Price/Costco downtown retail project shelved.

In an ominous development potentially injurious to downtown L.A.'s already-struggling Seventh Street retail corridor, Price/Costco Inc. has at least temporarily halted negotiations for a major "warehouse club" operation slated for the historic Robinson's department store building.

Sources said the much-anticipated store had been projected to sell perhaps $100 million to $150 million worth of merchandise annually.

Executives of the $18.25 billion-in-revenues retailer didn't return the Business Journal's calls. But other sources involved in the negotiations said suburban "big box"-oriented Price/Costco is reconsidering its commitment to the unusual city center location and multilevel structure; although some said they're optimistic that negotiations will resume in the near future.

Representatives of the City of Los Angeles, the vacant Robinson's property owner and Issaquah, Wash.-based Price/Costco had been working for more than a year on a creative incentive package aimed at supporting the warehouse store. The project was considered critical to reviving the once-thriving retail corridor along the southern flank of downtown's highrise core.

The historic 500,000-square-foot building at 600 W. Seventh St. has been vacant since Robinson's closed its store there three years ago. As the Business Journal reported last June, Price/Costco was negotiating to "master lease" the entire seven-story building for 25 years with extension options.

City economic development representatives offered to help absorb "extraordinary" costs associated with converting the early-20th-century structure into a two-level Price/Costco store. The public assistance package is said to focus on operation of the adjacent 700-stall parking structure.

But Price/Costco's interest was apparently cooled by concerns over the specific location and the building renovation/reinforcement costs - not the city's incentive package.

Price/Costco executives recently "expressed concerns about the specific site" - particularly its multistory configuration and urban location, noted Carol Schatz, president of the Central City Association, which actively supports downtown business interests. "But as far as we're aware, (negotiations) are on hold for the moment; the deal's not dead by any means," she said.

"We don't consider the negotiations dead by a long shot," commented John Gordon, managing partner with Aston Partners (formerly Knowlton Realty), leasing representative for the affiliate of Canadian firm Land Tower Realty that owns the Robinson's property.

"Convening this property to a multilevel store with an adjacent parking building is clearly a new challenge for an operation accustomed to big, single-level 'box' stores with acres of surface parking," Gordon said. "You have to be gung-ho about it, and they had been until recently. But I think we'll see some important meetings with key Price/Costco executives within the next few weeks," he added.

Patronage along the corridor - which stretches east from the Seventh Market Place shopping center at Citicorp Plaza - has declined substantially in recent years. Nor does it help revival prospects that Federated Department Stores Inc. is closing the Bullock's store at Seventh Market Place - leaving the future of that shopping center's Robinson's-May in doubt.

Downtown retail specialists had also noted that other "big box"-type retailers had been watching the Price/Costco situation closely, with an eye on making similar urban commitments if the operation proved a success.

Mirroring its typical expansion strategy, Price/Costco just acquired 30 acres in Westlake Village and plans to anchor a 300,000-square-foot shopping center it plans to develop in that suburban location.