Article Courtesy of Puget Sound Business Journal

Deirdre Gregg

Staff Writer

The city of Kent's big bet on a huge lifestyle center in the heart of its downtown appears to be paying off.

The first tenant, Green River Community College, opened its doors in September, and retail, restaurant and entertainment tenants have been opening throughout November and December, culminating in the Dec. 17 grand opening of a new 14-screen AMC Theatre.

The city has invested more than $17 million in the project, which is intended to anchor a revitalized downtown and generate a new stream of sales tax revenue. The AMC Theatre alone is expected to lure about 940,000 people to Kent Station each year, generating more than $300,000 in admissions tax.

The city has collected significant sales tax revenue from construction of Kent Station, and from several other downtown developments triggered by the lifestyle center. Kent expects to collect far more sales tax from ongoing retail sales, and the development is expected to create about 500 new jobs.

But both the city and its private development partner, Tarragon Development, had to work hard to get to this point. Assembling the tenants, particularly the retailers, in a lifestyle center is a tough job, rather like putting together a puzzle, said Joe Blattner, Tarragon president.

That's true of any urban village-type development, said Candace Gray, president of Portland-based Gray & Associates, which works with developers to help them develop strategies for leasing lifestyle centers.

"On a scale of 1 to 10, with 10 being the most difficult, lifestyle centers (like Kent Station) are an eight to 10, while strip centers and big-box developments are two to five," said Gray.

That's because many retailers are not just looking at the demographics of the area, but looking for a set of preferred co-tenants. Gray said that in some cases, she's seen retailers hand developers a list of co-tenants that's two pages long, with details on top choices and alternates.

In the case of Kent Station, Blattner said one key to leasing the first phase of the $100 million, 470,000-square-foot lifestyle center was a $4 million investment the city made six years ago.

In 1999, Sound Transit was preparing to build a surface parking lot beside the commuter rail station in downtown Kent. In return for a $4 million contribution from the city, the agency agreed to build a multilevel parking garage instead.

"We partnered with them, because the leadership of the city didn't want all this prime land in downtown Kent taken up by surface parking," said Nathan Torgelson, economic development manager for the city.

So when Tarragon and its leasing agent went looking for tenants, they were able to offer lots of free parking -- an appealing offer for the AMC movie theater.

Blattner said that after a six-screen cinema on Kent's East Hill shut down, there was a large area not served by a movie theater between Auburn and Southcenter. But parking is always a major challenge for cinemas, Blattner said.

"There's no way we could have built the garage ourselves and leased it to the cinema," Blattner said. "That took huge vision on the part of the city of Kent, and we wouldn't have a theater without it."

With a movie theater there to boost nighttime traffic, and more than 60,000 people working within two miles of the development during the day, Kent Station was able to land 11 eating establishments, from quick service to more formal places.

"It really adds to the demand for food when you have a cinema," Blattner said. "That started the snowball."

Jeff Iverson with Ram International, which operates the Ram Restaurant & Brewery at Kent Station, said the demographics of the area were a big draw for him.

"Our information showed that a great majority of the dining dollars spent in the Southcenter and Tukwila area were coming from Kent, so we were attracted to it," he said.

With the theater and restaurants in place, it was easier to court retail tenants, Blattner said.

"Before, going and talking to retailers, you could show them great demographics, but it was still a raw piece of ground without anything on it, and retailers travel in herds," he said.

With the $40 million first phase mostly leased, Tarragon will likely start building the $20 million second phase next year, which will include adult apparel and other soft goods like home furnishings. Future phases will also include about 140 residential units and more space for Green River Community College.

In the meantime, Kent Station seems to be spurring other development downtown, according to Torgelson.

A $20 million condo-hotel project, with a La Quinta hotel, condos and a 350-stall parking garage, is going in across the street from Kent Station. Valley Bank is building a new $3 million complex south of Kent Station, Kiel Mortgage is renovating space for a new office downtown, and real estate investor Jack Alhadeff is renovating an 18,000-square-foot building that will include retail and residential.

All these investments indicate that Kent Station is bringing new life into the city's central business district, Torgelson said.

"It's like a (Seattle) University Village for South King County," he said.