GloucesterTimes.com, Gloucester, MA

September 16, 2009

Marshalls' Gloucester debut signals new retail landscape on Cape Ann

By Patrick Anderson

On rack after rack, handbags, jeans and hosiery sit tagged, beckoning shoppers under bright fluorescent light reflected in polished floors and new metal.

Outside, newly striped parking spaces stretch across fresh black asphalt without a single tire mark or gum stain.

Tomorrow, the retail landscape on Cape Ann changes as shoppers arrive for the first opening of Gloucester Crossing, the city's largest and most modern suburban shopping center.

It's a familiar set-up across the country, but new to Cape Ann, which has been nearly ignored by the retail development that has bloomed across the country and elsewhere on the North Shore.

For many on the island, driving several miles "off the island" to shop has been an inconvenience that's part of what makes Gloucester unique.

First to open will be discount fashion retailer Marshalls, and by the end of next month, the complex off the Route 128 and Blackburn Circle will have a functioning Market Basket supermarket, Five Guys Burgers and Fries hamburger stand, Dollar Tree store, liquor store and Game Stop video game shop.

The product of nearly a year-and-a-half of construction and five years of community debate over its potential to change the city's character and affect downtown businesses, for many shoppers Gloucester Crossing will simply lessen their desire to drive 15 miles to the shopping malls of Danvers and Peabody.

For its creator, Boston developer Sam Park, Gloucester Crossing is a $60 million claim on one of the last remaining "underserved" retail markets in Massachusetts, if not the East Coast.

"Some people wonder why we would make this big a bet on Gloucester, being at the end of the line," Park said standing in the middle of his new parking lot Monday, eager to be within days of seeing his brainchild launched. "But the demographics are perfect — so underserved. There is more supply than demand."

Park and the stores he has signed to the project see residents from as far away as North Beverly and Ipswich shopping at Gloucester Crossing, along with those from Gloucester, Rockport, Manchester and Essex.

All told, Park says there is more than enough disposable income in the area to make it work.

With around 120,000 square feet out of the planned 200,000 square feet of space in the project now under lease, the shopping center's focus at this point is a mix within the low- to mid-end market.

Park described some of the stores, including Marshalls, as "small box" retailers, in contrast to "big box" behemoths such as Wal-Mart, Best Buy and Home Depot.

'The right mix'

"We are trying to be selective," Park said, "focusing on getting the right mix."

As he fills out the remaining tenants in the complex, Park said he is looking for "dry goods," some clothes and fashion stores, home furnishings, and a few chain restaurants, including at least one in the "quick causal" niche.

Since office-supply giant Staples pulled out of an agreement to be an anchor tenant in Gloucester Crossing last month, Park said he has been searching for another office store and another anchor to take its place.

Despite the recession and development slowdown throughout the region, Park has kept Gloucester Crossing growing quickly.

He went ahead and built most of the second phase of the shopping area, along the north edge of the property, even though it is not scheduled to open until next spring.

Foundation work for the Holiday Inn Express hotel planned for the project, which a rival hotel builder this year called unfeasible, is set to start next month. Vertical construction on the hotel is slated to start next spring with a targeted opening in the spring of 2011.

Park bought the 33-acre Gloucester Crossing site, a wooded piece of vacant land near Fuller School in 2004 for $3.2 million from a developer who had been looking to build a 240-unit apartment complex.

The Gloucester Crossing plan emerged out of a combination of Park proposals and requests from city leaders, who preferred the hotel and shopping center to an apartment complex.

Tax base boost

The $500,000 annual increase in the city tax base was also part of the pitch.

As the project moved through the planning and approval process in 2006 and 2007, concerns about the shopping center included a stoplight Park wanted to erect at the entrance to the project on Route 128, the clearing of the existing landscape on the site and his bid for a tax forgiveness package.

In the end, the stoplight was eliminated in favor of the ramps now in place and the Park did get a tax increment financing package worth $2.3 million.

But as the shopping center has taken shape and stores prepare to open their doors, the longest lingering fear is that the new auto-friendly complex with its large national chains will draw business away from Gloucester's compact, historic and idiosyncratic downtown, like suburban commercial development has done in so many other communities.

Through the approval process, Park said he intended to avoid direct competition with downtown stores or duplicating services already provided by other retailers in the city.

View from Main Street

"It is competition for Main Street," said Jack Palazola of Palazola's Sporting Goods on Main Street yesterday. "A lot of people say it makes your business better, but we want more stores that are independently owned and unique."

"We don't want to destroy downtown because people can't find underwear," he added.

While so far no store planned for Gloucester Crossing targets sports equipment, Palazola says he expects the new development to cut into his sales of some clothes and footwear.

"We will probably carry less of certain things that we don't carry as much of," Palazola said. "We will carry more pure sports things."

Down the street at Seasons on Main, a store described by owner Nancy Hendrickson as a mini-department store, the competition from Marshalls and other Crossing clothing stores appears more direct.

"I think for Gloucester it is the wrong way to go. Main Street has been here trying to make a go of things for years," Hendrickson said. "(Gloucester Crossing) will definitely draw away from Main Street because people are hurting. If they can save by going to a big box store, they will but not because they want to."

Among other things, Seasons on Main is one of the downtown stores that sells underwear, the item that people have repeatedly said they haven't been able to buy on the island for a long time.

Welcoming competition

But not all Main Street retailers agree that Gloucester Crossing will be bad for downtown.

Mark Adrian Farber of Mark Adrian Shoes said yesterday that he welcomed the competition and that it would focus his business even more on personal service and the higher end segment of the market that Marshalls couldn't touch.

"I think that downtown will continue to evolve to be specialty retailers, high-end, high customer service — a market segment that Gloucester Crossing will not infiltrate," Farber said. "I believe there is plenty of business to go around. The new center will generate a lot of traffic because of its novelty and that is normal and natural. After that happens, customarily traffic will level off and seek its own level."

So far, the first store to move to Gloucester Crossing from another area of the city is Cape Ann Liquors, which is moving from its space on Bass Avenue to a larger, 2,000-square foot spot next to Five Guys Burgers And Fries by the end of October.

While the focus has been on downtown, the move of a liquor store from the Stop & Shop plaza to near the new Market Basket points to the effect Gloucester Crossing might have on the area's large supermarket chains.

Park said any debate about the affects of his new project needed to take into account the jobs it has created, especially for young people and seniors.

Park had promised at least 200 full- and part-time jobs during approval, but was now saying the total would be closer to 400 jobs.

In the end, he said, the project would benefit the city because it will "keep Gloucester dollars in Gloucester," he says.

Patrick Anderson can be reached at panderson@gloucestertimes.com