Pacific Place not ready to see J.Jill go

Everything from mannequins to jeans is up for grabs at the J.Jill clothing store on the third floor of Pacific Place in downtown Seattle. The store is set to close this weekend after selling off its merchandise and anything else it can.

But Pacific Place isn't ready to see it go. The shopping center argues that J.Jill's departure violates a 10-year lease that runs through April 2010, and it's gearing up for a legal fight.

Some say disputes like the one between Pacific Place and J.Jill will become more common as retailers nationwide close stores amid a tough economy, breaking leases along the way.

"It was rare when the economy was booming," said Cynthia Thomas, a Seattle real-estate attorney whose clients include shopping-center owners. "But since last year we've started to see more retailers struggling and closing down."

Women's clothier Talbots last week completed a previously announced, $75-million sale of the J.Jill brand to a San Francisco private-equity firm, Golden Gate Capital. Massachusetts-based Talbots, which paid $517 million for the brand in 2006, said 204 of J.Jill's 279 store leases would be transferred to Golden Gate.

As for the remaining 75 leases, Talbots said it would keep them and close the stores within two months as part of a renewed focus on its core Talbots business.

J.Jill still has four stores in the Puget Sound area: Kent Station, Bellevue Square, the Village of Alderwood and Uptown Gig Harbor.

Pacific Place has a so-called continuous-operations agreement, which requires Talbots to not only pay rent until J.Jill's lease expires at the end of April, but also to keep the 6,000-square-foot store open and adequately stocked with merchandise, General Manager Lynn Beck said.

"We would like to have them remain open and operate as a full-line J.Jill store," she said. "They are taking another course. We are pursuing all of our rights under the lease, including any legal remedies."

Talbots declined to comment through a company spokeswoman.

Even if Talbots continues to pay rent through April, a darkened storefront looks bad and can hurt surrounding retailers, said Thomas, who is not involved in the dispute. Pacific Place isn't likely to persuade J.Jill to stay open, she said, but it could seek the remaining rent, plus damages.

"It's going to be difficult for Pacific Place to backfill that space," Thomas said. "You want people whose name has a cachet, and pickings today are slim."

Charles Staadecker, a Seattle real-estate broker who specializes in the retail sector, said he expects more store closures as consumers pull back on their spending amid rising joblessness.

"It's important for landlords and tenants to work closely together and create a strong partnership until the recession ends," he said. "Landlords can make temporary concessions until times improve. But if you have no communication, you will find tenants not asking landlords for alternatives to closing."

Counting the J.Jill store, Pacific Place has three available spots out of a total of 50. It's looking for locally owned, unique retailers to fill its empty spaces, Beck said.

When Seattle-based Pine Street Group opened the 325,000-square-foot shopping center in 1998, a third of its tenants were unique to the Puget Sound area, Beck said. As the tenant roster became dominated by upscale national chains, the local portion dropped to a fourth.

"Until the economy turns around, national chains are just not expanding," she said. "We're looking at this as an opportunity to recapture some of those unique tenants again."

She said the Pro Shop on the third floor is the type of local, unique tenant Pacific Place wants. The Pro Shop, which sells Seahawks and Sounders FC apparel, opened last month in space previously occupied by women's clothier Ann Taylor, which moved elsewhere on the third floor.

The Seahawks signed a short-term lease that expires in late January, but the store has been so popular that Pacific Place is talking with them about a long-term arrangement, Beck said.

"We're trying new things," she said. "Before, we didn't have to."

— Amy Martinez

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Retail Report appears Fridays. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or mallison@seattletimes.com. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or amartinez@seattletimes.com