In the land of grunge, Gore-Tex and geeks, The Bellevue Collection is betting big on luxury.
This story first appeared in the May 3, 2013 issue of WWD. Subscribe Today.
“I’ve been trying to make the case for luxury to come to the Northwest for 20 years,” says Kemper Freeman, owner and operator of The Bellevue Collection, a 4-million-square-foot, mixed-use complex 10 miles east of Seattle across Lake Washington.
“When I said Bellevue Collection could be another North Michigan Avenue, people looked at me and said I was crazy. But we’ve got the critical mass. We get 22 or 23 million shoppers a year. We have one of Nordstrom’s highest-volume units, among its top three, and we have some of the best restaurants in the market,” added Freeman.
He now has plans for a $1.2 billion, 2-million-square-foot expansion that he’s been pitching to designers and high-priced brands. At the heart of the project will be 200,000 square feet of retailing over three levels, with stores ranging from 3,000 to 20,000 square feet for the most part, though there could be a few retailers at 45,000 square feet or even as large as 70,000 square feet. Another 125,000 square feet for restaurants is envisioned. With some rearranging of the space or tenant departures, Freeman said, Bellevue Collection could also accommodate a luxury anchor such as Saks Fifth Avenue or Bloomingdale’s, but no such deals seem close.
The sprawling Bellevue Collection includes the Bellevue Square “super regional” shopping center and two mixed-use projects, Bellevue Place and Lincoln Square. The project, enlarging Bellevue Square and Lincoln Square, also calls for:
• Two six-level underground parking garages.
• A 31-story office building with views of Mount Rainier and Lake Washington.
• High-end hotels and high-end residential units.
• A sky bridge connecting the Lincoln Square and Bellevue Square expansions. Both properties will add retail.
For years, Freeman wanted to jump into the luxury game, and he came close just prior to the Great Recession, when he got a permit to expand and was ready to go. “But I could smell the end of the boom, and we just stopped,” he said. Instead, he spent $42 million remodeling his property with Italian limestone floors and other enhancements.
Asked why he’s proceeding now with the expansion, with the country not yet recovered from recession, Freeman replied that The Bellevue Collection is on a roll, having generated 10 percent increases or higher for 48 months in a row and reaching $853 in sales a square foot last year. December was up 22.4 percent, and November was ahead 19.8 percent, he said.
“It’s never been easier to arrange financing at the lowest rates if you have great credit and a great financial record,” Freeman added, giving further cause for green-lighting the project. “We have low leverage on our mortgages. And it’s never been easier to work with tenants if you have a good product.
“But you could say the simplest reason is customer demand. Microsoft employees are getting older and maybe want to dress up a bit more than when they were younger. They’re dining out more and buying the best wines.”
He implied there’s a lack of luxury in the region, even with The Shops at the Bravern, just three long blocks away. “In terms of luxury offering, there is nothing between here and San Francisco and Chicago.”
The Bravern got the head start on luxury in 2009, launching the first Neiman Marcus, Hermès, Burberry, Bottega Veneta, Jimmy Choo and Red Door Spa in the Northwest, among a handful of other luxury retailers there. The Bellevue Collection has a smattering of luxury limited to Burberry, Hugo Boss, Vince, Lacoste, Kate Spade, Tiffany, Façonnable, Michael Kors, The North Face and designer shops inside Nordstrom. Freeman says there’s no significant traffic synergy between the two developments, and he’s no doubt approaching some tenants in The Bravern, but he declined to identify any brands or designers he’s pursuing. “I’ve started the leasing talks, and [I’m] in the final stages of coming up with a design. It’s too early to say who’s coming, but they’re coming.”
It’s not an easy pitch, considering Northwesterners are more into hiking than haute couture. However, shopping at least in Bellevue is robust and not restricted to the moderate market or activewear. The 285,000-square-foot Nordstrom in Bellevue is said to be among the top three units in the chain, generating about $200 million in annual sales, right up there with the Chicago and Seattle stores. The Bellevue Collection also houses a 167,000-square-foot Macy’s apparel store and a 52,000-square-foot Macy’s home store, which together generate between $60 million and $90 million in annual sales. The 200,000-square-foot J.C. Penney does $20 million to $22 million and has fallen below the $25 million peak, according to sources.
The Bellevue Collection was started by Freeman’s father and grandfather in 1946, originally with 37,000 square feet for a coffee shop, a grocery and about 14 other stores. At one time there was a Marshall Field’s, which converted to a Frederick & Nelson, then a Liberty House, and ultimately got divided up into 180,000 square feet of specialty shops. When Freeman joined the operation in 1966, “My dad told me that my job was to double the size of the center. I spent 14 years doing it, doubling it to 1 million square feet from 500,000.” With this latest expansion project, he’s still on the job.