Banana Republic looks to re-enter Aspen’s retail scene

Majority of Aspen Planning and Zoning Commission opens door for national retailer by granting variance to building owner on ‘second tier’ space rule

Banana Republic is eyeing the retail space in this three-story residential and commercial building at 420 E. Hyman Ave., which is scheduled to be completed in April.
Kelsey Brunner/The Aspen Times

An Aspen building owner on Tuesday received a variance to a city rule meant to create second tier spaces for affordable, locally serving businesses so Banana Republic can become his tenant.

Marc Ezralow, owner of 420 E. Hyman Ave., is in negotiations with the national retailer to rent just under 4,000 square feet on two levels but was prevented to do so due to the city’s land use code in which the basement space is required to be designed separate from the street level.

The city’s commercial design standards were a result of amendments to the land use code after Aspen City Council in 2016 passed an emergency ordinance freezing all development applications in the city’s commercial zone districts.

The definition of “second tier” commercial space was created during that process and requires projects to be designed much like 420 E. Hyman, according to Jeff Barnhill, a city planner.

Council at the time was concerned that businesses serving the needs of the full-time population were at risk of being displaced as restaurants, retail spaces and offices able to pay high rents were resulting in a continuing shift toward exclusivity, he told the citizen-based P&Z commission.

The requirement to provide separate net leasable spaces in basement and upper floor locations, isolated from ground floor prime space, was created in hopes to provide local serving businesses more affordable rent opportunities, according to Barnhill.

But Ezralow, who bought the building in 2017 for $8.25 million when the requirement did not exist, said his intention was to have one tenant who offered multiple price points, and not a luxury retailer on the street level and a useless basement space that’s unappealing and not viable for a business that would likely remain empty.

An architect’s rendering of what the building under construction on the Hyman Avenue Mall will look like when it’s completed.

“I would’ve never bought this building,” he said, if the condition existed to separate the spaces.

A resident of Pacific Palisades, California, Ezralow said he plans to move his family to Aspen this summer and live on the third floor residential portion of the building.

“We are not (fancy) people … we’ve been offered deals from high-end retailers and we wanted to have something where everyone can shop,” he said before Tuesday’s P&Z meeting.

Banana Republic representatives said the company requires a certain amount of square footage, typically a minimum of 7,000 square feet, to adequately store inventory, offer multiple price points and display its merchandise and brand in an interactive and effective manner.

“Banana Republic’s use of only the ground level or only the basement level of the property would render its investment financially infeasible,” wrote Ed Kelloff, Banana Republic’s senior director of real estate, in a letter to city officials.

He noted in his letter that 420 E. Hyman Ave. is the only building in downtown Aspen that is available and can accommodate Banana Republic’s minimum space requirements.

“Before Banana Republic abandons its efforts to open a retail store in the city Banana Republic submits this letter of support for owner’s application for relief from the onerous space restrictions applied to the property under the code,” Kelloff wrote.

Banana Republic has been in Aspen previously, leasing two floors in the building that is now occupied by Ralph Lauren on Cooper Avenue. Banana Republic left in 2003 to make way for Ralph Lauren.

Ezralow, represented by land use consultant Sara Adams, requested a variance from the second tier requirement based on a hardship and asked that Banana Republic be able to combine the street level and the basement to one commercial space.

City staff, including planning director Amy Simon, recommended denial of the request, stating that the criteria for receiving a variance are strict.

A property owner must demonstrate that reasonable use of the property has been withheld by the city and can only be achieved by a variance.

“The current building configuration may not provide enough net leasable space for this tenant but that does not mean that it doesn’t provide enough space for any tenant and staff feels that the application represents an applicant’s specific inconvenience rather than a site specific hardship,” Barnhill said.

He also said the city is concerned that granting a variance because an applicant simply does not have enough net leasable space to operate will set a bad precedent and serve as a way to circumvent the land use code.

“To my knowledge this is the first second tier space reduction that has come to Planning and Zoning Commission,” he said.

The P&Z commission voted 3-2 in favor of granting the variance, with the two dissenting members — Spencer McKnight and Teraissa McGovern — saying when considering the criteria on its own, there is no hardship.

“They had ample opportunity before vested rights expire to combine these two units and they would not have been subject to this requirement … they don’t sway me on that,” McGovern said. “I think their mention and use of Banana Republic as the hook for us is trying to play on our emotions, but we are not the owner, we are not the people who are signing that lease. … The negotiations could break down tomorrow and then we have done something that could be rented to anybody with no locally serving, no whatever.”

To address that concern, a voluntary deed restriction was added as an amendment to the resolution that the board passed stating the combined main and ground level commercial unit must be dedicated to “general retail” as defined in the land use code rather than “specialty retail” defined by the city as luxury, generally non-recurring purchases, such as jewelry, art and fur.

The city’s second tier restriction as it exists as of Tuesday’s meeting would be reinstated if the combined space no longer meets the definition of a hardship.

The majority members of the commission said they felt there was a hardship for Ezralow because the basement is not a space that’s viable for a successful business and the city’s code doesn’t match the intent of having locally serving businesses.

“This is hard for me because I hate to see an empty space in Aspen with the current climate and retail mix and disappointment that people are having,” commission member Brittanie Rockhill said. “I don’t like the idea of us being in the way of that being able to happen.

“I see Teraissa’s point and I also am fighting with my own common sense with intent and what Aspen could really use and what Aspen really needs and it makes me want to approve it.”