High-end stores in store?

Nordstrom Rack store sales have seen double-digit growth for 26 consecutive quarters. The company plans to open 22 more of the offshoot of its full-line department store by 2018.

Omahans have big-city aspirations when it comes to shopping: High-end stores like Nordstrom, Macy’s, Crate & Barrel, Tiffany’s and Restoration Hardware are on many shoppers’ wish lists.

If Omaha ever is going to lure such high-profile retailers, now is the chance, retail experts said, with the planned revamp of the Crossroads at 72nd and Dodge Streets.

“It’s going to take a major, game-changing development” to attract higher-end brands to hang a shingle in Omaha, said Barry Zoob, senior vice president of Colliers International commercial real estate brokerage in Omaha. “That development, for all practical purposes, is going to be Crossroads.”

Consider, Zoob said, what the demographics data show:

» The 3-mile radius around Crossroads has the highest daytime population of any area in the city. That’s the number of people who live and work in any given area.

» The same 3-mile radius has the most “rooftops” of any area in the city. In other words, more households to patronize any new shops.

“You can’t get better demographics than that,” Zoob said.

Even though the current state of the mostly empty Crossroads might make it hard to imagine, the area would be a big draw for certain retailers, local commercial real estate brokers said.

Rod Yates, developer of the new Crossroads Village, said he’s in talks with new-to-market furniture and fashion retailers — the types of brands that Nebraskans have to travel to Kansas City and Minneapolis to access.

Yates wouldn’t name new potential tenants because, he said, he hadn’t signed any leases.

But some of the brands could be related to ones that already have outlet stores at Yates’ other project, Nebraska Crossing Outlets in Gretna, which opened in 2013. He said he has used the redeveloped outlet mall as a “laboratory and a beta” for other projects.

“What’s really going to help us in the end with Crossroads is we’ve had a bunch of stores build outlet stores here and a bunch of stores that want full-price stores in the market as well,” Yates said. “We’ll benefit from them testing the market and seeing good performance from the outlets.”

Brands that have opened in the outlet mall that hadn’t previously had a presence in Nebraska include Kate Spade, Tommy Bahama, Ralph Lauren, Michael Kors and the North Face.

On a feedback form posted on the Crossroads Village website, swarms of people say they want Macy’s, Nordstrom and Saks Fifth Avenue. “Apple, Crate & Barrel, Nordstrom, Kenneth Cole, a public park and space for local retail,” one submission says. Other suggestions include Zara, H&M, Bloomingdale’s, Topshop and BCBG.

So could Nordstrom or Macy’s soon be opening on 72nd and Dodge? Not likely, retail experts said. Department stores largely have stopped expanding around the U.S., especially as online shopping and specialty retailers have eaten into their business.

What’s more likely is an offshoot of a full-line department store, something like a Nordstrom Rack or Saks Off Fifth, those retail watchers said.

“There are very few retail formats that are expanding right now” and many are off-price formats like TJ Maxx, Nordstrom Rack or Ross Stores, said Ken Perkins, president of Massachussetts-based Retail Metrics.

National retailers big and small are adjusting to consumers’ changing behaviors, requiring them to re-think their store footprints, invest more in e-commerce and downsize their brick-and-mortar presences.

For example, Nordstrom plans to open a total of six full-line stores, including three in Canada, by 2018. It plans to open 22 Nordstrom Rack stores.

Nordstrom’s earnings show Rack store sales have seen double-digit growth for 26 consecutive quarters. Macy’s Backstage stores — its off-price offering — are being tested in larger markets like New York City, but the company announced just last month that it would be closing up to 40 stores next year, replacing some with Backstage stores.

“It’s tricky getting national retailers to open new stores unless it’s really a good location and a lot of good ones going in at one time,” Perkins said.

That could be just the opening for a new Crossroads, some said.

The latest redevelopment, expected to open for the holidays in 2017, would have 410,000 square feet of retail and restaurant space accompanied by a movie theater, an urban park, apartments and office space. Existing structures between Target and the Charleston’s restaurant will be demolished. Yates said he hopes to start demolition this spring.

“Most consumers, it seems like, are not just going to shop anymore — they’re looking for an experience,” Perkins said. “There has to be some sort of an entertainment aspect now because of the competition from online.”

Yates agreed: “(Retailers) like mixed-use, urban, infill development. They like to see office, residential and merchandising co-tenancy. It’s important if they’re going to come to the market to make sure they have the right project.”

The mixed-used component to the development is especially important, Yates said, given the decrepit state of the current Crossroads. It can be hard to lure a retailer to a project that has, in a past life, failed.

That’s why it’s important to include more than just retail, but also residential, commercial and especially entertainment, he said. Such additions mean built-in activity for would-be retailers.

At the moment, some of the financing for the project is still up in the air. The first phase of the project is supposed to cost $275 million, according to Yates. He and the city are in the process of negotiating what portion of the development will be publicly financed, something that has drawn some controversy.

In the meantime, those dreaming of a high-end department store probably should temper their expectations. A Nordstrom Rack could very well be in Omaha’s future, said Jerry Hoffman, president of Lincoln-based retail consulting firm Hoffman Strategy Group. But a Neiman Marcus, Saks or even a full-line Nordstrom? Probably not, he said.

“Those are really located in a very few spots around the country and they’re among the most affluent markets in the United States,” Hoffman said.

By practice, retailers don’t comment on possible new stores before they have signed leases with developers.

Local NAI NP Dodge associate Julia Roberts, who has lured new-to-market retailers and restaurants to Omaha, agreed that the fanciest department stores aren’t likely to open in Omaha.

And “as far as like an Ikea? No, those large boxes aren’t going to come here,” she said.

Developer Yates said he lured brands such as Kate Spade and Michael Kors to Nebraska Crossing by showing them how much “retail leakage” occurs in the local market. That refers to how many people from the market hop to another market to shop, like an Omahan going to Kansas City, for instance.

A Claritas study he commissioned before construction of the outlet mall in 2010 found about $1.4 billion in sales leak annually from the Omaha market to other states and about $2 billion when combined with Lincoln.

That shows Midwesterners have the money to shop and are willing to drive to get to the brands they want, Yates and others said. And it makes the trade zone — or the area the shops can draw from — larger than more congested areas where car travel can be a hassle.

Also, Nebraska’s strong economy has sold some retailers, Yates said, especially coming out of the recession where many stores were hard-hit in large markets like Los Angeles or Phoenix.

Perhaps all hope is not lost for Omahans dreaming of a Crate & Barrel in their neighborhood.

“We’ve finally put together the right location, the right kind of thought process to what a development should be as it relates to the environment these stores want to build in,” Yates said, “And that’s the magic we’re trying to create at Crossroads.”

Contact the writer: 402-444-1414, paige.yowell@owh.com

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