When the Eagles sang "New Kid in Town" last Thursday night at the Delta Center, little did they know there is one just across the road.
"There's talk on the street, it sounds so familiar. Great expectations, everybody's watching you . . . "
Just 8 months old, The Gateway has already reshaped the Salt Lake City landscape, physically and economically. It's the talk of the downtown, for better or worse. And depending on who you talk to, the new kid — a big kid at that — is either a bully or a savior.
Gateway's mix of shops, eateries, movie theaters and apartments are the centerpiece of downtown's westward migration. In the past decade, 70 percent of new housing and 60 percent of new restaurants were built west of West Temple. With hip clubs like Club Axis across the street from Gateway, the west side also has emerged as the city's nightlife district.
"We don't see this as a bookend for downtown. It's a catalyst," said Gateway developer Kem Gardner.
It is also a huge roll of the dice.
"It's an enormous risk being off Main Street," said Jim Wood, senior analyst at the University of Utah Bureau Economic and Business Research. Entertainment venues are migrating west, but Gateway — three blocks from Main — is "walking a fine line."
The $375 million "lifestyle center" faces some hurdles, particularly getting people there and then enticing them to spend in its trendy establishments, as it looks to make its mark in the city's evolving downtown.
Its restaurants draw a sizeable business lunch crowd along with a smattering of tourists. But there doesn't appear to be a steady stream of office workers beating a path or riding TRAX over for some midday shopping. Store workers spend their weekday hours rearranging merchandise while waiting for customers.
Leanne Milne and her teenage daughter last week found the shops better for browsing than buying. Too pricey. One shopkeeper admiring Milne's white and blue floral patterned pants, asked where she bought them.
"Sam's Club," Milne told her with a laugh.
Still, she thinks Gateway will make an impression and pull customers from Main Street.
"I wonder what will happen to the downtown malls," Milne said. "Can two malls survive?"
Gateway is a dues-paying part of the 40-block area the Downtown Alliance defines as "downtown" yet not in the hub of activity.
"I think it's ahead of its time by 15 or 20 years," says Gene Horbach, a Washington state developer who owns buildings on Main Street. "It's quite a distance from your main attractions."
But The Boyer Co. says the property is gaining steam as it enters its ninth month, possibly attracting the Cheesecake Factory, Tiffany, Crate and Barrel, even the elusive Virgin (Records) Megastore — and that it is well on its way to the lofty goal detailed in a recent memo of the project's "key messages." "We anticipate the Gateway will become Utah's number two attraction for visitors and locals alike — second only to Temple Square."
Temple Square draws about 5 million visitors annually; Gateway says it attracted a million during the 2002 Winter Games.
Sales in some stores exceeded expectations for the first quarter — the Olympic quarter. Vacant spaces are filling up, but Main Street defenders and others say this success comes at a great consequence to other parts of downtown.
Vasilios Priskos, partner in InterNet Properties Inc., calls Gateway a "huge" negative because it pulls business off Main Street where office space capacity already outpaces demand. Even Gateway owners halted construction of a six-story office tower for lack of tenant interest.
It's difficult at this point to assess how much retail business Gateway is siphoning from Crossroads Plaza and ZCMI Center.
Central business district retail sales declined dramatically long before Gateway opened, doing $373.1 million in 2000 or $100 million less than peak six years ago, according to the Downtown Alliance. Project developer Jake Boyer estimates Gateway will do about $150 million in retail sales this year. "We are bringing that retail sales dollar back into the city," Boyer said.
The Gateway, the owners say, is where big-name stores want to be.
"Forty tenants had a chance to go to ZCMI or Crossroads instead of coming here," developer Kem Gardner said. "The score is 40 to zero."
But it is not Gateway vs. Main Street, he said. The battle is between suburban malls and downtown, of which Gateway is a part. "As long as we have the perception that downtown is Main Street, we're not going to grow this city," Gardner said.
Ted Knowlton, an urban planner with Portland-based Fregonese Calthorpe Associates, says Main Street doesn't have to be pitted against Gateway. The two areas can help each other, but there needs to be some "connective tissue" to link them together. He suggested a Parisian-style walkway or boulevard.
But neither the city nor any developers have plans to bridge the gap.
At Gateway, some 87 percent of its space is leased, with tenants on 15-year leases.
Stores and restaurants are doing well, with sales climbing steadily over $300 per square foot of floor space, surpassing national averages by about $100, Boyer said.
Gardner runs his finger down a list of March 2002 sales figures: Abercrombie and Fitch — $500,000 in sales; JMR — $400 per square foot; California Pizza Kitchen — $600 per square foot; bebe — "off the charts."
The IMAX planetarium is on line to open this fall. Construction of a children's museum is well under way. Two office buildings are nearly 100 percent leased, but the great steel monster that is supposed to be developing as office space is still an unfinished eyesore. Gateway has no takers on the space, Gardner said.
"This is just Roger (Boyer) and me," Gardner said. "We're sinking everything into this."
The two partners have subsidized the project $2 million to $3 million, Gardner said.
Along with shopping, entertainment and dining, Gateway has created housing, an element many observers say is essential to long-term vibrancy downtown.
The Northgate apartment spaces have been leased nearly as quickly as they have become available, said Dan Lofgren of Salt Lake City's Cowboy Partners, which is working with Australian housing giant Lend Lease on Gateway's housing community.
The company is leasing 66 units per month, Lofgren said. "It's two times faster than we would have predicted."
And why not? asks Lofgren. The amenities are endless. "We've managed to locate the Delta Center across the street, a beautiful retail area at their back door and light rail at their front doorstep."
Becky Bergeson, a Salt Lake attorney, was one of the first to invest in the trendy residential area on 200 South west of 300 West just north of Gateway. She says convenience put the city center ahead of the suburbs. Her digs are not far from her office and close to the downtown fun she loves. The location, she says, is getting better and better.
"The Gateway was a big step in the change in my neighborhood," Bergeson said. "It has brought a lot of people back in to downtown, and the area is improving."
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