Mall Maverick -- Bellevue Square Developer Travels Unconventional Road

Bellevue Square developer F. Kemper Freeman Jr. has the bland, bespectacled countenance and modest manner of a trusted financial adviser. He even dresses like one.

But put him on his own turf and Freeman revs up. The salesman within emerges.

"Auntie Anne's!" he exclaims, catching sight of a snack store some distance down the mall, across the atrium. "Have you tried their pretzels? Even if you hate pretzels, you'll love theirs."

Or walking into The Bon Marche's men's store, where shirts are draped across fine furniture.

"I mean, that Nautica stuff," he says. "Who wouldn't be crazy about that?"

These days, it seems, plenty of people are crazy about what's happening at Bellevue Square, a retail laboratory for Freeman's highly successful, maverick brand of mall merchandising.

Construction partitions wall off spaces all over the mall as a $100 million-plus mall renovation continues. About 32 stores have opened in space formerly occupied by the now-defunct Frederick & Nelson, and a total of 17 more are opening, most by Christmas.

That has triggered moves throughout the mall. In the last year, probably at least a quarter of Bellevue Square's 200-some tenants have moved, remodeled or are new.

Some of the nation's most sought-after retail tenants, including Warner Brothers, F.A.O Schwartz and Ann Taylor, are in. More, including J. Crew and Williams-Sonoma, are coming.

Meanwhile, foot traffic is up nearly a quarter over last year. Sales per square foot - already one of the highest on the West Coast - have soared to about $500. Two anchors - The Bon and Nordstrom - are expanding significantly, and the third, J.C. Penney, probably will add 50 percent more space.

And Freeman, 52, already is polishing plans for his next move. Preliminary architectural drawings call for an 80,000-square-foot addition that will wrap around the Square's northeast corner. Another tenant with sizzling sales, housewares merchant Crate & Barrel, and Borders Books, will open on the site in 1996.

He has accomplished all of this while gleefully breaking nearly all the rules the industry swears by. But then, Bellevue Square is not a typical mall, and the Freeman family is not a typical mall owner.

For starters, it's a family-run business. The fourth generation of Freemans, Kemper's two daughters, work in the leasing office.

Most malls are owned by megadevelopers who regard their malls primarily as investments, not legacies.

Bellevue Square, a 1.3 million-square-foot mall, also is a single property.

Most developers own dozens if not 100 or more malls.

While most malls are managed according to a set of ironclad rules, Freeman does things his way. He ignores industry conventions that say a mall must have all its retailers grouped by categories, such as shoes; a mall must not put restaurants next door to nice shops; or a mall must have national chains and few local tenants.

"Kemper breaks every one of those rules," says Rebecca Wolfe, a Detroit-based retail leasing consultant who represented The Icing, an accessory chain that wanted a space in Bellevue Square.

"We, as retailers, pull our hair out because he's so unusual in so many regards."

When The Icing was offered a spot right next to Panda Express, a Chinese cafeteria-style restaurant with some decidedly pungent, garlicky dishes, Wolfe says tactfully, "we had to think about that a lot." The Icing went in.

"The sales tell the story, so he's doing something right, I guess," Wolfe says.

Freeman likes to point to the battle for the Frederick's space as an example of how independent, hands-on management can make a difference. Another retailer, Gottschalks, a price-oriented California chain, wanted the former Frederick's space in the mall. But Freeman, who figured Gottschalks wouldn't fit in, fought persistently to get the space, and won.

Now, instead of Gottschalks, he's getting a collection of shops any super-regional mall owner would envy.

Then there was the matter of Saks Fifth Avenue. After obtaining the former Frederick's space, Freeman won a commitment from the tony New York specialty retailer to fill part of the 220,000 square feet. On the day Saks was scheduled to sign, however, its executives told Freeman they'd lowered projected sales by one-third, so his share would be less, and if that was OK with him.

It wasn't, and he sent Saks packing. Then he came up with the plans to renovate Frederick's former space into small shops - something else industry pundits warned wouldn't work.

But it has, spectacularly. Sure, Freeman admits, it cost him more than it would have to have Saks. With hallways and such, he ended up with about 40,000 fewer square feet, and more tenants to manage.

But more than 300 potential tenants were interested in the space. And sales so far for the small stores are triple what Saks had projected.

Freeman's iconoclastic style is alternately viewed as trend-setting, or just plain bizarre. Take the practice of having restaurants and snack bars scattered throughout the center, rather than in a food court.

"That's a rule he may be writing," says Jim Mance, a leasing agent for The Rouse Co. who filled Westlake Center. Mingling restaurants and retail requires special venting to keep food odors and grease away from other tenants, especially clothing stores.

Still, says Mance, as malls become larger, shoppers may object to walking longer distances to get to food courts, preferring to have restaurants tucked in among shops.

Freeman's mall gets high marks from tenants for retail mix and service. Industry watchers say family-run malls typically watch such things more carefully than institutionally run malls.

"It's one of the premier malls on the West Coast," says Tom Bosch, Eddie Bauer's senior vice president for stores, which has several stores in Bellevue Square. "We're very pleased with the management of that mall."

So is Seattle-based Boston Sox, which faced a retailers' nightmare - having to relocate or close temporarily - during the recent mall renovation. Boston Sox ended up moving several times, but Bellevue Square went out of its way to ease the transition, even offering a much larger, temporary site for the same rent.

In an industry dominated by national chains, Bellevue Square is known as a mall where local retailers are welcome. According to Freeman, 48 percent of his tenants are local retailers, compared with a national average of about 12 percent.

"A lot of landlords will throw out their local tenant" if a national chain wants space, says Jim Bieri, president of Bieri & Associates, a Detroit-based tenant consulting firm. But in at least one instance, Bieri recalls, "Kemper kept the local."

Some worry that Bellevue Square's gain is Seattle's loss. Not really, says Mance.

In fact, Bellevue's renovation helps Seattle, because national retailers generally find that expansion into a new market requires at least two stores to make sense. Before the renovation, Mance says, many national retailers who wanted to come into this area couldn't find space in either Seattle or Bellevue. Now, at least, they have a toehold - and a stronger reason to locate another store here.

True, he says, if a chain in Seattle locates a branch in Bellevue Square, customers may initially shop there, and sales at the older store may drop 10 percent or 15 percent.

"But it always springs back," Mance says. Both markets remain strong, but they're different. Seattle draws the tourists, grabs the attention and still owns the more nationally prominent address.

"They don't shoot movies in Bellevue," he says.

Strolling past the new Aveda Esthetique cosmetics shop, Freeman acknowledges as much. When Aveda lists its store locations around the world, he notes, the company doesn't name Bellevue Square. It claims its address as "Seattle."

At some point in the future, Bellevue Square may emerge from Seattle's shadow in the eyes of the nation's shoppers. The upcoming $30 million addition will help.

Freeman all but chortles as he recalls how all the experts told him that the area where the expansion will go - between a parking garage and the street, at the intersection of Northeast Eighth Street and Bellevue Way - was "useless space," suitable only for parking and shrubs.

And he obviously relishes his next experiment.

Both of the new stores in the planned expansion, plus a restaurant and a third tenant, will not open to the mall. They will not even be accessible from the mall without going through the garage. Instead, they'll open directly onto the street, just like a city downtown.

Radical? For malls like his, absolutely.

But given Freeman's track record, he may end up leading the parade, predicts Mance.

"He's going to write some new rules," says Mance, "and I think you're going to find other retailers are going to be following those rules."