A few Register articles/editorials about the closing. It's defintely a loss, but the downtown movers and shakers appear to be pretty optomistic about what lies ahead for the property, including the possible mention of another format of department store that only sells mens and womens apparel. Still the question remains of why Saks purchased the building, then deceided to close the store.
Surprised to see that the store was indeed profitable, even if sales were well below average. We have a local real estate magnet, the assistant city manager, the Downtown Community Alliance and the Greater DSM Partnership all saying encourging things about what may lie ahead.
The editorials are defintely worth a read
D.M to lose downtown icon
LOSS OF YOUNKERS CREATES 'OPPORTUNITY'
By DONNELLE ELLER and PATT JOHNSON
REGISTER BUSINESS WRITERS
June 4, 2005
Younkers department store will close in August after more than 100 years in downtown Des Moines, concluding a downward decline that began decades ago.
Friday's announcement, which also included closing the Younkers Tea Room, saddened longtime customers who remembered the Younkers store and restaurant as part of a shopping tradition that spanned generations.
"I've been coming here for a long time," said Tiarra Williams of Des Moines, who works at Wells Fargo Financial. "My grandma used to bring me here."
Des Moines leaders said that the store closing is regrettable, but that it creates an opportunity for "more sustainable" development.
Advocates see smaller retail, housing and office space being developed in the 230,000 square feet that make up the building.
"If there was a time for this kind of setback, now is that time," said Susan Ramsey, a spokeswoman for the Greater Des Moines Partnership, who pointed to booming downtown development, including housing, recreation and business growth.
Among the projects: the $57 million Principal Riverwalk and Wells Fargo's $90 million expansion across from the Younkers building.
"I'm optimistic that developers are going to recognize the opportunity . . . and move quickly," Ramsey said.
Saks Inc., the Birmingham, Ala.-based owner of Younkers, said Friday that plans for the building and the store's final date are "yet to be determined." Saks purchased the building in May for $5.2 million from Illinois-based Southern Realty Co. The retailer is working with a Chicago real estate development company to determine the building's future.
Kerty Levy, president of the Downtown Community Alliance, calls the building an "architectural gem."
The retail chain was started by two brothers - Samuel and Herman Younker - who opened their first store in Des Moines in 1874 and the downtown store at Seventh and Walnut streets in 1899.
"It's an emotional loss, but it's a huge opportunity as well," Levy said. "Its location downtown is phenomenal. There's just so much potential there."
Saks Inc. said Friday that closing the downtown store is part of its "strategy of focusing our resources on our most productive locations." The 110 downtown employees will either be transferred to one of Younkers' four other Des Moines area locations or be fired and given severance packages.
George Myers, senior vice president of stores for Carson Pirie Scott, a division of Saks, said the downtown Younkers' sales were the lowest of all the Des Moines-area stores.
Experts said Saks is cutting low-performing stores so it can sell its northern department store group, of which Younkers is a member. Carson Pirie Scott, Bergner's, Boston Store and Herberger's also are part of the group.
Saks recently sold its Proffitt's and McRae's department stores to Belk Inc. for $622 million.
Saks and other chains are shedding department stores because sales are being "clobbered" by discounters, such as Wal-Mart and Target, and luxury stores on the other end, said Ken Stone, a retired Iowa State University retail economist.
The Des Moines metro area's department store sales dropped 11.1 percent for the period from February through April, compared with the same period last year, according to a report from the International Council of Shopping Centers. That made Des Moines the worst-performing metro area in the nation.
The figures include only sales at stores that have been open for 13 months or more - not the department stores that opened at Jordan Creek Town Center in West Des Moines or elsewhere.
"The stores that aren't high-producing are probably going to be closing up," Stone said.
Myers said it's unlikely any other Younkers stores will close soon, he said. The company closed stores in Iowa City and Omaha earlier this year.
The challenge for department stores in downtown areas is even greater, with shorter operating hours and more complicated traffic and parking.
Being downtown worked against the Younkers store, Myers said. Downtown stores have a limited customer base and generally aren't open nights and Sun- days.
"And for a normal department store that means losing prime selling time," he said. The downtown Younkers store was "really only busy 11 a.m. to 2 p.m. during the week."
In addition, Des Moines has seen an eruption of retail space enter the market during the past couple of years. Jordan Creek mall in West Des Moines opened in August with 1 million square feet. Also, "big box" retailers - Costco, DSW Shoe Warehouse, Lowe's and others - built about 750,000 square feet last year, much of it around the new mall.
"The whole movement of retail to the suburbs has ripped the downtown retail picture," said Stone, who noted that many cities are trying to lure major retailers to downtown "with limited success."
Kay Palan, an associate professor of marketing at Iowa State University, said consumers these days want "a variety of choices" from a variety of stores. Dense retail areas in cities such as Chicago or Minneapolis provide choices, as do malls.
"If a downtown isn't thriving, it's very hard for a department store to make it," Palan said. "It's my perception that the downtown Younkers has been suffering for years."
Rick Clark, the Des Moines assistant city manager, said the city has been working for years to keep the Younkers store open. In 1993, Younkers received $450,000 in forgivable loans from the city and a development group and the city agreed to buy the downtown Younkers warehouse in exchange for a 10-year commitment to downtown Des Moines.
"It's not a surprise that it's closing," said Clark, who added that Saks hasn't invested significantly in upgrading the store - or its merchandise - to make it appealing to consumers, especially younger residents moving downtown.
He said the fate of the Younkers downtown store was cast in 2002 when the retailer decided to move its corporate operations. "It was a huge blow. . . . It really did have an impact on the viability of that store."
Myers said about 50 Carson division employees will maintain offices in the building after the store closes.
Clark said he hopes a future developer will create retail space in the building, even if it's less than Younkers' 141,000 square feet. He said he believed a new retailer could succeed.
Crawford: Time wore away store's luster
By ERIN CRAWFORD
June 4, 2005
Sisters Jeannette and Eleanore Neumann remember meeting their dad for lunch at the Younkers Tea Room and shopping with their mom at the flagship downtown store with its big windows and shiny "Electric Stairs."
"It was a special place to go shopping," Jeannette said.
That was 10 years ago. That was old Des Moines.
Now the women are in their early 20s, and they're spending the afternoon in the city's new retail hot spot - the East Village. After meeting their father for lunch at Basil Prosperi on East Fifth Street, they stroll over to Schaffer's 504 to browse.
Younkers' downtown store may be closing, but that doesn't stop Jeannette Neumann from calling this an "exciting time" in Des Moines. Look around the East Village. There's art. A place to drink tea. An eclectic clothing boutique.
"It's the fun new place," she said. "You feel like you discovered something."
I always felt as if I discovered something when I went to the Younkers downtown, but it was a bit sad. It was the store time forgot.
At one time, Younkers must have drawn busy shoppers off the street, but these days, the only people on the sidewalk seem to be waiting for buses. Bystanders don't see a lot of terrific urban attractions around it.
The department store shut down every weekday at 5:30 p.m., just when people got off work and could spend their time shopping. Saturdays, it was about the only thing open in the skywalks, and practically deserted.
Younkers moved its most impressive fashion and accessory items across town years ago to its upscale West Des Moines quarters. The once-prestigious downtown showpiece hasn't been an exciting or glamorous place to shop in a long, long time.
That's why it's hard to get worked up about its departure. Talk to 20-somethings who missed the glory days, and I'll get an "Aww, that's too bad. Have you heard about the new restaurant in the East Village?"
(It's a swanky little bistro and bar called the Continental.)
Ben Washburn, 26, a professional who lives at Brown Camp Lofts with his wife, Alicia, sometimes dropped by the downtown Younkers for good tie sales. He calls it a loss, but only because he liked the convenient downtown location.
"The benefit of Younkers was I could walk by, see a tie and buy it," he said.
The future of Des Moines is in "small business," Washburn has decided. "It seems like (Younkers) was the only (retail), and that's probably why it faded. You have to have more."
Right now, the action is in the East Village. Jennifer Hansen used to work at Younkers downtown. She watched the company shift its emphasis from downtown to the Valley West store after she moved to town in 1993. Now she owns Eden, an elegant shop full of soaps and perfumes and home-fragrance items in the village.
To her, the stately old building at Seventh and Walnut would be the perfect place for small-scale retail - a cosmopolitan galleria, perhaps.
"I don't think a department store will come" to fill the space, she said. "There's a definite need for more boutiques."
Jeannette Neumann suggested that it might be a good space for a bookstore, with a nice cafe and coffee shop. Maybe Borders.
I spent a weekend in May in Seattle, which has a healthy downtown, chock full of ritzy retail stores: Louis Vuitton. Betsy Smith. Urban Outfitters. In larger cities, professionals who shop downtown expect that kind of "wow" factor.
For Des Moines' downtown workers, save for a few isolated stores sprinkled throughout the metro area, it's a half-hour drive to Jordan Creek to be wowed.
Whatever replaces Younkers has a lesson to learn from the former tenant: No store is an island, not even an aging institution. Especially not an institution that gave up a long time ago trying to impress a metro population that is increasingly cosmopolitan and has seen its shopping options increase exponentially elsewhere.
Young people are confident we'll figure it out.
"Once more residents (move downtown), you'll see more need for that retail," Washburn said.
With all the condo construction, pessimism about downtown just seems dated.
Elbert: With downtown's renaissance, why close now?
By DAVID ELBERT
REGISTER BUSINESS EDITOR
June 4, 2005
The decision by Saks Inc. to close the downtown Younkers store was inevitable, although the timing is somewhat ironic and sure to disappoint downtown workers.
Downtown department stores have been pulling out of central cities for more than three decades. Des Moines managed to keep one longer than most cities of similar size, and for that we should all be happy.
A lot of local people bent over backward during the past 15 to 20 years to keep open the store, which is nearly 106 years old. The city and others gave Younkers a big incentive package in 1993. Managers did their part by keeping the store profitable by shrinking inventory and staffing from eight floors to three.
The timing of Friday's announcement is ironic in that the owners kept the store open for many years when the future of downtown was uncertain. Now, for the first time in decades, the future of downtown seems all but assured with housing and retail making comebacks.
If Younkers could weather all the bad years, why pull out now when things look brighter than they have at any time since I moved here in 1975?
It's a tough question to answer with any degree of certainty at a time when the leadership at Younkers' parent, Saks, is in turmoil.
The company recently fired three top executives after they were accused of shaking down vendors for more than $20 million. To put it delicately, the company's credibility isn't the best right now.
Saks recently sold the company's southern division of department stores, and it wants to sell the northern division, which includes Younkers. Given the civil fraud charges that Saks faces from vendors in a New York court, it's a safe bet that any sale of the northern division will be carefully scrutinized and is likely to be delayed for a while.
In the meantime, one thing that Saks can do is clean up Younkers and the other properties that it wants to put up for sale.
Real estate experts say that while the downtown Des Moines store is profitable, it is probably off-putting to buyers because it's an odd duck. It's not in a mall, it's not open on Sundays, and its sales are well below average.
Also, the store had an odd lease arrangement that stemmed from the store not having its own heating and cooling equipment. The downtown store buys those services from the Partnership Building, which is on the north side of the same block as Younkers.
That arrangement has been in effect ever since the Partnership Building, formerly Locust Mall, was built in 1985. As a result, the lease that Younkers signed 15 years ago with an investment group that owns the building required Younkers to install heating and cooling equipment if the retailer ever moved out.
Younkers' lease was due to expire in August and would have triggered the requirement for installation of heating and cooling equipment, if no new lease was signed.
Given the age and size of the downtown store, it would have cost millions of dollars to do that, according to officials familiar with the situation.
Rather than sign a new lease, Younkers' parent company decided to buy the building for $5.2 million last month.
The purchase gives the company more flexibility, and is probably cheaper in the long run for Saks, according to downtown leaders familiar with the arrangement.
So what happens now with the building?
Saks isn't saying.
There's a chance, downtown experts said, that Saks could move one of its other retail chains into some of the Younkers space.
It makes sense, they said, because the one thing the downtown store does well is sell women's and men's apparel.
The store also sells kitchen, dining and bedroom furnishings, along with children's apparel. But downtown office workers shopping on their lunch hours for women's and men's apparel have kept the store afloat, the experts said.
The Younkers building is in too good of shape, and the property is too valuable to allow it to sit empty, said Jim Hubbell of Hubbell Realty.
It makes sense to continue to use the first and second floors for retail, Hubbell and others said.
A private health club is another possible use, Hubbell said.
The upper floors could be developed as luxury housing or office space or both, Hubbell said.
Older downtown office buildings typically have small floor plans that don't lend themselves to modern office layouts. But Younkers has large, open floor plans, Hubbell said.
An example of a similar conversion, he said, is the former downtown J.C. Penney store. After Penney moved out, it was converted to office space for employees of health insurer Wellmark in 1996.
"It's a great building and a wonderful location" in the heart of the downtown financial district, Hubbell said of the Younkers building.
"I know it's sad to see Younkers go, but this is not necessarily as bad as people might assume," he said.
He's right. It was inevitable that Younkers would close at some point.
It's better that Younkers close now when so many other positive things are happening. A few years ago, the downtown was more fragile. Losing Younkers would have been a much bigger blow.