Category Archive: Preservation News
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Store fate is raising questions
By Michael Yeomans
TRIBUNE-REVIEW
Saturday, August 2, 2003Questions linger in the wake of May Department Stores Co. decision to sell or close its Downtown Lord & Taylor store. Among them:
Who will buy the building? And, would the city’s Urban Redevelopment Authority approve another so-called “soft loan” in the future in order to lure another retailer into the space?
In the case of the building, speculation abounds, but no clear favorite has emerged. Some experts say a relocation of the Downtown Saks Fifth Avenue across Smithfield Street to the larger Lord & Taylor space makes sense. Others have said the city could take another crack at luring two other upscale retailers — Nordstrom and Neiman Marcus.
May Co. spokeswoman Laura Bryant said Friday a meeting has been arranged between the company and city officials to begin a dialogue over what will become of the building, a landmark structure. In the meantime, it is open for business as usual.
On the question of financing, it appears the city would be willing to offer some type of incentive package for a new retailer.
Lord & Taylor received an $11.75 million “soft loan” from the URA as an inducement to open a store in the former Mellon Bank headquarters building at Smithfield and Fifth avenues, which it did in November 2000.
Under the agreement, Lord & Taylor would only have to begin paying that loan back once sales reached $35 million, at which point it would have to pay 2 percent of gross sales over that $35 million figure. After five years, or in November 2005, the company could close the store without repaying the loan.
The Lazarus-Macy’s store on Fifth Avenue received a similar incentive in 1998, obtaining an $18 million loan from the Pittsburgh Development Fund in return for an agreement to operate for five years, meaning the store could close at year’s end with the loan not being repaid, since it, too, has not reached its sales trigger, $41.7 million.
“If the mayor’s office wants us to assist in finding a new tenant-owner for the Lord & Taylor building, we would do so,” Jerry Dettore, deputy director of the URA said yesterday, declining to comment on whether the URA’s efforts would include soft loans.
Aaron Stauber, managing director of Rugby Realty, who participated in the redevelopment of the former Gimbel’s department store on Sixth Avenue, said Lord & Taylor has several options.
One possibility is to stay open two more years, if it doesn’t find a buyer before that, then shut the store down, without paying back the loan.
Another is to negotiate a partial payment of the loan with the URA, and shut the store down.
Yet another option is to sell or give the building to the URA as a payoff of the loan and take a write-off on the asset.
The building has 196,000 square feet, including 135,000 square feet of selling space on four floors. It is valued at $27.5 million by the county, roughly the amount of money spent by May Co. to renovate the former bank building after paying Mellon Financial Corp. $9.25 million for the structure in 1999.
Stauber said the most logical result is for Saks Fifth Avenue to relocate from its Oliver Street location to the Lord & Taylor building.
This would fulfill a long rumored desire for Saks to expand its store here in a better location, while not introducing a new competitor to the market for May Co.
Hugh “Herky” Pollock, executive vice president of CB Richard Ellis Pittsburgh, agrees.
“For this to work, the city would have to structure a deal by which it would purchase Saks’ current building,” he said.
“We’re always evaluating our store base and exploring opportunities for expansion where appropriate,” said Saks spokeswoman Julia Bentley.
Margaret “Midge” McCauley of Philadelphia-based Kravco, whose Downtown Works division is assembling a plan for redeveloping the city’s Fifth and Forbes corridor, said her group has not been invited into the talks between May Co. and the city, but she said Kravco stands ready to help.
“We have an excellent relationship with the May Co.,” she said, adding that her group has had talks in the past with Saks, but none recently.
When asked if Kravco would possibly be a buyer of the Lord & Taylor building, McCauley said, “That hasn’t been discussed.”
McCauley said there are several incentive tools Kravco could employ to lure tenants to the Fifth and Forbes area, but she said until lease agreements are negotiated, it’s too soon to discuss specifics.
She said any large retailer considering the Lord & Taylor site would likely request some incentives, but she said they would already have incentive enough in a “beautiful building that has already been (remodeled)” only three years ago.
What could likely be ruled out for the building, Stauber said, is a conversion into offices, which would be difficult and expensive. He said it would likely be cheaper for someone looking for office space to build their own building from the ground up for less money.
He also said it is unlikely it would lease the building, especially to a competitor to Kaufmann’s, which May Co. owns across Smithfield Street.
The thing that astounded Stauber is the abysmal sales record reported by Lord & Taylor, which the URA said was less than $10 million in 2002 — about a quarter of what would have triggered repayment of the URA loan.
Stauber said the Burlington Coat Factory, in the basement of former Gimbel’s building that his firm redeveloped, does more sales than that in a smaller store selling cheaper merchandise.
He said Lord & Taylor likely presented the city credible per-square-foot sales numbers from its existing stores to justify the loan trigger amount. He said if the URA does similar type deals in the future, it needs to be more conservative in setting the trigger figure.
Or even better, he said, instead of an all-or-nothing trigger amount, the URA could adopt a tiered repayment plan that would kick in at lower levels of sales.
Tribune-Review reporter Sam Spatter contributed to this story.
Michael Yeomans can be reached at myeomans@tribweb.com or (412) 320-7908.
This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review
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Retail will follow the residents
By George Aspiotes and Maggi Newhouse
TRIBUNE-REVIEW
Friday, August 1, 2003When it comes to retail, planning officials from cities nationwide have this advice for Pittsburgh: Quit trying so hard.
Despite receiving $11.8 million in public money to open a Lord & Taylor in Downtown Pittsburgh, May Department Stores announced Tuesday that the location is one of 34 stores it plans to sell or close.For Milwaukee Mayor John Norquist, the news further proves the strategy he has used in his city for years — fewer taxpayer subsidies means more success when it comes to business and residential development.
“You shouldn’t feel bad about Lord & Taylor,” Norquist said. “I’d feel bad about having bribed them to come in the first place. If you have patience, retail will develop.
“My feeling is the city should make it easy to convert buildings to housing. If more people lived Downtown, then the retail would follow.”
Norquist said his city has one department store, a Boston Store — and he’s fine with that. Since 1999, Milwaukee has added more than 3,000 residential units downtown — without any subsidies.
As a result, he has seen Milwaukee’s downtown area buck the national trend and grow in population.
In Pittsburgh, the population of the Golden Triangle (everything west of the Crosstown Boulevard) is approximately 2,000, according to the latest Census figures.
Milwaukee isn’t alone in its strategy. Across the country, cities of approximately Pittsburgh’s size are finding that retail becomes secondary in the larger goal of luring residents to downtowns.
Denver has not had a department store in its downtown since 1995. In the early 1990s, officials decided the city could not maintain a solid base for downtown department stores, said Ben Kelly, director of communications for the Downtown Denver Partnership.
“It was decided that much more effort would be put into bolstering downtown housing,” Kelly said. “We worked under the idea that rooftops would bring retail.”
Since 1995, downtown Denver has become an entertainment-oriented location. Anchored by Coors Field, the downtown development has focused on theaters and restaurants. City officials hope to attract 25,000 residents to the downtown in the next two decades, according to the Rocky Mountain News.
Downtown Denver has seen more than 6,600 residential units built since 1990, with 1,800 more under construction as of April, according to the Downtown Denver Partnership.
Tampa, Fla., a city of 303,000, saw its last downtown department store depart 15 years ago when the Maas Brothers Department Store closed after 100 years in the city.
As in Denver, Tampa Mayor Pam Iorio has made boosting the downtown’s residential population a priority.
“In Tampa, the return of the department store is unlikely,” said Paul Ayres, director of marketing and business development for the Tampa Downtown Partnership. “We are working to add residential to the area. Then you’ll see other services come along that are more retail-oriented and geared toward the residential base.”
Downtown Columbus, Ohio, has two department stores within an urban mall. Bill Burns, a spokesman for the Greater Columbus Chamber of Commerce, said the stores, including a Lazarus that has been in the city for years, are only one part of a successful city.
“A downtown setting has to have housing, jobs, recreational opportunities; they all make up a successful downtown,” he said.
Pittsburgh Mayor Tom Murphy’s spokesman, Craig Kwiecinski, said that is also the mayor’s strategy — to focus on commercial, entertainment, retail and housing.
One example is the latest plan for the Fifth and Forbes corridor, to be developed by Downtown Works, a division of Philadelphia-based Kravco. It calls for a combination of new and renovated buildings for retail and residential use.
“We are fortunate to have several major retailers anchoring our downtown,” Kwiecinski said. “We believe that is what we can build on to make downtown a vibrant retail destination.”
“Pittsburgh has tried too hard (on retail),” Milwaukee’s Norquist said. “Try to work more with the real estate market. You don’t have to subsidize.”
Still, the city will have three department stores after Lord & Taylor is gone — and that’s three more than Cleveland.
George Aspiotes and Maggi Newhouse can be reached at gaspiotes@tribweb.com or 412-320-7982.
This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review
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Department stores fight for survival
By Michael Yeomans
TRIBUNE-REVIEW
Friday, August 1, 2003Think Kaufmann’s would never entertain the idea of abandoning its landmark store in Downtown Pittsburgh? Or Lazarus wouldn’t consider pulling up stakes after only five years in its shiny new Fifth Avenue location?
Think again.
Department stores are taking a beating from discounters and are fighting for their lives, says retail industry analyst Lois Huff.
In this environment, anything goes.
Department stores, she said Thursday, don’t have the luxury to make moves “for reasons other than survival.”
“It’s not a growth sector. You’ll see survivors who can do well, but the days of double-digit growth are gone.”
Pittsburgh officials were still reeling yesterday, a day after St. Louis-based May Department Stores Co. said it plans to sell or close its Lord & Taylor store Downtown, which has been open less than three years. May is restructuring its Lord & Taylor division and will close 32 underperforming stores in 15 states.
Mayor Tom Murphy insists the store must remain open for two more years to fulfill the terms of an $11.75 million loan made to the company in 1999 to buy and help renovate the former Mellon Bank headquarters building at Smithfield Street and Fifth Avenue.
But according to an agreement between May and the city’s Urban Redevelopment Authority, the company likely can settle up with the city by simply repaying the loan. In the worst case, said city Controller Tom Flaherty, the company could operate the store for two more years, then close it and not have to pay back the loan.
May is setting aside $380 million to pay for costs associated with the Lord & Taylor restructuring. Company spokeswoman Sharon Bateman said the company won’t reveal when the Pittsburgh store will close.
Huff, of Columbus, Ohio-based Retail Forward Inc., said the trend toward department store consolidation will continue. What that might mean for Downtown Pittsburgh is hard to figure.
On the one hand, she said, the addition of a Seattle-based Nordstrom or a Bloomingdales, an upscale sister of Lazarus in the Cincinnati-based Federated Department Stores Inc. family, could help make Downtown a regional shopping mecca.
On the other hand, she said, it’s highly unusual for a city of Pittsburgh’s size to support four department stores. Saks Fifth Avenue is the Downtown’s other department store.
Jake Haulk, president of the Allegheny Institute for Public Policy, a Mt. Lebanon-based think tank, said with 140,000 people coming into town each weekday to work, “maybe Downtown is already being put to its best use.”
“If you try to put more activity in Downtown — be it more retail or more residential — you may end up hurting its best use, because you’ll make it more congested.”
Flaherty said he hopes the failure of Lord & Taylor dispels the “if you build it, they will come” approach Murphy has taken to subsidizing private development.
Huff isn’t convinced the city can’t support a high-end retailer, which is the reason Lord & Taylor cited for leaving. Pittsburgh already has a Saks, she said, which fills that niche.
As for the struggles of the taxpayer-subsidized Downtown Lazarus, she said the fact that the chain has four other stores in the region would make it less likely it would close the store, although she wouldn’t rule out the possibility.
“Nothing in that sector is inconceivable,” she said. “Department store chains want to have enough density in a market to make it efficient to operate,” she said. “Lord & Taylor didn’t have that density.”
Today, Federated Department Stores will unveil its new Lazarus-Macy’s name for its five regional stores.
Under terms of a $48 million public subsidy for the Downtown Lazarus, Federated could elect to close the store after November, a similar five-year window as in the Lord & Taylor deal. It has yet to reach the $41 million in annual sales that would trigger repayment of an $18 million city loan.
It could walk away at year’s end leaving the building as collateral.
Lazarus officials did not return a call for comment yesterday.
Kaufmann’s officials continue to assert that its flagship Downtown store is safe, the opening of a new, smaller-format Kaufmann’s a few miles away at The Waterfront complex notwithstanding.
“I can tell you unequivocally that at this time we have no plans to make any other changes at any other store, other than opening another Kaufmann’s at The Waterfront,” said Robin Reibel, spokeswoman for May’s Filene’s/Kaufmann’s division in Boston.
Construction of The Waterfront store is proceeding ahead of schedule, pointing to an opening in mid-October.
The Waterfront store is one of a new breed of stores for May. It’s smaller — about 140,000 square feet — than a traditional suburban mall store, which would range from 180,000 to 200,000 square feet.
It is one of a small group of so-called new-concept, lifestyle stores that Kaufmann’s and two other May chains plan to open this year.
“The store will emphasize convenience and accessibility and a different layout than what people may be used to in a traditional outlet,” Reibel said. “There will be a central checkout opportunity, in addition to the traditional checkout, and there will be designer shopping carts that will allow people to carry through the store various items and merchandise, and even have a child in the cart as well.”
Although The Waterfront is just a few miles east of Downtown, Reibel said the company does not believe the new store will hurt the city location.
“There’s no worry about that (Downtown) store,” Reibel said. “This is an addition. But it’s a different niche, and I think people will use both.”
Michael Yeomans can be reached at myeomans@tribweb.com or (412) 320-7908.
This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review
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Lord & Taylor leaving Pittsburgh – 3-year-old Downtown store among 32 retailer is unloading
By Len Boselovic and Dan Fitzpatrick,
Post-Gazette Staff Writers
Thursday, July 31, 2003May Department Stores said yesterday it intends to sell its Lord & Taylor store on Smithfield Street and 31 others in 15 states in a $380 million restructuring.
The announcement deals another blow to the city’s languishing plans to revitalize its struggling Downtown retail district.
The St. Louis-based chain yesterday said it is divesting stores that aren’t supporting its strategy of repositioning the chain as an upscale retailer. Although they represent 38 percent of Lord & Taylor’s 86 locations, the 32 stores account for only 19 percent of sales.
It’s not certain when the Downtown store will close. It employs 75 and opened three years ago as a strategic piece of a Fifth-Forbes renewal plan that never took off. May has a lease agreement with the Urban Redevelopment Authority that calls for it to operate the store through 2005 or pay off an $11.8 million URA loan that helped finance its opening.
Spokeswoman Sharon Bateman would say only that Lord & Taylor will continue operating all stores targeted for divestiture until it can get out of leases at those it rents and sell the stores that it owns.
Retail analysts expect it will be tough to find buyers given the economy and competition, and said the urban location won’t make the sale of the Pittsburgh store any easier.
Mayor Tom Murphy and URA Director Mulugetta Birru — the duo that worked hard to woo Lord & Taylor to the city — indicated that they would sue if May failed to live up to its obligation to operate the store through 2005.
But analysts expect that won’t prevent May from leaving town sooner and speculated that a payoff of its loan is included in the $380 million May said the overall restructuring will cost.
Lord & Taylor bought its Downtown site from Mellon Financial for $9 million in 1998 and opened the store two years later after extensively renovating the building over the protests of preservationists who lamented the destruction of the neoclassical, marble interior.
Downtown boosters hoped Lord & Taylor would serve as one of the last pieces of a puzzle aimed at spurring transformation of a ragtag corridor into a vibrant retail and entertainment center.
But as the Fifth-Forbes plans stalled, so did sales at the new Lord & Taylor, totaling only $11.2 million in 2001 and $9.1 million last year, according to the URA — sharply below the $35 million threshold at which the chain was supposed to contribute money to help pay off the URA loan.
While the store was a poor performer, city officials said they were caught by surprise by yesterday’s announcement.
Birru, in fact, cited an upbeat conversation he had six to eight months ago with a May executive vice president who admitted that sales were slow but stressed that May “would never give up in the Pittsburgh market and they would make it work.”
Birru was miffed at how the announcement yesterday was handled. “I haven’t spoken to them; they haven’t called us … they should let us know on the phone that they are closing and why they are closing and how they would cooperate in dealing with us,” he said.
Joining Birru in frustration yesterday were the preservationists who fought May’s decision to gut the building’s interior. “We believe this has been a high price to pay for a retail store,” said Cathy McCollom, an official with the Pittsburgh History & Landmarks Foundation. “It was a spectacular, unique interior that was lost forever.”
Murphy tried to put a brave face on the news, saying the city “firmly believes that the Golden Triangle can become a thriving, vibrant retail district.”
If the city is to take any comfort in yesterday’s news, it’s that Pittsburgh wasn’t being singled out.
Lord & Taylor also is abandoning stores in Harrisburg, Baltimore, Columbus, Ohio, and Tampa, Fla., two stores each in Miami and Dallas, three stores each in Atlanta, Houston and Denver, as well as several other locations.
May expects the closings to save it $50 million annually and allow it to focus on making the chain more appealing to an affluent clientele. One criticism of the Downtown store and other Lord & Taylor locations targeted for abandonment is that their merchandise wasn’t all that different from department stores such as sister Kaufmann’s or Lazarus.
With Lord & Taylor out, it’s not certain what will become of the Downtown site. Some have suggested Nordstrom, another high-end retailer long sought by the city, as a possibility, but those efforts have been unsuccessful to date and analyst Eric Meyers doesn’t think Lord & Taylor’s exodus will change that.
“I don’t think Pittsburgh is a market they are terribly interested in,” said Meyers, an equity analyst with Federated Investors, Downtown. Even if Seattle-based Nordstrom were interested, it would probably prefer a suburban location such as Robinson, he said.
Target and Wal-Mart, two discount retailers, do have some urban stores, “but the economics have to be good, which means a lot of support from the city,” Meyers said. “I think it’s going to be a tough market for the real estate.”
Dusty Elias Kirk, an attorney with Pepper Hamilton who is familiar with real estate development issues, said the announcement could further complicate Murphy’s efforts to redevelop Fifth and Forbes. “That’s not a corner you would want to have empty for long,” she said.
Herky Pollock, a retail broker with CB Richard Ellis/Pittsburgh, agreed.
“The fact that a well-known national department store was unable to be successful in the best retail corner in Downtown, coupled with the fact that Lazarus is not doing well Downtown, does not signify great hopes for the retail corridor as it currently exists.”
A closing of Lord & Taylor, Pollock added, “certainly would cause retailers to pause about the overall vibrancy of the Downtown market. How could it not?”
Retail broker Kevin Langholz with Langholz/Wilson & Associates predicted that with Lord and Taylor’s exit, “Downtown Pittsburgh will continue its downward spiral in the minds of retailers.”
But Midge McCauley, a retailing expert hired by the mayor to recommend changes for the Fifth and Forbes corridor, said she and her suburban Philadelphia-based employer, Kravco Co., remain committed to the project.
“I don’t like to see stores close,” McCauley said, but Pittsburgh “has more department stores than most cities. Even if you lose two of your four department stores, you still have more than most cities.”
Despite the condition of Fifth and Forbes, some big-name retailers continue to mull moves here.
Saks Fifth Avenue has been talking for years about expanding its store on Smithfield. Upscale Dallas department store Neiman Marcus toured Downtown last year, looking for possible locations. And Chicago home furnishings retailer Crate & Barrel has said Pittsburgh is a market on its radar.
Finding a new user for the 125,000-square-foot Lord & Taylor building will be challenging, though.
Real estate experts said May probably will not sell it to a department store competitor, with a May-owned Kaufmann’s still operating across the street. And converting it to office space would be expensive and perhaps unlikely in what remains a soft commercial real estate market.
Before the building became a Lord & Taylor, the previous owners at Mellon Financial tried a number of different things before settling on the retailer. They thought about making it a conference center or a large display area for Mellon’s products. They even considered using it as a small hotel for Mellon employees or working with the Carnegie Museums of Pittsburgh to develop it as a museum.
“There is a use for everything,” said Rob Geiger of real estate brokerage Grant Street Associates, who helped Mellon sell the building to May. “It just takes a little work to find it.
(Post-Gazette staff writers Tom Barnes and Tim McNulty contributed to this story. Len Boselovic can be reached at lboselovic@post-gazette.com or 412-263-1941. Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752.)
Joe Grata can be reached at jgrata@post-gazette.com or 412-263-1985.
This article appeared in the Pittsburgh Post Gazette. © Pittsburgh Post Gazette
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Lord & Taylor leaving Downtown
By Michael Yeomans
TRIBUNE-REVIEW
Thursday, July 31, 2003For the second time in a year, May Department Stores Co. dropped a bomb on Downtown Pittsburgh.
Less than three years after gutting the marble interior of a landmark Pittsburgh building, once the headquarters of Mellon Bank, to open a $30 million Lord & Taylor department store, the company said Wednesday it wants to sell or close the store and leave town.
Last summer, the St. Louis-based company combined its then-Pittsburgh-based Kaufmann’s division with its Filene’s division, consolidating the management of the two in Boston, where Filene’s is based. The move cost Downtown about 1,200 jobs.
Shocked city officials are scrambling to find out what their legal options are.
Mayor Tom Murphy, who was notified of the Lord & Taylor plans yesterday by a senior May Co. official, said the chain could be required to operate the store for at least another two years as part of a deal in which it received an $11.75 million loan from the city’s Urban Redevelopment Authority.
“The city and URA incorporated a clause into the original agreement requiring Lord & Taylor to operate their Pittsburgh store for a minimum of five years, and we look forward to discussing these issues in further detail with the May Co.,” Murphy said in a statement.
May Co. said the Downtown Lord & Taylor, which opened in November 2000, was an underperforming store in its brief life.
“That store did not achieve a suitable level of performance and did not support efforts to turn it into an upscale fashion retailer,” company spokeswoman Sharon Bateman said.
Bateman said the store will operate as usual until the company sells it or closes it. She declined to speculate when that could happen.
In all, May said it intends to sell or close 32 stores in 15 states, including two in Pennsylvania — Downtown and Harrisburg. The chain also has four stores in the Philadelphia area. May will keep 54 stores open in 11 states and the District of Columbia as it repositions the chain as a more upscale boutique. May also said it will close two other stores it operates.
The company said the moves will cost it $380 million, but ultimately yield savings of $50 million a year. About 3,700 employees will be affected, and May said severance and retirement benefits will be available for those who qualify.
Jane Elfers, chief executive of Lord & Taylor, said the stores to be closed represent 38 percent of the chain’s locations, but only 19 percent of its sales.
Customers at the Downtown store were surprised by the announcement.
Lois Peters, of Uniontown, was in Pittsburgh yesterday specifically to shop at Lord & Taylor for a dress for her daughter, Mackenzie. She said she will be disappointed to see the store close.
“Some stores are just special. This is one of them,” she said. “We knew what we wanted, and it was right there.”
Carol Epps, 42, of Greentree, said she will have to switch over to Saks Fifth Avenue.
“(Lord & Taylor) has a nice selection and seemed to be more on the higher end,” she said.
Steve Baumgarten, a retail analyst for Parker/Hunter Inc. in Pittsburgh, said the city might attempt to once again lure Seattle-based Nordstrom to Pittsburgh to fill the Lord & Taylor space.
A Nordstrom spokeswoman said yesterday the company has no plans for a store in Pittsburgh. Mayor Murphy, in his initial plan to redevelop the Fifth and Forbes corridor, made landing a Nordstrom store a cornerstone of his plan.
Baumgarten said May did too little to differentiate Lord & Taylor from Kaufmann’s. The area’s flagship Kaufmann’s store Downtown is next door to Lord & Taylor.
“I shop at both, and there is a lot of similar product in both stores. They cannibalized each other,” he said.
Margaret “Midge” McCauley, director of Downtown Works — a division of Kravco, the Philadelphia company picked by Murphy to put together a redevelopment plan for the city’s Fifth and Forbes and Market Square areas — tried to put the best face on the Lord & Taylor decision.
“I think we can go forward without it. You still have three department stores, which is more than most cities have,” she said. “I’m very upbeat about Pittsburgh. You’ve got all the elements in place for a successful revitalization of Downtown.”
Department stores in general are suffering at the hands of discounters such as Wal-Mart, Target and Kohl’s.
Through the month of May, May Department Stores has suffered declining same-store sales for 13 consecutive months. Department store chains are doing several things to attempt to reverse their slide.
Last month, May fired about 1,500 employees, about three or four in each of the company’s 447 stores, after cutting 1,600 jobs last year in the combination of Kaufmann’s and Filene’s.
On Friday, Federated Department Stores Inc. will unveil its new Lazarus-Macy’s name in its five regional stores, including its Downtown location. The move is an attempt by Cincinnati-based Federated to establish a national brand by using the familiar Macy’s name.
In addition to the name change, Cincinnati-based Federated has identified Pittsburgh as one of six regions where it will spend $100 million in an attempt to make its stores more convenient for shoppers.
Some of the changes include more signs, automated price scanners throughout the stores, lounges in the fitting rooms and the addition of “upscale” shopping carts.
Richard Istvan, store manager for the Jos. A. Banks Clothier Downtown, said Lord & Taylor’s departure will mean less customer traffic in the Fifth Avenue corridor.
“I’m surprised they’re going before Lazarus,” he said.
Lord & Taylor stores on closings list
Here is a list of the 34 stores that May Department Stores Co. plans to close. All are Lord & Taylor stores unless otherwise noted:
COLORADO — Three stores in Denver.
CONNECTICUT — Stores in Manchester and Meriden.
GEORGIA — Three stores in Atlanta.
FLORIDA — Two stores in Miami; one each in Boca Raton, Ft. Lauderdale, Orlando, Palm Beach County and Tampa.
IOWA — One Famous-Barr store in Des Moines.
KENTUCKY — One store in Louisville.
LOUISIANA — One store in New Orleans.
MARYLAND — One store in Baltimore.
MASSACHUSETTS — One store in Springfield and one store in North Attleboro.
NEBRASKA — One Jones Store in Omaha.
NEW YORK — One store in Albany.
NORTH CAROLINA — One store in Raleigh.
OHIO — One store in Columbus.
PENNSYLVANIA — One store in Harrisburg and one store in Pittsburgh.
RHODE ISLAND — One store in Providence.
TEXAS — Two stores in Dallas/Fort Worth and three stores in Houston.
VIRGINIA — One store in Norfolk.
By The Associated PressMichael Yeomans can be reached at myeomans@tribweb.com or (412) 320-7908.
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Project’s cost included gutting of landmark
By Ron DaParma
TRIBUNE-REVIEW REAL ESTATE WRITER
Thursday, July 31, 2003Amid the optimism that greeted plans for a new Lord & Taylor department store in Downtown Pittsburgh in 1998 came voices of concern about the chain’s plan to gut the interior of the once richly marbled former Mellon Bank headquarters at 514 Smithfield St.
Now, with word Wednesday that the May Department Stores Co., parent of Lord & Taylor, will sell or close the Pittsburgh store, there appears to be vindication for those who raised doubts about renovations to the grand stone building once known as the “Cathedral of Earning.”
“We are disappointed that the interior was lost, and we feel it was a high price to pay,” said Cathy McCollom, director of operations and marketing for the Pittsburgh History & Landmarks Foundation.
The foundation was among those that urged Lord & Taylor officials to proceed with caution on renovations to the historic structure that opened in 1924 with ceremonies attended by government and business dignitaries led by U.S. Treasury Secretary Andrew W. Mellon.
The bank interior featured a large open area ringed by 20 massive marble columns. Only four of those columns were left after the May renovation work, which included the installation of an escalator to carry shoppers to four floors built in what was once an impressive open interior space overlooked by a glass skylight 62 feet above the floor.
“Of course, we are very disappointed that a major retailer (will close) in the city’s Downtown area,” McCollum said. “But as preservationists, we think it was an extremely high cost that a unique interior has been lost forever.”
“Philosophically, what this means to me is validation that when you make a decision to renovate a building like that, you have to think well beyond the immediate tenant that is going to occupy it,” said Rob Pfaffmann, architect with Pfaffmann & Associates, a Pittsburgh-based architectural firm. “These buildings live well beyond their immediate (uses).
“Now we have lost a lot of the architectural fabric in that building, and it turned out that we didn’t have to lose it.”
Nonetheless, Pfaffmann said, Lord & Taylor’s departure could bring a new opportunity for the 79-year-old building, possibly another retailer or law office or financial firm, but with a new approach to the design.
“Let’s see if we can do better,” he said. “I think there still is enough left to bring in another high-end tenant that may be able to create something unique there.”
Ron DaParma can be reached at rdaparma@tribweb.com or 412-320-7907.
This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review
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Taxpayers may find they co-signed store’s $11.75M loan
By Michael Yeomans and David M. Brown
TRIBUNE-REVIEW
Thursday, July 31, 2003Could taxpayers be left holding the bag for an $11.75 million loan when May Department Stores Co. sells or closes its Lord & Taylor store Downtown?
That is what Mayor Tom Murphy and other city officials are trying to figure out in the wake of the announcement that May intends to leave the Downtown site as part of a restructuring of its Lord & Taylor division that will result in the elimination of 32 of its 86 stores.
It also raises the specter of what could happen if Federated Department Stores Inc. should decide to close its struggling, taxpayer-subsidized Lazarus store on Fifth Avenue.
Lord & Taylor’s so-called soft loan is the result of a complicated transaction engineered by Stephen Leeper when he headed the city’s development efforts for Murphy. Leeper now is executive director of the city-county Sports & Exhibition Authority.
To finance the store, the city’s Urban Redevelopment Authority bought two parking garages from the Pittsburgh Public Parking Authority. The URA then leased the garages to a Chicago company that paid $28 million up front and agreed to pay $172,500 annually for 50 years.
Of the $28 million, $12.3 million went to Kaufmann’s to buy out leases it had in one of the garages. May, the parent of Kaufmann’s and Lord & Taylor, received $2.3 million for improvements it made to a garage. Lord & Taylor received an $11.75 million loan, and handed $9 million to Mellon Financial Corp. to buy the former Mellon Bank headquarters.
Lord & Taylor has to make payments on the loan only when its gross annual sales Downtown exceed $35 million. It would have to pay 2 percent of gross sales over $35 million.
It couldn’t be determined whether that has ever happened in the store’s brief life.
Asked how the Lord & Taylor decision affects the loan, URA Executive Director Mulugetta Birru said, “Under the agreement, they are expected to operate the store as Lord & Taylor at least five years. If they don’t do that, they are in default of the loan.”
The store opened in November 2000.
Whether such a default would make the entire amount due and payable is uncertain, he said.
“We are reviewing that right now with the lawyers,” Birru said. “This came as a major surprise. They didn’t even call us.
“Six to eight months ago, I did speak to them and they had informed me that although their sales levels are low, they were considering they could still make the store work profitability.”
Leeper referred questions to the mayor’s office.
Pittsburgh Controller Tom Flaherty said he believes Lord & Taylor “never paid a dime” on the loan and could get out of town without ever repaying anything.
Flaherty said he will investigate the loan’s status.
“That’s something that we’re are certainly going to look at, and I would think it’s something that City Council may want to investigate,” he said. “Before the city acts, it’s imperative that the decision-makers know what the ramifications of this are. The ramifications to me don’t look good at all. It looks bad. There is a lot of public money invested in this department store, and it’s bad news that they are planning on getting out of Dodge.”
To build its Downtown store that opened in 1998, Lazarus received a $13 million loan from the city-sponsored Pittsburgh Development Fund. It has yet to reach the $41.7 million in annual sales that would require it to begin repaying the loan. In total, Lazarus received a $48 million public subsidy on the $78 million cost to build the store and a 500-car garage underneath it.
Lazarus officials could not be reached for comment yesterday.
Michael Yeomans and David M. Brown can be reached at myeomans@tribweb.com or (412) 320-7908.
This article appeared in the Pittsburgh Tribune Review © Pittsburgh Tribune Review
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New designs for Route 28 gains support – Proposals would spare church, industrial park
By Joe Grata,
Post-Gazette Staff Writer
Thursday, July 17, 2003Alternative designs initiated by the Pennsylvania Department of Transportation only six months ago appear to be gaining support for the eventual reconstruction of a two-mile stretch of Route 28 between the North Side and Millvale.
Both options would save St. Nicholas Church, the first Croatian Roman Catholic Church in the United States, although the Pittsburgh Catholic Diocese wants to close it, and Millvale Industrial Park, although the owner wants to get rid of it.
Historic preservation groups are rallying around the two sites along the dangerous, congested highway.
At a PennDOT-sponsored open house at the Boathouse on Washington’s Landing yesterday, many of the 300 people who turned out to look at plans and meet with engineers appeared to favor “Alternative 6,” which proposes to rebuild Route 28 essentially where it is, rather than “Alternative 5,” which would place six lanes of traffic on a 30-foot overpass only a flying hubcap away from the stained-glass “rose window” above St. Nicholas’ main entrance.
“No. 6 is a superb plan,” said Jack Schmitt, chairman of the Religious Structures Committee of Preservation Pittsburgh, who said new access and parking would enable the church’s dwindling congregation to grow. “It saves the church, preserves the green hillside and is cheaper” by $40 million.
No. 6 could be even cheaper if it were up to Andrew A. Lang Jr., owner of Millvale Industrial Park, home to a dozen small businesses.
Historic groups want to save that site because one of the buildings housed a brewery in the 19th century.
“There’s nothing historic about it,” Lang said of the building, which is now mostly a warehouse. “It’s been altered and remodeled 15 times. You’d never know a brewery ever existed there. Why does someone else have an interest in saving my place when I don’t?”
Tom Fox, PennDOT District 11 assistant executive for design, said while he may be inclined to accommodate Lang’s wish, federal laws require PennDOT to prove there’s no prudent and feasible alternative to buying and demolishing a historic structure, even though it might cost $20 million to save the one Lang owns.
Plans to rebuild the two miles of Route 28, known as the “death stretch” because of its accident history, have languished for years.
The highway, an extension of East Ohio Street past the Del Monte/Heinz plant, is a narrow four lanes with no divider or shoulders. Traffic bogs down at signals at the 31st and 40th street bridges.
PennDOT proposes spending $160 million to $200 million to reconstruct the stretch, although the timetable does not call for construction to begin before 2008.
Until six months ago, PennDOT’s design options would have eliminated St. Nicholas Church and Millvale Industrial Park and dislocated about 80 households, including some on Eggers Street atop Troy Hill. The plans would have meant constructing up to 20 miles of retaining walls over the two-mile stretch to shoehorn a limited-access expressway between the steep hillside on one side and Norfolk Southern Railway tracks on the other.
Fox credited George White, a retired civil engineering professor who is with the Pittsburgh History & Landmarks Foundation, for coming up with new ideas that have since been modified to conform to the terrain and geometry at the two bridge intersections.
“My take on [the open house] is that the people favor Alternatives 5 and 6,” Fox said. “We’ll study the comments and recommend a final alternative for the draft environmental impact statement and hold a public hearing on it early next year.”
Nos. 5 and 6 would provide nonstop traffic flow on Route 28, as did the earlier plans, although the speed limit with No. 6 would be 40 mph and the horizontal profile would be narrow: a 5-foot sidewalk in front of St. Nicholas, a 2 1/2-foot-wide curb, two 12-foot southbound lanes, a concrete divider, two 12-foot northbound lanes and another 2 1/2-foot-wide curb.
Fox said accidents and breakdowns would stop traffic, as opposed to Alternative 5, which provides 10-foot-wide shoulders in each direction by elevating parts of the highway toward the river, over the railroad line.
White said special legislation could permit PennDOT to acquire half of the 52-foot-wide railroad right of way and build No. 6 as a first-class transportation facility at the present elevation, increasing the frontage at St. Nicholas and keeping the hillside in its natural state.
White said train traffic is so infrequent that Norfolk Southern does not need all of the four tracks passing through the site.
One more entity is planning to weigh in on PennDOT’s plans — the Riverlife Task Force, a group promoting preservation and controlled development along the city’s river corridors.
Attorney Ted McConnell of Kirkpartrick & Lockhart, a Downtown law firm that advises the task force, was at the open house, examining a total of 11 options that were posted on easels around the room.
“We’re concerned about the hillside, the visual impacts and the community impacts of what PennDOT plans to do,” he said. “We’re looking at the alternatives and determining if there are some appropriate mitigation measures that we can recommend.”
Joe Grata can be reached at jgrata@post-gazette.com or 412-263-1985.
This article appeared in the Pittsburgh Post Gazette. © Pittsburgh Post Gazette