When Nordstrom in 1992 signed its lease to open in Circle Centre, mall developers extracted an unusual commitment. The Seattle company agreed not to open another Indianapolis-area store for at least five years.
So when Nordstrom last month announced it will launch a second location here, in The Fashion Mall at Keystone, it caught the attention of Herman Renfro, a former Simon Property Group Inc. development executive who oversaw Circle Centre.
"When I first read it, I thought, 'I don't know about this,'" said Renfro, who now runs Renfro Development Co.
Mike Higbee, who led the Indianapolis Department of Metropolitan Development under Mayor Bill Hudnut, also had misgivings.
Ultimately, they're OK with it—which is a sign of just how far downtown has come since Circle Centre opened in 1995.
"If you go back to the late '80s and early '90s, the issue back then was getting people to think of downtown as a retail environment, because it was not," said Higbee, who now runs his own consulting firm.
"That one-of-a-kind department store was essential to getting that done. I think we've gotten over that hump. People do think of downtown as a place to dine, shop and entertain."
Indeed, it's hard to relate now, but in the early '90s, downtown was a sleepy place. Demolition to make way for Circle Centre had begun in 1989. But problems lining up financing and anchor tenants delayed construction—leaving huge holes in the ground that shook the city's psyche.
To pull the project together, the city paid more than half of the $319 million cost to build it. It owns the land under the 791,000-square-foot mall and leases the property to Circle Centre Development Corp., a partnership of 20 companies that owns the mall itself.
Good, not great
Today, Circle Centre performs well, if not spectacularly. In 2005, sales per square foot for mall shops on the first three floors was $393, 3.4 percent above the national average, according to the International Council of Shopping Centers. The biggest disappointment remains the vacancy-plagued fourth floor, whose focus on entertainment and nightclubs didn't catch on.
One of the mall's strengths—or weaknesses, depending on how you look at it--is its reliance on the city's booming convention trade. Before the mall opened, planners thought about 25 percent of shoppers would be convention-related. The percentage has turned out to be about half.
With another Nordstrom in the market, you'd figure fewer north-siders would venture to the downtown Nordstrom. But Indianapolis retail brokers doubt many make a special trip now, given they have an abundance of high-end shopping options at The Fashion Mall, including Saks Fifth Avenue.
Nordstrom plans to open the second store in 2008, taking over space now occupied by Parisian. The anchor slot became available this fall after North Carolina-based Belk Inc. bought the 38-store Parisian chain from Alabama-based Saks Inc., then put Midwestern sites on the block. It sold the Circle Centre Parisian to Pennsylvania-based Bon-Ton Stores Inc. Bon-Ton is widely expected to retain the Parisian moniker, but didn't return calls seeking confirmation.
Simon has an incentive to make sure both The Fashion Mall and Circle Centre remain healthy. It manages both, owns The Fashion Mall outright, and has a 15-percent stake in Circle Centre.
Simon referred questions about the viability of two local Nordstroms to the Seattle company. Its spokeswoman expressed confidence both would do well but would not disclose the internal research the company reviewed before making its decision.
Mayor Bart Peterson isn't worried. Both Nordstrom and Simon are "savvy companies," he said. "It isn't in their interest to do anything that would harm Circle Centre mall."
Still, a second local Nordstrom does Circle Centre no favors. When the mall opened, developers boasted it featured an array of retailers not found elsewhere in the Indianapolis area. But over the years, the number of unique stores has shrunk. A handful—including FAO Schwartz, Warner Bros. Studio Store and The Museum Co.—closed because of parent companies' financial problems.
That's far from ideal. "The more unique, the better, for sure," Higbee acknowledged.
It's recently made up some lost ground. Last year, for instance, Hennes & Mauritz, a trendy Swedish apparel retailer, opened its only central Indiana location in Circle Centre.
But this is no time to take the downtown mall's success for granted. Circle Centre is appealing to conventioneers, in part, because it is one of the few successful downtown malls in the country. But that very fact shows just how fragile its success may be.