Talks have been under way for more than a year with Gap to fill the 127,639-sf spot vacated in fall 1999 by Saks Fifth Avenue's relocation to a larger space on the 1.9-million sf Galleria's north side. It's been widely publicized that San Francisco-based Gap Inc. would take over the site, but construction plans had been kept under wraps until yesterday.

The unusual construction has just started and will conclude in March 2002. The interior is such that Gap is going to stack Banana Republic, Old Navy and four of its specialty brands to create a stores-within-a-store concept.

Gap and its brands currently occupy some 40,000 sf in the high-end mall, owned by Hines Interests of Houston. Negotiations already are under way with replacement tenants, but there are some surprises in store for customers, Staman Ogilvie, Hines' executive vice president, tells GlobeSt.com. Careful not to tip his hand, Ogilvie says "we have a lot of conversations going that will be welcome additions to the Dallas market." He says he is "quite confident" that the inline space will have tenants lined up long before Gap wraps up construction.

The Galleria is in stiff competition with new brands that are surfacing at Stonebriar Centre and the upcoming Shops at Willow Bend. Thus, the freeing up of Gap's inline space is welcome, says Ogilvie. The Galleria is 98 1/2% occupied. "We don't like sitting by while new brands come to town and we can't talk to them," he tells GlobeSt.com.

Ogilvie says Gap has signed a 15-year lease for the Saks space, with renewal options that carry the retailer to 2054. The per sf rate varies for Galleria space, but can go as high as $80 per sf.

A Gap Inc. source tells GlobeSt.com that the project is one of the largest undertaken by the nationwide specialty apparel retailer. No project costs are available at this time. The vertical concept is the brainstorm of the corporation's real estate brokers, she says. It's a matter of always keeping options open when surveying space.

This marks the first project in more than a year at the 18-year-old Galleria. Galleria Level One will house Banana Republic; level two, Gap, GapKids, babyGap and GapBody; and level three, Old Navy. Each store will have a separate entrance and be linked by a new three-story glass atrium with vertical transportation to each level. To complement the Gap project, Hines will add a skybridge to the top level of the adjacent LBJ Parking Garage.

Gap will serve as the fourth anchor at the high-end retail center. Macy's occupies 243,000 sf; Nordstrom, 225,000 sf; and Saks, 155,000 sf. The Galleria is the centerpiece to a 3.8-million sf, mixed-use complex boasting a 473,500-sf Westin Hotel and five office towers totaling nearly 2.2 million sf as well as 112,000 sf of street retail.