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Bellevue Collection Had It Right – 50 Years Ago

I have been focusing on newly hatched properties which personify the live-in, work-at, dine-out destinations that will be the hallmark of successful shopping centers as we move towards 2020 and beyond. And I have made the point that these types of centers, when done right, can generate the rebirth and renewed prosperity of urban cores – in both large cities and small municipalities alike.

Turns out Kemper Freeman had it right…over 50 years ago! Kemper is chairman and CEO of Kemper Development Company, a third-generation privately owned shopping center owner/developer unlike virtually any other. For starters:

Dating from the company’s founding in 1946, Kemper Development has operated in only a single locale: Bellevue, WA, one of Seattle’s fastest growing and increasingly affluent suburbs.

Under Kemper Freeman’s leadership, Bellevue Collection – initially a one-off enclosed mall called Bellevue Square — has expanded over the past few decades to the point where it essentially represents Bellevue’s downtown business district. The “Collection” now encompasses a mix of high-rise office and residential structures and luxury hotels — in addition to the original shopping center.

Unlike many of its peers, Kemper Development has steered away from the public REIT structure and chosen to keep the company in private hands – and impervious to the vicissitudes of the financial markets.

Nevertheless, the Collection has evolved into a diverse mixed-use development with retail sales exceeding $1,000 sales per-square-foot – placing it among the top retail real estate performers in the West, and virtually anywhere in the U.S.

Given the company’s single-location focus, Kemper has been able to fine-tune its retail and marketing offerings to focus with pinpoint accuracy on the preferences and tastes of its continuously evolving customer base – without the distractions of under-performing properties which plague the typical mall REIT portfolio.

Kemper Freeman himself could easily serve as the resident historian of Bellevue . . . and in a sense, he and Kemper Development are the curators of Bellevue’s unique offerings as the most alluring suburban hub within Seattle’s trade area. What’s most interesting is that Bellevue Collection’s success is the result not of esoteric data mining studies, or of those much-ballyhooed technologies such as geo-fencing or beacons. Rather, it’s the cumulative outcome of the company’s intuitive customer service instincts – and its deep understanding of the diverse, multi-ethnic community in which it operates.

One thing you notice when you enter the Bellevue Collection mall complex: The retail assortment is not a bland mix of the “usual suspects.”

Rather, Bellevue Collection is essentially a world-class marketplace edited and localized for its customers. It’s a cross section of global brands and local design resources calibrated to the specific Bellevue demographic – local chefs utilizing locally sourced ingredients; fashions created by talented designers based in the Pacific Northwest; an ongoing calendar of special events featuring performers from the greater Seattle community.

In a recent extended conversation, Kemper outlined the key factors which have contributed to Bellevue Collection’s success . . . and together they could fill out a Retail 101 curriculum.

How has Bellevue Square achieved best of class sales performance – both in the West and nationally? 

“Since we only have the one location, we can afford to do a deep-dive into this community and its needs,” Kemper told me. “We have calibrated the amount of retail square footage needed to service this community, and the specific tastes and preferences of its residents. And we have organized the retail and entertainment offerings to address those interests.

“We concentrate on the fundamentals of retail display – incorporating lots of outside light and three-dimensional storefronts, which are a far more compelling draw than flat ones. We have also narrowed the common area walkways to 30-foot widths, and created clear site lines from one level of the center to another, thereby dramatically increasing customer dwell time and overall sales revenue.

Where do the residential and office towers fit in?

“We realized several years ago that great retail is the ideal catalyst for all forms of commercial real estate. That insight marked our transition from a retail-only destination to a true mixed-use community. We then brought people into our organization who were experts in both commercial and residential – rather than partnering with outside developers.

“We now have four office buildings and a newly opened high-rise apartment complex, together with two four-diamond hotels, as key components of the Bellevue Collection. The office and residential tenants drive the retail component, exponentially increasing our customer base with a live-in clientele.”

How does Bellevue Collection link to the greater community?

“We have a year-round sequence of special events which essentially comprise Bellevue’s civic calendar: The summer Arts Festival attracts 360,000 attendees; Fashion Week in September offers a line-up of runway presentations unique to the Pacific Northwest, and our December Snowflake Parade features performances by 250 college and high school students. We’ve also launched a Lunar New Year celebration in February, since Asians now represent 30 per cent of Bellevue’s 140,000 population and a significant portion of our clientele.”

Why has the newly expanded Food Hall become such a strong draw for both Bellevue and Seattle residents? (And Kemper Freeman can name them all!)

“We recruited three of the best chefs in the Seattle area to run their venues here. Pagliacci Pizza has the most incredible crust; Tavern Hall’s burger has a unique custom grind of beef blended with wine essence, and Pearl Seafood offers the most amazing array of regionally sourced oysters.”

What have you done with those vacated department store boxes?

“We converted a former Marshall Field (230,000 square-feet) into 35 new stores, and a former JCPenney (200,000 square-feet on three levels) into a another new specialty retail space. As a result, we were able to increase our rent roll by 50 percent — and we passed that increase along in the form of rent reductions to existing tenants.” (Macy’s, Nordstrom and Nordstrom Rack currently operate stores at Bellevue Collection.)

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