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Monday, July 25, 2011, 7:00 am

Athleta plans to nearly double HQ size

Gap ‘pushing on the accelerator’ with plans for 50 stores by 2013

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    The Gap's Athleta has leased 40,000 square feet at South McDowell Landing in Petaluma.

    AthletaPETALUMA — Women’s activewear retailer Athleta, a division of San Francisco-based apparel giant Gap Inc., plans to nearly double the size of its 200-employee headquarters office in Petaluma this fall as the brand’s brick-and-mortar retail initiative picks up the pace.

    Gap (NYSE: GPS) earlier this month signed a 10-year lease with RNM Properties for 40,000 square feet of office space in the 2000 S. McDowell Blvd. and plans to move in November, according to those involved in the deal. It’s the same South McDowell Landing building, which overlooks Shollenberger Park, where backpack canteen pioneer Camelbak expanded in 2008. Athleta currently occupies 22,000 square feet at 1450 Technology Lane, a five-minute walk from the new location.

    Scott Key, vice president and general manager of Athleta, said the division was presented a number of locations from around the Bay Area for relocation but committed to starting the site search in Petaluma.

    “Athleta has a long-standing connection and a deep tie to Petaluma, a place our headquarters office employees have called home since the beginning,” he said. “Along with our expansion in the retail category this year has come growth within our headquarters as well.”

    The expanded location will accommodate current and future staff, he said.

    “We’re excited to make the move to a more fitting space while maintaining our ties to Shollenberger Park, local Petaluma races and the communities here, which have all become a part of Athleta’s DNA,” Mr. Key said.

    Athleta is a key growth brand in Gap’s portfolio, which also includes Old Navy, Banana Republic and Piperlime, according to Chairman and Chief Executive Officer Glenn Murphy. Gap had fiscal 2010 sales of $14.7 billion and had 3,100 company-operated stores and 175 franchise locations.

    As the company looks for ways to contain costs, including plans to consolidate U.S. retail locations, Gap agrees with Athleta division managers that they “have a tiger by the tail” in gobbling up a big cat’s share of the $31 billion-a-year market for women’s sports and active apparel, according to Mr. Murphy.

    “That’s why we’re pushing the accelerator,” he told securities analysts in a May conference call on fiscal first-quarter results.

    Gap opened a pilot Athleta store in Strawberry Village Shopping Center in Mill Valley in spring 2010 and a “flagship” 5,000-square-foot store on Filmore Street in San Francisco in January.

    The company plans to open nine or 10 Athleta stores this year. That includes two in New York City and one in Newport Beach, and have 50 open in North America by the end of 2013.

    Mr. Murphy said sales per square foot for the new stores have been strong.

    The International Council of Shopping Centers agreed. In May,  the retail real estate trade group named Athleta the 2011 Hot Retailer. Based on a survey of 55,000 council members worldwide, the award recognizes “retail concepts that drive consumers into shopping centers around the world.”

    In the past 13 years, Athleta has grown from a catalog retailer of active lifestyle clothing designed by and for athletes to an estimated $37 million-a-year online retailer in September 2008, when Gap acquired it for $150 million in cash. Athleta had 250 employees at the time.

    Trevor Buck, Brian Foster and Steven Leonard of Cassidy Turley BT Commercial brokered Athleta’s new headquarters lease, which was in process for nine months.

    The 120,000-square-foot 1450 Technology Lane building will be empty this fall when WorkRite moves in late summer and Athleta relocates, according to Mr. Leonard.

    “There’s a lot of activity on it, and it will fill up,” he said. “We’ve already had a half-dozen showings on it.”

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