Anchorage Nordstrom Rack dispute pits mall owners against tenants

When Nordstrom Rack announced plans to move into The Mall at Sears in Midtown Anchorage, it was hailed as a big business boon for an aging mall looking to reinvent itself.  

But that hasn't exactly panned out. Two years later, after a renovation for the upscale discount store, the mall's owners are mired in a heated dispute with other retailers over a lack of an indoor connection between the Rack and the rest of the mall.

A Superior Court decision in December is culminating in a public hearing Monday before the city Planning and Zoning Commission. Commissioners are revisiting the plans amid a barrage of complaints about sidewalks, safety, access and public involvement.

Seritage Growth Companies, the real estate investment trust that now owns the mall, has showed signs of relenting to the complaints. At a public hearing last month, representatives of the trust pledged to add in a new sidewalk along the northern wall of the store and to beef up the number of signs directing customers to the common areas of the mall.

"All code requirements were satisfied in the original application to bring Nordstrom Rack to the mall," the company said in an emailed statement Wednesday. But it conceded that it has since modified that application: "We look forward (to) discussing further at next week's hearing."

Nordstrom Rack, which opened last fall, only has one set of doors, facing east to a parking lot and the Seward Highway. To make way for a loading dock during the renovation, crews demolished the sidewalk along the building's northern wall.

Replacing the sidewalk isn't enough, mall merchants say. They say that by isolating Nordstrom Rack from the rest of the mall by not also including an indoor walkway, their landlord is defying city standards for a northern climate, as well as taking away business and causing safety problems.

"Why does Nordstrom want to put that thing in the mall if they didn't want to join the mall?" said Dick Stallone, the longtime owner of a men's clothing store in the mall.  "It doesn't make sense."

Frustrated customers complain daily, Stallone said. Carr-Gottstein, which used to own the mall and now manages the leases, has sided with the merchants, even creating a website and a three-minute video that shows people walking through the parking lot in the path of cars.

The Mall at Sears, which opened in 1968, was the first enclosed shopping center in Alaska. In the past several years, Sears, facing sharply declining sales and stock values, has been trying to sell and redevelop its properties. Last year, Seritage Growth Properties, a real estate investment trust spun off from Sears, acquired the mall along with more than 260 other properties nationally.  

In 2014, Sears downsized its retail space and leased the empty space to Nordstorm Rack, a national chain that offers discounted Nordstrom apparel, accessories and shoes.

That May, the city Planning and Zoning Commission approved the renovation plans without public comment. At the time, the city planning department said the project, classified as a retrofit of an existing building, was not big or controversial enough to warrant a public hearing, said Terry Schoenthal, who recently became a planning manager for the city.  

Schoenthal also said city planners decided it was appropriate to take out the sidewalk because the loading dock separated the store's wall from the parking lot.

But a group of mall retailers and Carr-Gottstein protested the decision. The issue ultimately went to Superior Court. In December, a judge ordered the planning commission to hold a public hearing.

The first public hearing was held in mid-June and will extend to a second hearing Monday. In between the two hearings, city attorney Bill Falsey clarified that the Planning and Zoning Commission was opening the entire case back up for review.

In the first hearing, Seritage relented to some of the complaints, with a representative pledging to add a new sidewalk on the northern edge of the store.

The representative, James Bry, also indicated plans to add parallel parking, parking lot speed bumps and more signs inside and outside to direct customers to the common areas of the mall.

As far as connecting Nordstrom Rack to the rest of the mall, Schoenthal said, that's likely not a matter for the city to order.

"It's a business decision on the part of Nordstrom Rack and Sears Mall," Schoenthal said. "That's not something we can really get into."

He said the city hasn't historically weighed in on indoor connections between buildings.  

Schoenthal said he couldn't comment on Sears' reasons for not building an indoor entrance to Nordstrom Rack. But in general, a new access point would require additional security against shoplifting as well as cash registers and staffing, he said.  

Monday's Planning and Zoning Commission hearing is set to start at 6:30 p.m. in the Anchorage Assembly chambers at the Loussac Library.