This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
The Gateway turns 5 this month.
Since its 2001 opening, the lifestyle center in Salt Lake City has revived the notion of traveling to the city to shop. It has pushed downtown's boundaries westward. And its popularity has made weekend parking a challenge.
When Gateway turns 10 in another five years, the LDS Church's new downtown shopping center will open with largely the same aim. City Creek Center is meant to resuscitate Main Street, lure back suburbanites and entice people out of their cars and onto the sidewalks.
The two malls might even feel the same. Residents will mix among shoppers. Water features will draw hordes of children. Fashionistas will flock to shop.
Four blocks apart, the two could band together as a powerhouse regional shopping magnet to compete with Fashion Place to the south and Layton Hills to the north. Or they could cannibalize each other and simply shift retail dollars around.
So will Gateway and City Creek combat or complement one another?
To Gateway owners, the answer rests with the church and its national retail partner.
"If they will concentrate on the O.C. Tanners and other high-end tenants they know about, I think it'll work well together," says Kem Gardner, a part owner of Gateway. "If they declare war on Gateway, it'll be confrontational."
As Mormons, Gardner and his Gateway partners are conflicted about competing against their church. But they have been clear eyed about protecting their mall.
They sold some of Gateway to an outside retail development company with a larger portfolio than the church's partner. They are fortifying their investment and have plans to add 150 more apartments, three more office towers and a hotel.
And, in key ways, Gateway will be bolstered by the church itself.
Raiders or rooters?
The Boyer Co.'s Gateway started slowly when it debuted in November 2001, but shoppers began flocking after the 2002 Winter Olympics.
Every month since April 2002, owners say the center has boasted double-digit jumps in same-store sales, though they didn't provide financial figures. The average sales per square foot at Gateway shops is $450 - compared with the industry average of about $400. Owners count about 5 million visitors a year.
Taubman Centers Inc., the church's retail partner whose malls average $508 per square foot, likes some of what it sees at Gateway.
"We have a very strong, vested interest in Gateway being successful," says Bruce Heckman, Taubman's vice president of development, noting City Creek Center will thrive if the rest of downtown booms. "We want to make sure they are synergistic."
Together, he pointed out, the two could provide a powerful attraction to shoppers - better "than any one of us alone."
But what has Gateway owners hunkering down is a statement made by Taubman CEO William Taubman early last month at a City Council meeting, describing the tenants he would seek:
"We will see the retailers that are appropriate for downtown Salt Lake and are appropriate for a Nordstrom/Macy's type shopping center. Some of those retailers do exist at Gateway. The retailers will need to decide where they feel they have the best opportunity for sales and income."
It's hard to know how the two shopping centers will work together - or not - until Taubman lines up its tenants. Heckman says leasing won't happen until 2010. "We're not focused on individual tenants. Too much happens in retail."
But one Boyer executive told City Council members that Taubman already has talked to some Gateway tenants. After all, 33 tenants found at Gateway - from Apple to Z Gallerie - are found at a Taubman mall in Denver.
"There's no question they're going to come after the tenants," Gardner says. The church "gave us a chance to really get Gateway established, for which we're grateful. Hopefully we've positioned Gateway where we can be competitive."
Gateway developers believed they had an understanding from top-level LDS officials that there would be no cherry-picking. "I believe the church has the intention of honoring this handshake agreement to [not] raid or pick off our tenants," says Jake Boyer, another Gateway owner.
But the church won't deny or confirm such a deal. Instead, it defers to Taubman, which will own the retail portion of City Creek Center and has made no such pact with Gateway.
"There is sufficient business in the downtown for Gateway and this new center to be highly successful," says Mark Gibbons, president of Property Reserve Inc., the church's real estate arm.
For some, it may be hard to stir up sympathy for Gateway owners, because talk of raiding rings as deja vu. When Gateway arrived, it was supposed to complement, not compete, with Main Street. But Gateway is seen by some as helping kill the Crossroads and ZCMI Center malls. Nordstrom even wanted to bail from Crossroads, until the city blocked the move after intense lobbying by the church. The department store now intends to help anchor City Creek Center.
Boyer denies harming Main Street and blames the malls' demises on poor management. He says 42 of Gateway's retailers were new to the market, while just 3 percent of the square footage of Gateway came from Main Street. The figure doesn't include the office tenants who have moved west off Main (including The Salt Lake Tribune).
As church-going Mormons, Gardner says he and partner Roger Boyer are uncomfortable going head to head with their church. So, in 2005, they sold portions of the mall to Inland Southwest Management, part of a larger publicly traded company. With its 832 properties, Inland is much larger than Taubman, at 22. But Inland's assets are concentrated with small community centers and malls, while Taubman owns more regional centers, giving the latter more clout with the type of tenants that both Gateway and the church's project will try to snag.
Gardner also notes he cannot compete with the church's pocketbook. "On a subsidized project, how do we compete unless we have a large retailer backing [us]?"
Because the church won't be seeking public funds, the city cannot require it or Taubman not to pluck from Gateway. The city has that leverage with Gateway - but at least one City Council member is considering erasing the fine Gateway must pay for the stores it lifts off Main or from Trolley Square, southeast of downtown.
Anita Kramer, director of retail development for the Washington, D.C.-based Urban Land Institute, thinks the two malls will be able to co-exist. "If the existing center is strong and doing well, there's no reason to believe it would be impacted. A developer typically wouldn't want to build if the only way to build is to completely cannibalize the existing one."
For now, no exodus from Gateway is in the works - at least by locally owned tenants. And some tenants have signed a "radius clause" forbidding them from opening another store near Gateway.
Sky Grant, owner of men's clothier D. Grant Ltd., ticks off Gateway's advantages. It is open Sunday, provides entertainment draws such as the children's museum and is just off the freeway. It also will be closer to commuter rail's downtown stop once FrontRunner chugs through in 2008.
"If they came and talked to me, I would listen," he says of Taubman. "But I'm not looking to move. We really like the Gateway."
Tresor Jewelers, which stood in Crossroads for 20 years, would like to be in both projects to cater to different clienteles - Gateway's 20-something audience and Taubman's expected older, wealthier shoppers, says co-owner Nelly Depoyan. "If they let me, I want to be in both malls."
Gateway's Bastille could be one of the upscale clothing stores - a man's sweater runs $276 - found at City Creek Center, but owner Dawn Farrell says she is "happy right where we are. I would hope [City Creek Center] is something that would complement Gateway, not compete with it."
Some Gateway shoppers hope to split their time between both malls. While browsing Bastille for boots recently, Nicole Bingham of Salt Lake City said Nordstrom would tug her to City Creek Center. "To me, it's not an issue of shopping at one or the other. I would shop at both."
And although City Creek Center will be closer to browse for Salt Laker Belem Boisbunon - she works at the Zions Bank building on Main Street - she plans to continue trekking to Gateway on her lunch hours and weekends, as she has since it opened. "It's fun to walk around here - I really like the variety of stores they have."
Growing up, out:
From now to City Creek's debut, Gateway will keep growing.
When the city forbade Nordstrom and its ilk from opening at Gateway, it bent the rules to allow stores such as Target, Kohl's or Wal-Mart. But Gateway has given up on a department store and will instead convert the parking lot north of Barnes & Noble into up to two more eight-story office towers, with retail on the ground floor starting in 2007. A third office tower soon will be under construction on 200 South.
"We're 100 percent leased. People, they like this atmosphere for an office location," Jake Boyer says.
Cowboy Partners - the same company building some of the housing at City Creek Center - is set to build 150 higher-end apartments on 500 West, adding to the 500 apartments or condos already at Gateway. In addition, almost 370 more housing units are planned by other developers immediately to the west. And five blocks north, 90 condos or town homes are set to be built as part of a mixed-use development.
Gateway developers are in negotiations for a 125- to 150-room boutique hotel on 400 West, fulfilling initial plans for the shopping center. "We're talking to several hotel groups. It would be a premier place to stay if you were coming in from out of town," Boyer says.
Gateway has locked down the entertainment draws - and City Creek Center will offer no resistance. The new mall won't include theaters or live entertainment. And just two full-service restaurants are planned, while Gateway boasts a restaurant row, bar, live-music venue, planetarium, children's museum and movie theaters.
"On a Friday night, I'm not sure - if there's only two restaurants and no movie theaters [at City Creek Center] - you're as likely to go to that center," Boyer says.
City Creek won't be open on Sundays, the third-busiest day (after Saturday and Friday) at Gateway based on parking counts. And the new mall will have less retail than the two centers it replaces: 900,000 square feet instead of 1.2 million.
The church is propping up Gateway in another way.
It moved LDS Business College from 400 East to the Triad Center earlier this year, delivering 1,300 potential shoppers to Gateway's doorstep. The college could grow to 2,500 students. And the Salt Lake City satellite of Brigham Young University and its 1,800 students will move to Triad next fall. Those BYU students will be commuting, but up to 212 of the business college students will live downtown in separate-sex dorms.
Robert Grow, founder of the smart-growth group Envision Utah, believes the introduction of those college campuses are at least as important to downtown as building City Creek Center.
"Moving the campuses there is one of the coups of this decade in terms of the future of Salt Lake City."
Grow believes Utah demands two downtown malls. "As you project ahead the growth and strength of this region, both Gateway and City Creek Center are necessary amenities for Salt Lake City to fulfill its destiny."
Another good sign - both mall developers are talking about how to connect the two centers.
Although Gateway is just four blocks from Main Street, it feels farther. The Salt Palace cuts off 100 South. With its sprawling parking lots, South Temple offers a joyless walk. 200 South is more lively - but still a jaunt. And although light rail will be extended from the Delta Center to 300 South and 600 West - with two stops adjacent to Gateway - it still can require a wait of 15 to 20 minutes to shuttle to and from the two centers.
The city and downtown business community are exploring building a separate circulator system for quicker service. And the church could play a role in melding the malls if it develops its empty blocks on South Temple.
"We have the opportunity to create a capital city that in coming decades could blur and blend," says Tim Chambless, a member of the Planning Commission.
"We can potentially connect those and make it something seen in Tokyo, Beijing, Shanghai and Paris, where people get out of their cars and they walk and they enjoy doing it," Chambless says.
The city has five years to figure out how.