Virginia Bucks a Trend and Builds Mall in Heart of Downtown Norfolk

ROBERT SMITHWICK won't take no for an answer. Just ask the folks who run Nordstrom Inc. and R. H. Macy & Company, two of the premier retailers in the United States.

On a visit to New York recently, Mr. Smithwick, the director of development for the city of Norfolk, Va., admits that he single-mindedly pursued both Nordstrom and Macy's until they finally agreed to place stores at the huge $270 million shopping center recently announced for downtown Norfolk. Called the MacArthur Center, the shopping complex will be located on 17 acres in the heart of Norfolk - the state's second largest city.

The center, experts say, is a case study of how some communities around the US are seeking to woo major retailers back to their downtown areas. Since the 1950s, most shopping malls have been built in suburban communities.

While a number of cities have opened downtown shopping malls in recent years, most are either ``festival-type marketplaces,'' made up of entertainment and restaurant complexes, or ``comprised of boutiques and specialty stores,'' says Mark Schoifet, a spokesman for the International Council of Shopping Centers in New York.

Norfolk's proposed mall, which will have two large-scale retailers anchoring the complex and a third one yet to be announced, is ``definitely a rarity,'' Mr. Schoifet says.

``Department stores and large retail stores have been fleeing downtowns for years,'' says Janet Mangano, a retail analyst with investment house Burnham Securities Inc. ``There are only a few US cities that now have a thriving retail section, such as San Francisco, Boston, and Chicago. Discount stores are moving downtown, but not upscale retailers. What appears to be happening in Norfolk is clearly an exception.''

Putting the MacArthur Center complex together, however, was not an easy victory. Smithwick grimaces when he talks about the initial calls made to Nordstrom executives five years ago. The Seattle-based retailer was not interested in the Norfolk/Hampton Roads area, which over the years has become known as a military and ship-building community, dominated by the Pentagon.

BUT Smithwick, a 6-foot, five-inches individual, who once headed up Texaco Inc.'s US operations, refused to give up. His office conducted studies showing that Norfolk's overall demographic market was similar to that of Portland, Ore. - a town where Nordstrom's profits are good.

Smithwick says he also knew that if he could win over Nordstrom, he could win over his other key retail target: Macy's.

Finally, after countless conversations, Nordstrom and Macy's signed aboard this spring. The proposed complex is named after former General Douglas MacArthur, who is entombed at a museum site near the mall.

Whether the takeover of Macy's by Federated Department Stores Inc., announced last week, will affect Macy's decision to locate at Norfolk, is not yet known. Smithwick insists that it will not.

The MacArthur Mall is expected to cost around $270 million, of which the city's share will come to $95 million, Smithwick says. Conroy Development Company of Greenwich, Conn., the project's developer, will provide $175 million, Smithwick adds.

The city's part of the complex financial arrangement will come from an assortment of bonds, loans, and parking fees. The largest part of the tab, around $33 million, will come from a low-interest federal loan. Smithwick says the final direct cost to taxpayers will be more than offset by income from the mall.

The mall is expected to create up to 3,000 permanent jobs, plus 1,500 construction jobs. Construction should begin in October, Smithwick says. The mall should be open by late 1996 and generate $10 million annually in sales taxes from about 100 stores.

Norfolk's new mall is expected to rival the area's closest other major shopping complex, the Lynnhaven Mall, located in Virginia Beach, adjacent to Norfolk. Virginia Beach is the largest city in Virginia in population. The Lynnhaven Mall includes Montgomery Ward & Company Inc., JC Penney, and the Hecht Company.

``If you want to go to an upscale retailer like Nordstrom or Macy's, you have to drive all the way up to the Washington, D.C., area,'' Smithwick says. ``We're about to change that.''