Sibling Rivalry

In fact, its juicy demographics and abundance of buildable land convinced Neiman Marcus to choose Bellevue over Seattle. "We knew we might be giving up some of the tourist opportunity by not going to downtown Seattle," says Wayne Hussey, Neiman's senior vice president of store development and real estate. "[But] studies showed that we could do more business out of the eastside."

Particularly persuasive were the encouraging "psychographics," a marketing research term relating to a group's attitudes and interests, concerning the "propensity for people to buy fashion-branded goods," he says. Although Bellevue Square has a very good midmarket retail center, explains Ivanoff, the region was hungry for a one-stop luxury offering. As proof of the appetite for a Euro-style, high-end shopping experience (14 Bravern retailers are new to the region), he points to one simple fact: "We opened 85 percent leased in one of the worst economies in history."

Of course, in the short term, both Bellevue and Seattle have to contend with a volatile economy. "Vacancies are soft in both markets," says Greg Wendelken of Seattle's Marcus & Millichap, which specializes in retail real estate investment and produces the closely watched National Retail Report. Wendelken predicts a further shedding of stores in both markets in 2010. His firm's 2009 third-quarter investor report on Puget Sound-area retail noted the sharpest spike in vacancies were on the eastside, up 6.7 percent from 2008. However, highlighted as bright spots for the eastside were The Bravern's opening and Bellevue's ongoing retail construction and, for downtown Seattle, the completion of a rash of new apartments and condos and Link Light Rail stations, as well as the line's extension to Sea-Tac Airport, all potential retail boosters.

Kate Joncas, president of the Downtown Seattle Association (DSA), isn't sweating downtown Seattle's retail outlook. "There's a lot of competition in the region, but we still have things that differentiate our market and give us a competitive advantage." Advantages such as large-scale civic collaboration (this past holiday season, the DSA for the first time partnered with the Seattle Center, the Convention and Visitors Bureau and the Metropolitan Improvement District in a retail marketing blitz), robust tourism (every cruise ship docked in 2008 brought $1.7 million into the downtown economy) and increasing urban density (2,991 new residential units were under construction in 2008), including the new condo developments Escala and Olive 8.

"You can't make a causal relationship between the condo growth and retail in downtown because there are too many factors that impact retail," Joncas admits. "But, in addition to Uwajimaya and Whole Foods, there's now the IGA [grocery store] right down on Third and Pike, and that had to be driven by the growth of residents downtown."

Other coming retail drivers Joncas points to are Amazon's new headquarters in South Lake Union, the Children's Hospital Research Institute's ambitious expansion in the Denny Triangle, potential expansion of the convention center and the viaduct replacement, set to bring new vehicle traffic into the heart of Pioneer Square and to its retailers as well as provide open waterfront space for pedestrians. Connecting downtown's retail venues via pedestrian-friendly, landscaped spaces, such as a four-block park planned for Belltown, is one of Joncas' ambitions.

One area where she gives the edge to the eastside concerns street safety. "Statistically, the downtown [Seattle] crime rate is really low," Joncas says, "but the perception is that it doesn't feel good to people sometimes." A recent survey of downtown residents, she notes, revealed ongoing concern for open-air drug markets and aggressive panhandling. Solutions being pursued include partnerships with the park department to engage locals with tackling trouble areas, as was recently successful in Westlake Park, and backing the passage of a stronger panhandling ordinance, under review by the city council as of press time. The city council finally repealed the dreaded business and occupation "head" tax last November, which small businesses particularly hated.

A recent study sponsored by the Seattle Business Coalition notes that while eastside cities have been gaining private-sector jobs since 2000 (19,200 for Bellevue), Seattle has lost 7,900. A contributing factor, according to the study, is Seattle's significantly higher overall business taxes. For example, it cites, in 2007, while Seattle hit up businesses for $175 million in taxes, Bellevue demanded a relatively paltry $30 million.

Math and demographic parsing aside, an argument can be made, and is, mostly by eastside players, that our two primary retail markets add up to one stronger region as a whole. Says Schnitzer West's Ivanoff, "I think they're complementary more than they are adversaries."

Perhaps, but there's also one inescapable truth. Unlike Bellevue, the pressure is on Seattle to maintain a thriving retail core or risk losing its world-class status. So go the burdens of the firstborn.

More Interesting Stats

• 46 percent of Seattle's population is aged 25-49
• 40,000 millionaire households are within a 10-mile radius of downtown Bellevue

Sources: Downtown Seattle Association; City of Bellevue; Kemper Development Co.; Money magazine (2009); Washington State Department of Revenue

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