Disney Store to appear at Block 37

Mirror, mirror on the wall: What´s coming to Block 37 in the fall? A Disney store.

But the store won´t display only rows of toys and dresses; it also will boast interactive features. The prototype store will become the embattled retail mall´s first new lease since a court-appointed receiver assumed control of the property in late January.

At a Wednesday hearing, Cook County Circuit Judge Margaret Brennan said the court will approve Disney´s lease. She asked for several minor adjustments to the agreement, but said it was important not to jeopardize the deal with Disney, which she described as a "desirable tenant" for the shopping center in Chicago´s Loop.

The receiver team at CB Richard Ellis, which took over Block 37 from developer Joseph Freed & Associates, had mentioned in a February court filing that it had a lease proposal from Disney. Wednesday´s hearing was scheduled ahead of a Friday deadline that gave Disney time to walk away from the proposal.

The Disney store is part of a new retail concept that the company is rolling out this year in an effort to reinvent its stores, with the first location scheduled to debut this summer in Montebello, Calif., outside of Los Angeles. More than 20 new or remodeled stores will open this year in North America and Europe.

Disney will join Anthropologie, Zara, Sephora and a number of other retailers and eateries at Block 37. Attracting more tenants to the 278,000-square-foot complex, especially ones with marquee names such as Disney, is important for the retail project because several businesses have general "co-tenancy" agreements in which they receive concessions on rent until a certain square footage is filled at the mall.

Bank of America moved to foreclose on Freed in October. Even before the legal woes, the property had encountered several roadblocks, including the withdrawal of tenants such as David Barton Gym and yoga wear chain Lululemon.

"Disney´s obviously as high-profile a name as you can get, at least from a brand standpoint, so that´s definitely good news for Block 37," said retail consultant Neil Stern, a senior partner at McMillan Doolittle in Chicago.

Disney declined to comment on the Block 37 deal. In a press release announcing the new store design last week, the company described the concept as destination "developed from a child´s perspective" that integrates "the latest technology to create an enhanced shopping experience."

The new stores are designed to be more immersive than a traditional retail store, featuring interactive displays and an in-store theater where children can select film clips to watch. One feature is a "Disney Princess" castle, where a child can wave a magic wand in front of a mirror to summon a princess character.

Whether the concept proves successful is up for debate, however. Disney´s last big experiment in Chicago, its DisneyQuest indoor virtual reality theme park, closed in 2001 after two years.

"There´s a fairly large tourist component that plays into stores," Stern said. "If you look at the big ones in Chicago, like American Girl Place, it´s been unbelievably successful with that mix of retail and entertainment and drawing power. Again, it remains to be seen. Disney certainly has the brand chops in their portfolio to do it."

CB Richard Ellis said Disney will take up 4,464 square feet of Block 37 and anchor the southeast corner on Level 1. Its size will be about 80 percent of that of cosmetics retailer Sephora, which occupies 6,000 square feet. American Girl Place at Water Tower occupies 52,000 square feet.

Disney´s retail store strategy has undergone multiple changes in recent years. The company sold its stores to Children´s Place Retail Stores Inc. in 2004 amid weak North American sales, only to reacquire part of the chain in 2008.

According to a recent cover story in trade publication Chain Store Age, Disney will freshen nearly its entire chain of 370 stores worldwide in the next five to seven years, although it´s pumping its state-of-the-art technology into the prototypes.

Joe Parrott, senior vice president at CB Richard Ellis, said the interactivity of the Disney store should encourage shoppers to linger there and in the mall´s other stores.

"We´re trying to achieve a mix of stores that are better brands and are an attraction that draw people in specifically for their brands," he said. "They aren´t offering the type of merchandise you can find at dozens of other stores up and down State Street. … Disney definitely brings that to the table. It´s more than products, it´s an experience."