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'Nichols' Folly'

FOR MORE THAN 75 YEARS, Country Club Plaza has been at the heart of Kansas City, Mo. Even when new suburban malls beckoned, shoppers remained loyal to the open-air shopping center located five miles south of downtown.

When Jesse Clyde Nichols decided to build the country's first suburban shopping center designed to accommodate the automobile, Kansas Citians laughed. When he began importing sculptures, fountains and mosaics from around the world and designed the center to resemble Seville, Spain, they called it "Nichols' Folly."

But soon shoppers were strolling along the European-style avenues, and their loyalty has never wavered. Now, the Plaza attracts more than 6 million shoppers each year to its 14-block area, which includes 40 statues, fountains and sculptures; 12 towers; carriage rides and sidewalk cafes; and 180 shops and restaurants.

An outdoor art collection valued at more than $1 million complements the classic Spanish architecture, and the courtyards provide the perfect backdrop for the live music frequently played. Two of Spain's landmarks, the Giralda To wer and the Seville Light, mark the skyline.

Transitions, cranes on horizon While enjoying perennially high occupancy and rent rates, the Plaza has changed with the times. The original F.W. Woolworth is now Saks Fifth Avenue, and a former greenhouse is now The Cheesecake Factory. A Macy's department store evolved into a Barnes & Noble and Pottery Barn. A huge Sears department store that opened after World War II is going through its third transformation. The four-story building was turned into a mini-mall called Seville Square in 1977 and is expected to reopen this month as a 15-screen Cinemark cinema.

"Seville was very successful for the first 10 years of its life, but it was difficult to do multi-level retail and get shoppers up to the second and third floors," says Kelly Taylor, director of marketing for J.C. Nichols. "And we wanted to add more entertainment to the tenant mix."

The $28 million renovation of Seville Square into a cinema will maintain the Plaza's stylish image by offering valet parking, a gourmet coffee bar, coat check and private screening room. Banana Republic will remain on the first floor of the building, and a 12,000 sq. ft. restaurant will be added. One casualty of the multiplex cinema was the Plaza Theater, which had been attracting movie-goers since 1928.

Different options are being explored for the historic theater. "We want to preserve the art and architecture," Taylor says. "It's incredible what's in that building. We want to find someone who can work with what's there."

The landlocked Plaza also is undergoing its first new construction in 12 years, the $64 million Valencia Place, a 10-story office and retail tower being built on a former 180-space parking lot. The 240,000 sq. ft. tower will add 80,000 sq. ft. of retail as well as a six-level parking garage to the Plaza's existing 5,500 free parking spaces. It is scheduled to open early next year.

New ownership J.C. Nichols Co. grew into a local legend as a diversified commercial and residential real estate developer. But it was sold last year to a REIT, Raleigh, N.C.-based Highwoods Properties Cos., in a deal valued at $544 million. A period of adjustment continues for tenants and landlords following the sale, which ended local ownership of a company run by three generations of the Nichols family.

One point of contention is whether the new owners will take control of the 61-year-old Plaza Merchants Association, one of the last remaining independent merchant groups in the country.

Bill Schultz, retail specialist with Colliers Turley Martin Tucker in Kansas City, doesn't believe the purchase of Nichols will affect the Plaza. "Nichols has always tried to protect its uniqueness, and Highwoods would want to preserve that," he says.

A true survivor The most challenging time in the Plaza's history came in September 1977, when 20-foot flood waters caused $58 million in damage and raised concern about the future of the 55-acre shopping district, which had become as beloved a Kansas City institution as jazz and barbecue.

"Until three or four years ago, the Plaza was pretty well the only fashion destination in the city, as well as the cultural center for shopping and entertainment," Schultz says. In recent years, the Plaza has weathered the opening of the exclusive Leawood Town Center and the area's only Nordstrom at Oak Park Mall, even though it isn't blessed with the convenient highway access the suburban malls have.

"If a larger fashion retailer were coming to Kansas City, and the market could support only one store, it would be on the Plaza," Schultz says. For a while, Nichols, which is the exclusive leasing agent, insisted that Plaza stores be the retailers' only locations in the city. But in recent years, Nichols has had to make concessions to retailers wanting to open stores in the south suburbs.

Current tenants with the longest tenure on the Plaza are Jack Henry Clothiers and Helzberg Diamonds, which have been there since the 1940s. In 1965, the Hall family, owners of Hallmark, opened a three-level store that continues to take up an entire block; Gucci opened in 1978, Polo/Ralph Lauren in 1982 and Laura Ashley in 1983.

The next four years saw the addition of Abercrombie and Fitch, Talbots, Williams-Sonoma and The Gap. Sharper Image moved to the Plaza in 1989, Eddie Bauer in 1992 and FAO Schwarz in 1994. About a decade ago, the Plaza started staying open on Sundays.

Operating an open-air mall is similar to that of an enclosed mall, though the costs of maintaining 80-year-old buildings are higher. "We're constantly challenged with maintenance issues, and bringing in new tenants takes twice as much work with these buildings," Taylor says. "Maintenance issues, such as keeping sidewalks clean, are also more complex."

The Plaza boasts some of the highest lease rates in the city, ranging up to $25 per sq. ft. triple net (including CAM) plus a percentage of sales.

During the Christmas holiday season, the entire district is outlined by 75 miles of lights in a tradition dating to 1925. More than 250,000 people attend the annual lighting ceremony. The Plaza Art Fair, started in 1932 as a Depression-era promotion, is now ranked as one of the country's top art fairs.

* Location: 14-block area in the heart of Kansas City, Mo.

* Owner: J.C. Nichols, a Highwoods Properties Co., Kansas City

* Opening: 1922

* Trade area population: 1.7 million (about 60% of traffic is tourists)

* Average household income: $44,082 for total metropolitan area; some submarkets exceed $100,000 annually

* Current GLA: 1 million sq. ft.

* Number of stores: 180

* Current anchors: Halls Department Store and Saks Fifth Avenue

* Original anchors: F.W. Woolworth, grocery stores and eight filling stations

* Fun fact: The Plaza was the first planned shopping center in the country built to accommodate the automobile, which cost an average of $395 the year the Plaza opened.

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