CINCINNATI - Downtown Cincinnati may be in danger of losing one of its retail anchors.
Development sources said Saks Fifth Avenue is talking to the developer of Kenwood Collection about relocating to the Sycamore Township property formerly known as Kenwood Towne Place.
A development affiliate of Phillips Edison & Co. bought the property out of foreclosure last year and is investing up to $120 million to re-brand it as a center for luxury retail.
"We haven't made any announcement and we don't comment on rumors and speculation," said Julia Bentley, a Saks spokeswoman.
David Birdsall, president of Phillips Edison’s strategic investment fund, declined comment.
Mark Fallon, who is in charge of leasing the property, declined to comment about specific tenants. He has told WCPO he hopes to have all leases signed by December. Fallon is the vice president of real estate for Jeffrey R. Anderson Real Estate.
Cincinnati spokeswoman Meg Olberding said the city has been working for several months to retain Saks.
“We’ve been talking with Saks about what their business needs are downtown, but we haven’t heard from the company directly about (a Kenwood relocation)” she said. “What we want is a dynamic downtown with a full complement of retail so that’s what we’re after.”
This is a tricky time for downtown retail because the city is also trying to negotiate a lease extension with Macy's Inc. for its 180,000-square-foot downtown store. Macy's has announced four downtown store closings since January, 2013, including St Paul, Minn., Houston, Tex., St Louis, Mo., and Honolulu. Developers of Fountain Place have been talking with city officials about improvements to the downtown Macy’s store and a new apartment building above the property.
This isn’t the first time city officials have confronted the potential closure of the Saks store. Council approved a $6.6 million investment in the property in November, 2001. That led to a renovation of the property to “allow Saks to better allocate space for prestigious designers that are currently in their flagship stores.”
The agreement requires Saks to keep its downtown store open for 15 years, but allows them to terminate the arrangement by paying back a portion of city payments to them. A repayment schedule in the agreement indicates Saks would owe $2.2 million this year (10 years after completion) and $1.8 million after November. The renovated store opened in November 2003.
Saks can be released from the deal if “Saks sells the Saks store on the Property to an entity which acquires the majority of the Saks stores then located in the States of Ohio, Michigan, Illinois, and Pennsylvania.” Canada’s Hudson’s Bay Co. is buying Saks for $2.4 billion. The deal was announced in July and is expected to close by the end of the year.
Saks can also get out of the deal under various combinations of downtown retail closures, including Macy’s (Lazarus) Department Store plus Brooks Brothers, Tiffany’s and more than 77% of the gross leasable square footage of Tower Place.
Brooks Brothers closed last year. Tower Place is empty.
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