Developers Willing To Pay To Lure Starbucks

LOS ANGELES - The green-and-white Starbucks logo - as common as the golden arches of McDonald's in some communities - has become a highly sought-after prize that developers and public officials in other areas are going to amazing lengths to get.

"It's really important for these communities to have that Starbucks as a status symbol," says developer Severyn Askenazy of Pueblo Contracting Services. "It helps validate what they feel about their area."

In addition to the prestige Starbucks adds, developers also appreciate the shoppers it draws. Coffee-bar customers tend to linger and attract other businesses such as bookshops, bagel stores and restaurants. The chain already has some 2,000 stores worldwide.

Starbucks was one of the first names that came to the mind of Alhambra, Calif., City Manager Julio Fuentes when he began working on an overhaul of his town's sleepy Main Street in 1997. He wanted a big name that would grab people's attention and help give the downtown a more hip, upscale image.

Starbucks management wasn't immediately sold on the idea, so city officials offered the huge chain $136,000 in government redevelopment funds and a guarantee of cheap rent to open a store in Alhambra, about 10 miles east of downtown Los Angeles.

"It's a very trendy, upscale coffeehouse, and we decided we needed that," Fuentes said. "We just provided them the incentive to jump in the pool as one of the first swimmers."

Such recruitment tactics are not uncommon, although officials at the Seattle-based company decline to discuss their strategy or the incentives they receive from cities and developers to open their corporately owned stores. Several cities and neighborhoods in California alone have made pitches similar to Alhambra's, although not all have been successful.

Askenazy tried to lure Starbucks to the shopping center he's planning in the city of San Fernando, but has been unable to reel in the company. He called Starbucks' real-estate broker and began calculating how much free rent and tenant improvement he could offer. He even put together a new set of drawings showing Starbucks with a drive-through window.

"Ninety percent of the time we go into a location just because it's a good location," said Dan Bercu of the Los Angeles office of Epsteen & Associates. "We're not going to go somewhere just because they want us and it's cheap."

Bercu does admit that sometimes a developer dangles just enough incentive to attract them to a place they might not have previously considered. Long Beach, for example, gave the retailer's landlord enough cash to do most of the improvements for its downtown location in an area city planners are trying to revive.