Westdale signing Burlington a reality check

CEDAR RAPIDS — When Frew Development Group announced the signing of a lease with Burlington Stores on April 12, it was a reality check for anyone expecting high-end retailers like Crate & Barrel, Pottery Barn or Trader Joe's to open stores in the 71-acre redeveloped former mall.

'We went after Nordstrom Rack and other stores that so many people have said they wanted,' John Frew, president and CEO of Frew Development Group, said by telephone from his Denver office this past Tuesday. 'They don't want to come to Cedar Rapids.

'It was not our choice. It was their choice.'

Burlington, a national off-price retailer with 567 stores in 45 states and Puerto Rico, will open a 40,400-square-foot anchor store in the fall at Westdale. The store will employ between 50 and 100 people.

Jasmine Almoayed, Cedar Rapids economic development manager, said retailers know exactly where their customers live and how many they will need to be successful in a community.

'Being a smaller market will always be difficult for us,' Almoayed said. 'It is very unlikely that we will see upscale national retailers opening clothing stores in Cedar Rapids. We don't have the population base they are looking for or the level of per capita income.

'There's a reason why you see certain stores in large cities and not in others.'

When Frew announced plans in May 2013 for the $90 million redevelopment of Westdale, he said the end result over a 10-year period would be a 'showcase.' Some community members on social media took that to mean it would have high-end retailers and restaurants like Carrabba's, Cheesecake Factory, Macy's and Whole Foods.

'I would never undersell a community. I will always oversell a community,' Frew said. 'I really felt there was a quality and level of tenants that we would be able to attract, and I still feel that way.

'For those that do match the population, income and other factors that we offer, we've had to swim between two giant sharks — Coral Ridge Mall and Lindale Mall. You start to narrow the range of possibilities very quickly.'

An analysis of retail possibilities for Cedar Rapids conducted by Buxton Inc., a leading retail site-selection company in Fort Worth, Texas, found a population of 121,030 within a 15-minute drive of Westdale. That number swells to 175,886 within a 20-minute drive.

The city's Almoayed said retailers are more likely to locate closer to their customers. She said Buxton has exclusive access to data from credit-card companies that tracks consumer spending habits down to the neighborhood level.

'When people say they would like a specific retailer or restaurant, they usually have visited them in a much larger community,' Almoayed said. 'We have a much smaller trade area. Unless you and 50 of your closest friends are going to spend $5,000 a day at Nordstrom Rack, they aren't going to come here because they cannot be successful.'

Frew Development Group received financial assistance from the city of Cedar Rapids in the form of a $5 million upfront grant that paid for demolishing a majority of the existing mall. It also has received a 14-year, 100 percent property tax break through tax increment financing, plus the city guaranteed an $11.5 million bank loan to complete infrastructure work such as a relocated ring road, new water and storm sewer lines, landscaping and lighting.

The developer has received City Council approval to revise its original site-development plan, most recently to eliminate a park that was supposed to be in the center of the redevelopment.

'Every retailer we talked with of consequence gave us the same message: 'We don't care about Easter egg hunts or concerts in the park. Get rid of it or we aren't coming,'' Frew recalled. 'They were equally emphatic about not wanting residential. This is literally a retail development.

'We needed to recognize reality, shift gears and move on.'

Frew said the revised site plan without the park does not violate the terms of the TIF agreement or his development agreement with the city.

'The development agreement specifies minimum improvements that we must make,' he said. 'In some cases, it specifies a range, such as zero to 5 percent of the land can be used for a grocery store. If we don't have a grocery store, we're not in violation.'

The need to revise the development agreement was recognized early on by Scott Byers, the Cedar Rapids Realtor who purchased the moribund mall in December 2013. As reported in The Gazette, Byers told the council in March 2014 that the agreement would need 'course corrections' over the life of the 10-year project.

Council member Scott Olson, an architect, commercial Realtor and developer, said the retail industry still is recovering from the 2008 economic recession and projects such as Westdale need to satisfy the criteria of potential tenants.

'There are not that many retailers expanding, and they can pretty well call the shots,' Olson said.

More than $25 million has been invested in the project so far, Frew said. He said $5 million will be invested for the Burlington store, which must be turned over to the retailer by Aug. 15, and another $5 million will be needed to upgrade and repurpose the 99,000-square-foot former Von Maur building.

'We are absolutely on our way to fulfilling our obligations,' he said. 'We are working with a new-to-market retailer for the first floor of the Von Maur building, and we expect to announce plans for a new-to-market hotel on the Williams Boulevard side of the project.

'When everything is done, I think people will be very pleased with the tenants we have attracted to a showcase development,' Frew said.