attract new-to-market retailers and drive new customers to our region from the entire Midwest area.”
The deal means the end of Saks’ downtown Cincinnati store, which opened in 1983 and was renovated with $6.6 million in city assistance in 2003. That deal requires Saks to operate downtown through 2018, but it allows Saks to terminate early by paying back a portion of the city subsidies. If it continues to operate the downtown store through the end of 2015, the termination fee would be $1.3 million.
City leaders have been trying to retain the downtown retail anchor, with a letter-writing campaign that included local business leaders. But city officials said last week that Saks had not responded to its overtures.
A Saks spokesman said the company is hoping to continue the strong relationships it has forged in 30 years of business in Cincinnati.
"The new 80,000 square foot, two-level store will enable to us to better serve our customers with a beautiful new shopping environment and will move us closer to our existing customers," the spokesman said. "The new, larger store will position us for many years of future success in the Cincinnati market and we look forward to welcoming the community to the store. In the meantime, it will be business as usual at our existing store."
The city has received inquiries from companies interested in occupying the Saks site after its relocation, said Jeff McElravy, interim director of trade and development for the city. McElravy wouldn't identify the prospects.
Saks is a company in transition, with new ownership and management changes cemented by the $3 billion takeover of Saks by Toronto –based Hudson’s Bay Co. When the deal closed Nov. 4, Hudson’s Bay CEO Richard Baker told several media outlets that he wants to expand Saks into Canada and shift the company’s real estate assets into a publicly-traded Real Estate Investment Trust. The REIT structure will enable Hudson’s Bay to pay down debt from the Saks acquisition and provide cash flow for future growth, he said.
The Hudson’s Bay acquisition follows a period of retrenchment for the full-service store luxury stores that Cincinnati and other cities coveted for decades. In fact, Saks has closed 12 of its full-service stores since 2010, including locations in Dallas, Tex., Tampa Bay, Fla. And Stamford, Conn. The company has been expanding its online sales efforts and Saks Off Fifth outlet concept as it prunes its luxury retail inventory.
Kenwood Collection is an office and retail complex that was formerly known as Kenwood Towne Place, a troubled project that fell into foreclosure in 2009 and spawned a criminal investigation that led to bank fraud charges against its original developers. An investment affiliate of Phillips Edison & Co. bought the project out of foreclosure in 2012 and has been working to bring luxury retalers to the site since May.