American Apparel joining 'younger and fresher' State Street
(Crain's) — American Apparel Inc., a trendy retailer known for its basic T-shirts and provocative advertising, has signed a lease for a downtown store on State Street.
The two-level store is to open late this summer in the historic Mentor Building at 39 S. State, replacing a Children's Place store that opened when the property was redeveloped in 1999 and is closing next month.
Landing American Apparel is a coup for landlord Joseph Freed & Associates LLC, which is battling foreclosure two blocks north at the new mall at Block 37. The deal also illustrates that retail demand on State Street is holding up.
Terms of the lease weren't disclosed, though one retail expert says Freed probably didn't have to offer cut-rate rent for the 5,000-square-foot space even as retailing continues to suffer in the recession.
"The urban core is definitely a strong market," says Allen Joffe, a principal with Chicago-based retail brokerage Baum Realty Group LLC, which wasn't involved in the transaction. "I've been looking for 6,000 to 7,000 square feet on State Street. It's hard to come by, it goes fast and it's not cheap."
The replacement of Children's Place with American Apparel also reflects how State Street has become a hipper retail spot in the past decade, Mr. Joffe says. Stores that target teens and 20-somethings have migrated to the street as the number of college students in the Loop has swelled to 60,000.
"It's a great brand that's going to be very attractive to the student population and the office population downtown," says a spokeswoman for Chicago-based Freed. "You're starting to see some new brands on State Street, and I think it's fair to say that a lot of them are younger and fresher."
A spokesman for Los Angeles-based American Apparel, a publicly traded company that had revenue of $400 million through the first three quarters of last year, declines to comment.
The company, one of the nation's biggest garment manufacturers, is a wholesaler and retailer with 281 stores worldwide, including seven in the Chicago area. Its newest store here opened last fall at the Oakbrook Center mall, while the company has other suburban locations in Schaumburg and Evanston and four in the city.
American Apparel's controversial CEO, Dov Charney, has championed immigration reforms to allow legalization of foreign workers and also has touted his factory as "sweatshop-free."
The company's immigration reform push took a twist last summer when the U.S. Immigration and Customs Enforcement agency found that about 1,600 factory employees in Los Angeles — one-third of the staff — were not authorized to work in the United States and had supplied suspect or invalid documentation. Many of the workers were let go in the fall after they were unable to prove their eligibility, according to media reports.
American Apparel continues to be on a growth path. In the fourth quarter, the company says, it opened six stores — including two in Paris — while closing one. For the year, the retailer expanded by 21 stores.
Children's Place, meanwhile, plans to close the State Street store April 20 because its lease expired, a spokeswoman says. The same was true in north suburban Deerfield, where the retailer closed another store in January.
Despite those closings, the Secaucus, N.J.-based retailer, which has 947 stores nationwide and 31 in the Chicago area, is expanding, the spokeswoman says.
"We increased by 30 stores over the past year and we'll be increasing our footprint again this year," she says.
