RENT HIKE TO FOLLOW NORDSTROM; STORE'S ARRIVAL COULD DOOM MALL'S LESS `UPSCALE' TENANTS.

Byline: Jason Takenouchi Daily News Staff Writer

The proposed $20 million city subsidy to lure a Nordstrom department store here would be a mixed blessing to some businesses.

While many Valencia Town Center tenants say Nordstrom would bring needed shoppers to their mall, stores that do not fit into Nordstrom's tony image may get less benefit from the high-end retailer and could be squeezed by increased rents.

``The question is are you a tenant that still fits this image of the mall?'' said Jim Rabe, an analyst with Keyser Marston Associates. ``There's going to be a repositioning.''

According to the original proposal by mall developer The Newhall Land and Farming Company - written by Keyser Marston and released by the city this month after a Freedom of Information Act request - annual rents for existing tenants would be expected to increase by $2.50 a square foot after Nordstrom and related stores move into the center in 2002.

The rent hike would add to Newhall Land's profit margin on the expansion and is not related to the roughly $20 million incentive package that Newhall Land is seeking from the city of Santa Clarita.

Joe Sullivan, owner of the watch sales and repair shop On Time, said he wants Nordstrom to move in. But he said he feels the increase, though reasonable, is not fair, especially given that Nordstrom will not pay rent if it comes.

He said his rent is already higher than at his other store in the Northridge Fashion Center.

``I have to borrow from the Northridge mall to pay rent here,'' he said.

While he supports Nordstrom because it would ``bring some class'' to the center, Sullivan said, he expects little direct benefit from the expansion, especially if Nordstrom or other incoming stores have watch repair operations.

The 6-year-old Valencia Town Center currently has more than 100 stores and is anchored by Sears, J.C. Penney and Robinsons-May. If Nordstrom anchors the mall, Newhall Land officials expect 50 or more upscale stores, and a flood of shoppers, to follow.

Newhall Land spokeswoman Marlee Lauffer said foot traffic generated by Nordstrom and other new stores would more than make up for the rent increase.

``On the whole, most existing retailers would benefit greatly,'' she said. ``I can't see any of them not benefiting from the expanded center.''

Turnover would happen regardless of whether there was an expansion, she said.

Many retailers agreed Nordstrom would provide an infusion of shoppers and energy.

Vice President Alison Johnson of Diane's Inc., owner of the Diane's Swimwear store in the mall, said the company is happy with its sales levels and would welcome a Nordstrom, in large part because it would bring in the kind of shoppers that Diane's targets.

``The shopping centers that we're in that have a Nordstrom as an anchor are generally pretty good shopping centers,'' she said. ``I think that will make it a really great mall.''

But Johnson said she also felt a rent increase would not be fair to existing tenants.

Johnny Huynh, manager for Princess Nails, said the benefits of a Nordstrom would outweigh the rent increase.

``It's not much for the whole year,'' he said. ``Nordstrom is going to bring a lot of people in here, and you're going to get that much back, and more.''

The planned rent hike is just part of the proposal that Newhall Land officials say is needed to bring a Nordstrom store to Santa Clarita.

Under the original proposal by Newhall Land, the city would pay $20 million to Nordstrom, Inc., in addition to waiving some fees associated with the mall's expansion.

Newhall Land has offered to lend the city the money if the city repays it through a percentage of sales taxes generated by the mall expansion. The company also would give Nordstrom $12.5 million in land and other improvements.

The proposal is being worked out and has not yet been formally presented to the Santa Clarita City Council.