Executives at Saks Global are proceeding with plans to close Neiman Marcus' flagship store in downtown Dallas that has been open for more than a century, saying they have yet to receive anything from local business leaders that would make them change their minds as they focus on ensuring the retailer's long-term success.
Saks Global said it is closing the store on March 31 after not being able to reach a deal with one of the property's landlords. Despite local efforts to resolve the issue with the landlord, the New York City-based company that bought Neiman Marcus in December reaffirmed in a statement late Thursday its plans to close the downtown store and invest in another Neiman Marcus store at the sprawling NorthPark enclosed mall that's more popular with area shoppers.
NorthPark Center sits nearly 7 miles north of the downtown Dallas flagship store. Retail analysts told CoStar it would be standard business practice for Saks to join other store owners around the country in closing a downtown location, selling owned real estate and increasing its investment in the more popular mall location. Downtown Dallas Inc., an economic development group that has rallied with local officials in saying they will try to get Saks to reconsider, said late Thursday it wouldn't comment until Friday.
"Dallas continues to be a top market for the Neiman Marcus brand," said Marc Metrick, CEO of Saks Global Operating Group, in a statement emailed to CoStar News. "Based on customer data, we know that the overwhelming majority of our Dallas customer base prefers to shop at our NorthPark store. We know that the local community shares in our disappointment about losing a piece of Neiman Marcus history, but customers have expressed their excitement about the reimagination of NorthPark."
A consortium of Dallas city and business leaders including Downtown Dallas Inc. expressed hope in the past week of swaying executives to keep the brand rooted in the city core. The group, including Dallas city manager Kimberly Bizor Tolbert and Dallas real estate investor and developer Shawn Todd, said they were attempting to keep the luxury retailer in the city's central business district.
It's not uncommon for local officials to protest when a long-time retailer closes, dealing a public relations blow to the city. The looming closing of Macy's stores in San Francisco and in Philadelphia left some local officials expressing concern. In Philadelphia, several elected officials said the closing posed an opportunity to reframe the downtown retail area.
No donation documentation
In Dallas, the group of business and city officials said they convinced the landlord, Slaughter Partners, that Neiman Marcus couldn't reach an agreement with to donate the parcel of land to the city of Dallas. To date, Saks said it has not received documentation about the proposed land donation mentioned by the Dallas consortium.
"We acknowledge the position of the Dallas consortium, particularly given the slow resurgence of the downtown Dallas area over the last several years, and are willing to hear their perspective," Ian Putnam, CEO of Saks Global Properties and Investments, in an emailed statement. "However, we have to make decisions as a business about what’s best for the future and our long-term success in Dallas and beyond."
Saks Global said that as early as 2011, and as recently as December 2024, the retailer had sought several times to come to a commercially reasonable agreement with Slaughter Partners. Last November, the prior Neiman Marcus leadership sought help from the city of Dallas with lease negotiations, Saks said, but those efforts weren't helpful and led to Slaughter Partners terminating Neiman Marcus' occupancy upon expiration of its lease.
"During negotiations the landlord demanded rent well above market rates while knowing that without this particular lease agreement Neiman Marcus would be unable to operate the store," Saks executives said in the statement. Saks inherited the lease issue from Neiman Marcus' previous owners and worked in good faith to come to an agreement with the landlord, who chose to terminate our occupancy, the company said.
The group of Dallas city and business leaders said they expect to meet with someone at Saks Global next Tuesday. The meeting has yet to be confirmed. But what can be accomplished, if anything, is unclear.
When Saks purchased Neiman Marcus at the end of last year in a deal with a total enterprise value of $2.7 billion, there were eight malls that have both a Saks Fifth Avenue and a Neiman Marcus store. There are 39 Saks Fifth Avenue stores in North America, as well as 95 Saks Off 5th discount stores. Neiman Marcus has 36 department stores, two Bergdorf Goodman stores and five Last Call discount stores.
Tough sell
Convincing Neiman Marcus to reverse course and stay in downtown Dallas will likely be a tough sell because of the retailer's newly merged parent's broader corporate strategy, according to industry analysts.
"As a solution seems to have been found to the lease dispute, there is now no real legal impediment to Neiman Marcus continuing to operate in downtown Dallas," Neil Saunders, a retail analyst and managing director of analytics firm GlobalData, said in an email to CoStar News on Thursday.
"That Saks Global doesn’t seem to be interested suggests that their preference is for the store to be closed," he said. "We do not know the exact thinking behind this stance. However, it is likely related to wanting to monetize the real estate and consolidate store numbers. The thinking might be that the nearby NorthPark store will pick up most of the lost trade and that this is a more efficient way to service demand. As with a lot of things, Saks Global is very focused on the numbers."
Rudolph Milian, president and CEO of retail consultant Woodcliff Realty Advisors, had the same take. A number of department stores in urban central business districts have closed over the years because their customers don't necessarily want to go downtown to shop, according to Milian.
"Just think of San Francisco, Miami, Columbus, etc.," he said in an email to CoStar News. "My guess is the Neiman’s customer would much rather prefer to drive to NorthPark Center to shop at an expanded and modernized Neiman’s store than to drive and park somewhere near Main Street and Ervay to shop" at the store in downtown Dallas.
The downtown Dallas store isn't a good location for the luxury retailer or other upscale retailers, according to Milian.
"If it were, it would be surrounded by LVMH store concepts — Chanel, Rolex, Hermès, Versace, etc. — like you can see on Oak and Rush streets in Chicago right off Michigan Avenue," he said.
Blow to area
A Dallas-based retail real estate executive with more than 50 years of industry experience under his belt said the closing is a major blow to the area.
"Downtown Dallas has been treading water for a long, long time and Neiman Marcus was a big contributor to keeping downtown Dallas alive," Herb Weitzman, founder and executive chairman of retail real estate services firm Weitzman, told CoStar News.
Weitzman, who was once neighbors with Stanley Marcus, who helped create the Neiman Marcus culture and ethos in Dallas, said the exit of Neiman Marcus from downtown Dallas would be like Bergdorf Goodman leaving New York City. Neiman Marcus owns Bergdorf Goodman and its two legendary stores on Fifth Avenue in New York City.
"Dallas is one of the most important cities in the world, I would've thought they would've kept their downtown Dallas flagship open and promoted it more to their shoppers," the longtime real estate executive said.
Retailers have to keep tabs on their business and underlying sales and NorthPark has those in droves, Bob Young, executive managing partner of Weitzman, told CoStar News.
"Since its inception, NorthPark has been the most well-configured mall that gives shoppers a beautiful presence and is accessible to some incredible demographics," Young said.
Saks Global has to do what's best for its operations, Young said, and Dallas city and business leaders are trying to avoid a misstep in having a company such as Neiman Marcus exit its hometown after offering the company millions in incentives to keep its Dallas headquarters and flagship store operational and growing in Dallas.
As Mayor Eric Johnson said in helping the retailer open at its new Neiman Marcus headquarters two years ago at Cityplace Tower in Dallas, "Neiman Marcus is synonymous with Dallas," and he looked forward to keeping this "global brand" in the "heart of the city." Johnson's office did not immediately respond for further comment on the consortium of Dallas city and business leaders seeking to help retain the Neiman Marcus flagship store in the central business district.
Mike Geisler, a managing partner at Dallas-based retail real estate services firm Venture Commercial, said he's never seen a group of city and business leaders speak so publicly about retaining a company. Often, he said, the dealmaking is done behind closed doors, with this public negotiation reflecting the importance of the Neiman Marcus brand to the fabric of downtown Dallas.
"For Saks to try to cut those roots and not realize there's something important there beyond a brand... those things typically die over time," Geisler told CoStar News. "Neiman Marcus and the flagship store is an asset."