City Creek Center: Three for the Money 

As City Creek opens, Gateway & Trolley Square scramble to compete for shoppers

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On Feb. 21, 2012, Richard Wirick was crossing 400 South by the Salt Lake City Main Library when he was hit by a UTA bus. Wirick died of his injuries hours later in hospital at the age of 82.

Several weeks later, a purple wreath still adorns the door of Wirick’s Oxford shoe store on 100 South. The death of “Mr. Downtown,” as he was officially crowned in 2006 by local businesses, could not have been more poignant. No one spoke more passionately and with greater optimism than Wirick about the opening, across the street from his store, of the City Creek shopping center on March 22, 2012.

“He sadly missed it by a few weeks,” says Pam O’Mara, owner of Utah Artist Hands gallery, Wirick’s 100 South neighbor. “It was heartbreaking. He died a downtown death, going to a chamber [of commerce] meeting.”

Wirick’s boundless optimism, however, is not reflected in all quarters. Indeed, fear, if not loathing, may be closer to the mark.

While The Church of Jesus Christ of Latter-day Saints’ $1.5 billion mixed-use development, in partnership with real-estate investment trust Taubman Centers Inc., has injected new life into downtown, some see the 700,000 square feet of new retail space in Salt Lake City as a threat to neighboring shopping districts Gateway and Trolley Square.

“There’s just not enough demand nor fashion retailers to fill all the square footage that’s available in the downtown area,” argues Geoff Kaessner of GSK Realty Services. “All three cannot be national fashion retail shopping centers.” Nick Egelanian, president and founder of Site Work Retail Services, a national consultant that specializes in retailing, knows the Salt Lake City retail market well. “There’s no question in my mind this market cannot support all three,” he says.

Both malls have had ample opportunity to prepare for City Creek’s debut as it got ever closer. Trolley’s owner pumped $80 million into purchasing and reconstructing the 1908 building.

Gateway, by contrast, seems to have stayed much the same, down to the instrumental 2002 Olympic Winter Games theme song and LeAnn Rimes cover of “God Bless America” that play as the backdrop to the “dancing waters” of the fountain in Olympic Legacy Plaza, which parents and children turn into an urban water park during summer.

Gateway marketing director Heather Nash might as well speak for both malls when she acknowledges that in the face of City Creek’s arrival, Gateway “has to become more defined.” She talks about Gateway being more entertainment-driven, especially given the proximity of the EnergySolutions Arena, a venue for Utah Jazz games and nationally touring concerts. Trolley’s eclectic selection of quirky local stores and national chains such as Pottery Barn, combined with its long history, reflects why it continues to be highly regarded as much as a community asset as a shopping destination.

Utah is littered with malls that have gone out of style, strip malls long since abandoned by tenants seeking more foot traffic. With City Creek, the LDS Church has presumably erected something that’s meant to stand the test of time. Yet behind the polished veneer of Taubman’s marketing machine, the current seismic shifts in the downtown retail market seem to some more like an old-fashioned shell game. Raffi J. Daghlian, who owns Daghlian Oriental Rugs in Trolley Square, sees retail development in downtown Salt Lake City as “a vicious game.” First the LDS Church-owned ZCMI and Crossroads Plaza malls on Main Street killed downtown, he says, “then Gateway killed ZCMI and Crossroads, and now City Creek is killing Gateway. They are stealing each other’s customers, putting them from one pocket to another.”

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If there is theft, it doesn’t come cheaply. Taubman has invested $76 million in City Creek and owns and manages the retail and restaurant properties. “It’s not really comparable to any other retail center in the world,” says general manager Linda Wardell. “It’s much more than a suburban mall plopped into downtown Salt Lake City.” The financial might of the LDS Church, which has invested an estimated $1 billion-plus into the 23 acres smack in front of Temple Square and its global headquarters, has meant that while other American retail development projects languished in the downturned economy, City Creek pushed on, becoming the only mall set to open in the United States in 2012.

The stakes are high for the LDS Church that City Creek succeeds. “They have many more reasons to make this mall a success than perhaps other owners,” Egelanian says. “Pilgrimage, tourism, cross-promoting [with Temple Square], cross-marketing—those dynamics give them many more reasons to invest more deeply” than owners who do not have quite the same relationship with the city the mall is based in. Wardell expects 30 to 40 percent of visitors to be tourists, with some arguing this may create a City Creek spillover, with tourists from Idaho, Wyoming and Nevada not only patronizing the Mormon mall, but also the other shopping districts.

The LDS Church’s investment is evident wherever you look in City Creek, whether in the retractable roofing, which pampers shoppers in a way that visitors to Gateway’s wind-tunnel-like street can but dream of in the winter; the fountains—designed by the same company that created Las Vegas’ Bellagio fountain and also Gateway’s fountain—that do hourly shows mixing water, light, sound and fire; or the aquatic plants transplanted from the real City Creek to the fake one that meanders through the 92 percent leased, two-part shopping center. Spend and they will come, seems to be the philosophy, which begs the question, Kaessner says, of whether the LDS Church and Taubman can “put this development in top position in the marketplace just by sheer quality of building something so fine everybody has to go?”

Macy’s and Nordstrom may anchor the development, but the real anchor is the Mormon church. Flanked by Temple Square on the north, visitors to City Creek who stand in the outdoor food patio can almost feel the watchful eyes of law firm Kirton McConkie, as well as its key client, the administrative headquarters of the LDS Church—housed in the Church Office Building, the second-tallest structure in the city—looking down upon them.

City Creek is a truly conspicuous celebration of wealth at the tail end of a devastating recession, providing Gentiles and Mormons with a dollar-driven meeting point between South Temple and 100 South. For a faith dedicated to establishing God’s kingdom on Earth, City Creek is a curious coalescing of financial and religious imperatives, arguably reflecting, as Stan Albrecht wrote in Great Basin Kingdom Revisited, that “the individual attainment of economic success is viewed by some [Mormons] as the best indicator of righteousness and a useful surrogate measure of the assurance of one’s eternal exultation.”

The Happiness Factor
A remodeled trolley-car barn, Trolley Square opened in 1972 and has long held a special place in Salt Lake City, argues Steve Farr, owner of Payne Anthony Creative Jewelers. “Even if a corporation has ownership, it feels like it belongs to the community.” Walking Trolley’s cobbled corridor from the same parking spot he’s had for 30 years, “to me it’s almost stepping back in time.”

Cathy Kirkpatrick fell in love with Trolley when she and her daughter-in-law wanted to do a children’s clothing store based around the classic English novel The Secret Garden by Frances Hodgson Burnett. “It didn’t seem like an everyday mall. We loved the charm, the uniqueness of it,” she says. They opened The Secret Garden in 1998. The mall “was fully occupied and thriving then,” she says.

In 2006, owners Simon Properties sold the 320,000-square-foot mall for $38.6 million to Portland, Ore.-based ScanlanKemperBard [SKB], which took on a building with severe maintenance issues and a parking garage so dilapidated a car had partially fallen through the flooring. SKB “got rid of a lot of the tenants in there,” Kirkpatrick says, as they pursued an extensive, almost $40 million project to free up more leasing space. Just as SKB was about to break ground on site improvements in May 2007, a shooting claimed five lives in the mall.

Accounts differ as to the impact of the shooting on Trolley. Some tenants recall overwhelming concern and increased foot traffic from customers wanting to support the mall and its shopowners, while others speculate that a pall still hangs over the shopping district.

What is not in dispute, however, is that construction put an end to many of the businesses. The Secret Garden had to move several times, and Kirkpatrick says her business never recovered. “I loved working there,” she says. “I kept thinking it was temporary; I hung on for four years, kept waiting for it to turn around. I finally had to bite the bullet and move,” she says sadly. The Secret Garden closed in July 2011. “You put your heart and soul into something like that, it’s very difficult to let go. It took me a long time to get over it.” Kirkpatrick moved to Greenbrae, Calif., and re-opened The Secret Garden in a family-owned mall.

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GSK Realty’s Kaessner worked for three years finding tenants for Trolley before SKB went with another firm. His idea was to bring in “best of class” local retail, local designers and artists to mix with unique national stores.

“My objective was to create an active, pleasant shopping-community environment,” he says. “It’s unfortunate that model did not translate into a profitable investment for the owners.”

SKB’s executive vice president, Jay Fetherston, says attracting new tenants to Trolley’s “neighborhood feel” was challenging not only because national retailers had battened down the hatches in the face of recession, but also because local businesses were having “trouble obtaining financing” to open stores. Currently, Trolley is just 62 percent leased. “I can’t go back and change the recession,” Fetherston says, “I can only point at the [newly leased] successes,” such as vegan Super Natural Cafe, Prana Yoga, Weller Book Works and high-end natural grocer Whole Foods.

In order to make way for Whole Foods, Trolley Wing Company, originally housed in an old trolley car on the east side of the mall, was forced to move indoors.

Trolley Wing Company’s general manager, Beau Riddle, argues that the high-end grocer hasn’t added much to a mall that draws not only from the Avenues but also from the University of Utah. “The mall outpriced its demographic,” Riddle says, adding that Trolley is “like a Christmas mall, where you go for a cool trinket for your kitchen.”

SKB’s Portland-based Fetherston disagrees. He argues that he himself is an example of why Trolley’s core customers are much wider than such narrow stereotypes. He loves “super hot wings” and beer, while his girlfriend, a naturopathic doctor, shops at Whole Foods. That breadth of service at Trolley “resonates with me.”

But Riddle complains that such a perspective hasn’t been communicated to tenants by Trolley’s local management team. “If there’s a vision, I don’t discern it. If they have a direction, they don’t share it.”

Some critics argue that with so much money invested, SKB’s need for high rents were stymied by a recession-suffocated market. Fetherston says, however, “The business plan today on rents is different from the day we bought it in 2006.” Whether City Creek, Gateway or Trolley, “everyone’s trying to be responsive” to the recession, he adds.

“Construction-wise, they have everything done great,” Riddle says. “Now they have to figure out how to fill it up.”

Tumbleweed
Only one Trolley Square tenant, Restoration Hardware, is departing for City Creek. Gateway, on the other hand, has seen 13 stores leave or open duplicates in the Mormon mall, according to Gateway marketing director Heather Nash. That’s not a surprise, however, given that a Taubman executive told the Salt Lake City Council in 2005 that some of the retailers they were interested in for City Creek “do exist at Gateway.” That same year, the Boyer Company sold most of the retail space in The Gateway to Chicago-based Inland Western Real Estate Trust Inc. Boyer retained the northern and southern ends of the mall, along with office developments.

Downtown advocates aren’t shedding many tears for Gateway’s plight. Some see it as karma for the office and retail mall, which was built in the late 1990s with the help of public funds on 40 acres of land then owned by the railroad. Vasilios Priskos is director of downtown-based Internet Realty. He says Gateway, with its pedestrian imitation of a street of shops, “was a duplication of Main Street, a mimicking of what you have naturally here. It’s a very sterile version, but without the alleys and the odors. Young kids love it.” Priskos found the subsidizing of a development that was drawing retail from the struggling malls, Crossroads and ZCMI, and office rental income from downtown hard to swallow. “It was a little more offensive. I didn’t like it. Most of the rent roll of office tenants—including The Salt Lake Tribune—came from the core of the city.”

One long-established retailer who opened a store in Gateway was high-end haberdasher Dale Grant. Grant put in $250,000 worth of leasable improvements and fixtures, but the Olympics proved more of a curse than a blessing. Gateway’s long criticized labyrinth underground parking was given over to athletes, and Grant recalls the TV news urging people to stay away from downtown because of security concerns and congestion.

Gateway’s first-year policy of not permitting driving through the street also caused problems. “I’d walk out on the street and expected tumbleweed to blow by,” Grant says. “There was nobody on the street. It was scary.” Business picked up in the next few months.

City Creek was originally expected to open up late last year, but subsequently announced a March 2012 opening. Intentionally or not, that gave Taubman a larger window of opportunity to pursue retail businesses at Gateway, the 10-year leases of which expired in October. “Competition for tenants can be very fierce,” Egelanian says. “Many different forces are brought to bear, not the least of which is whoever is leasing one of the centers or multiple centers and has other centers that the stores want to be in.” Taubman has numerous upscale malls which to use as leverage to persuade a retailer into City Creek.

Priskos says the LDS Church’s financial clout and Taubman’s leasing experience is a potent combination. “I don’t think it was inappropriate pressure.” Unlike Gateway, City Creek was not subsidized, Priskos points out. The LDS Church and its partner paid “full bore for everything. So it’s all fair game.”

Downtown Alliance executive director Jason Mathis says he was more concerned six months ago than he is now. Inland, he says, “is really committed to [Gateway’s] long-term success. I am convinced they will continue to be viable, dynamic.” The loss of stores was “a handful,” and Gateway “will continue to thrive.”

On a Wing and a Prayer
Walk down the mall from north to south and the mix of bright, lively store fronts, such as Bastille and G-Star Raw, is mixed with empty stores with stock-photo posters in them advertising Gateway’s many supposed charms.

Gateway marketing director Nash says Gateway is 90 percent leased. One tenant that was expected to leave for City Creek that has instead signed a new lease with Gateway is Abercrombie & Fitch. Local realtors speculate its racy advertising was unacceptable to the LDS Church, although whether they had final say over which tenants they would not like to see in the mall isn’t clear. Nash points out that Gateway has also brought in new tenants recently, including hip fashion stores Bettie Page and Francesca.

Dale Grant left in October 2011, when his 10-year lease expired. “We could see sales going down,” he says. Taubman invited Dale Grant and his son Sky, who now owns the store, to look at City Creek. They liked a space by Nordstrom. But the rent structure was so high, Dale Grant says, he did not want to end up working for a landlord. “You had to go in there and be a huge success immediately or be in trouble.” Taubman’s arrogant attitude also irritated him. They acted, he says, as if “it were a privilege to go in there.”

Although Grant was forced to “walk away from a lot of money,” in terms of the $250,000 he had invested in building up the Gateway store, “I’m happy as hell” to get back to his original store in Foothill Village. “It will get ugly in there, I predict,” he says about Gateway.

Some businesses are betting on Gateway, but that’s not necessarily always a good thing. On Jan. 12, 2012, discount retailer Tuesday Morning opened in the Gateway, replacing a lease to a Halloween store. It’s at the north end of the development, which from the Apple store onward is still owned by developer Boyer. Retail consultant Egelanian doesn’t mince his words. “There could be no greater statement or harbinger of where that thing is going. That’s not a good direction.”

Nash disagrees. “It’s good to have that space leased and filled,” she says. “I don’t think it’s a negative for us.”

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Will Miller is more upbeat on Gateway’s future. After a year negotiating with Boyer, he has just opened the 15th branch of Wing Nutz at the south end of the mall. Wing Nutz was set up by Miller and Trolley Wing Company founder Will Owen five years after Owen was bought out of Trolley Wing Company.

Miller likes that Gateway has “the laid-back feel. It’s easier to spend time here. There’s plenty of places to eat, relax. There’s a good feel to it.” Despite being open only two-plus months, there are already a few dozen engraved mugs on the shelf representing VIP customers. It’s a practice Owen started at Trolley Wing Company. Each drinker gets a nickname engraved on their mug. Miller is “Wolf,” which stands for “wise old likeable fart,” he says with a grin.

The biggest question hanging over Gateway is the fate of key tenants like Anthropologie, a huge draw for young women shoppers, and Apple, which some argue is responsible for much of Gateway’s 6.5 million annually returning visitors. Nash says Anthropologie is “one of our tenants today. They have a lease with us.”

Whether Apple neighbor Forever 21, which has two floors leased from Boyer, will stay, given that it is opening a store in City Creek, isn’t clear.

Nash cites the new arrivals and says, “We have new energy coming in, we are not just standing still.”

Rules of Conduct
Whether part of this energy will include City Creek shoppers seeking entertainment options at Gateway remains to be seen. Another uncertain factor is whether City Creek’s ownership will impact the shopping appetite of locals and tourists. A recent QSaltLake blog suggested that the gay and lesbian dollar may stay away from a development owned by the Prop 8-supporting LDS Church, even if the retail space is owned by a different organization.

“The LDS Church has a very unique relationship with this community,” says Downtown Alliance’s Mathis. While they are interested in investing in downtown, it’s not only about business, he says, “but also being a long-term community steward. They feel a sense of ownership and interest in what happens in Salt Lake City.” That sense of ownership arguably can also divide local opinion. “Looking back at the history of Salt Lake City, there has always been these two sorts of differentiated pushes, one encapsulated with Exchange Place, the secular, non-LDS side of downtown, and the other Temple Square,” Mathis says. He acknowledges it will continue. “I think it’s really a tragedy there is this discord in our community.” That said, “certainly there are people of good will on both sides who want to work closely together to build a great community.”

City Creek’s Wardell echoes LDS Presiding Bishop David H. Burton’s statement at a recent press conference that all are welcome at City Creek. Unlike an incident two years ago when two men who kissed on church-owned Main Street Plaza were detained by church security, expressions of affection will be welcome, Wardell says, albeit within the “rules of conduct” that all Taubman’s 26 family-oriented shopping centers are governed by. City Creek is the only one that will close on Sunday, although its two restaurants, Texas de Brazil Churrascaria and the Cheesecake Factory, have the option to open. They both have liquor licenses, thanks to a miraculous—and short-lived—loosening of the license-granting rules by the Utah Legislature that benefited the Mormon mall’s restaurant tenants, although not to the point that they escaped the Zion curtain and other curious Utah restrictions on alcohol serving.

Kaessner predicts City Creek “will have a record-breaking opening, then settle down and have to build from there.” City Creek’s Wardell expects 150,000 in the first three days, with the LDS General Conference weekend on March 31-April 1 also set to bring in large crowds.

Squeaky Wheel
Retail in Salt Lake City has come full circle. Main Street boasts new stores and, says gallery owner Pam O’Mara, as she sweeps into the gutter blueberries from the Virginia creeper above her artists’ gallery, “people are walking around the city. That’s why Dick [Wirick] was so excited by City Creek. He knew it would bring people here.” She says in the past few weeks, she’s seen an uptick in business for her gallery and café from people who are going to, or work at, City Creek. Best news of all, she adds, is that its 5,000 parking spaces will be affordable—free the first hour, then $1 an hour after that. “When I heard that, I just wanted to kick up my heels.”

City Creek, unlike the malls it replaces, will have stores whose shopfronts face Main Street, says Jeff Barnard, owner of clothing boutiques JMR and Lolabella. He’s a veteran of the mall scene, having had stores in the Cottonwood Mall, which was torn down, and Trolley, which he left for Crossroads, only to then move to Gateway. Now he has two stores in Gateway, where rents average $40 per square foot. “Sometimes I think City Creek will crush Gateway, sometimes not,” he says. Either way, the key for a retailer, is to be “real careful you sign a lease with mobility so you don’t get trapped in a shopping center in decline.”

Barnard was in negotiations with City Creek for years. Taubman offered a leasing deal of $82 per square foot, which would incrementally rise to $125 over 10 years. Barnard didn’t necessarily balk at how expensive it was. “The way I look at it, you’re paying for more volume.” Nevertheless, he couldn’t afford it, and came up with an ingenious way of being part of City Creek and the seeming Main Street revolution without paying the exorbitant rent.

On Aug. 1, he will open a 5,500-square-foot store in the Crandall building, on the corner of Main and 100 South, called Chalk Garden Co-op, the title a nod to 1959, when his parents opened the Chalk Garden clothing store.

As downtown goes through a rebirth, those who gritted their teeth and stuck it out finally stand to benefit. After years and years of construction downtown, O’Mara says at times she thought she wouldn’t make it to the day when tourists would stop asking her why there was no one downtown. Now, with City Creek finally opening, Wirick’s optimism that downtown would burst into bloom after so many years of hibernation is already proving warranted. And, it seems, Wirick will be in on the act, in spirit at least. One of his relatives, she says, is planning to reopen the store when City Creek debuts.

Wherever Wirick is, she says, “I think he’s probably smiling.”

Whether Gateway is as cheerful is a more nuanced question. National retail consultant Nick Egelanian argues that Gateway is “probably the most vulnerable.” Trolley Square, he says, “has a pretty good future as a hybrid,” with its mix of high-end grocery store in Whole Foods and specialty boutiques like Williams-Sonoma. “My personal read of the market will be that City Creek and Gateway’s success or failure will depend on how tourists view them. The one that will have the most unique positioning is City Creek. Many of its retailers are one-of-a-kind [in Utah], and its physical features are not duplicated elsewhere. The formula that wins will be unique retailers and special place.”

Priskos argues that a third downtown mall is good news. “I do think there’s room for everyone. We’re not over-retailed. The question is where we will be five years from now.”

Gateway needs a major facelift, argue some. “I think the flavor of Gateway may change a little bit,” says Mathis, “younger, hipper, a little bit more of a niche market.” Kaessner agrees. “They need to become everything that City Creek can’t be,” he says. “They need more edgy retailers, wild restaurants, things that City Creek would never let happen.”

Payne Anthony’s Farr remains upbeat about Trolley. “I’ve been here long enough to continue to trust it will be full and beautiful as it has been in the past.” New Trolley arrival Tony Weller, of Weller Book Works, hopes similar local retail stars like his bookstore will be attracted to what drew him to the mall—its quality of architecture and personality.

But rug merchant Raffi Daghlian is more skeptical. Trolley, he argues, is caught in a catch-22. To get more people in, it has to have more stores leased, but to get more stores it has to have more foot traffic to attract them. “We don’t have the grease,” he says, to stop the proverbial wheel from squeaking.

SKB, meanwhile, has put the mall up for sale. “We’re trying to determine if it’s right for us to sell it or continue to own and operate it,” Fetherston says. Either way, he expects Trolley to survive another 100 years, unlike regional malls that quickly pass from fashion. “I don’t think it ever was [a regional mall], I don’t think it ever will be.”

In this constant recycling of retail space, of games played by powerful financial forces, it seems the winner is whoever has “the deepest pockets and the longest Rolodex list,” Kaessner says. Go up against the kind of financial clout that Taubman and the LDS Church are wielding, “and you’re going to lose.”Â

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