Ross Stores Inc., a Pleasanton, Calif.-based company that operates the Ross Dress for Less retail chain, has agreed to lease most of the former Gottschalks Inc. space in the Manito Shopping Center, on Spokane's South Hill, and plans to open a store there in mid-2011.

The company will occupy about 28,000 square feet of the 40,000 square feet of space that Gottschalks had occupied, and will move in after the space has been renovated and the exterior of the building has been updated cosmetically, says John Bennett, president of Spokane's Black Realty Management Inc., an NAI Black company.

The department store space has been vacant for more than a year.

Bennett, along with Dave Black and David Wright, both also of NAI Black, represented the shopping center's owner, Manito Shopping Center Associates LLC, in the lease transaction, which culminated a year of negotiations.

"My dad developed this center in the '60s, so it's kind of neat to revitalize it and still be working on it," says Dave Black, NAI Black business manager.

A firm cost estimate hasn't been developed yet for the extensive build-to-suit renovation of the former Gottschalks building, but it will be in the millions of dollars, and the project hopefully will serve as a springboard for renovation of the rest of the aging center, Bennett says.

Of the portion of the former Gottschalks space that Ross won't be leasing, he says, "We've got a couple of good prospects for that space we're talking to right now," and they're aware that Ross will be taking the adjacent space.

The shopping center is located near the southeast corner of 29th Avenue and Grand Boulevard and includes a total of about 123,000 square feet of retail space, not counting five separately owned buildings that sit elsewhere on that block, bounded also by 31st Avenue and Garfield Street.

The shopping center sits on a sloping site, with businesses near the northwest corner of the block occupying a lower grade than those to the south and east. A two-lane ramp that passes beneath part of a promenade adjoining the north-facing, upper-level main entrance to the former Gottschalks store space provides access between the center's upper and lower parking lots.

All of the former Gottschalks space is located on the upper level of the two-story western portion of the main shopping center complex, which has no indoor access between floors. A Rite-Aid store and a Super 1 Foods supermarket occupy the two large upper-level retail spaces just east of the department store space.

A restaurant-bar and a liquor store occupy two of three smaller west-facing retail spaces beneath the former Gottschalks store space, and Bennett says NAI Black is seeing some interest from prospective tenants in the third, currently vacant space there, formerly occupied by a travel agency.

Occupying other buildings on the block are branches of Washington Trust Bank, Chase Bank, U.S. Bank, and Spokane Teachers Credit Union, and Vintages at 611, a wine-focused restaurant located next to the U.S. Bank branch in a building just northwest of the main complex.

A preliminary sketch for the renovation project shows the exterior upgrades to the department store building possibly including the creation of an enhanced entry plaza, with an activity area and outdoor seating, new lights, banners, and planters. Also shown on the rendering is an envisioned new structure with a gable roof at the northwest corner of the building that would house an open-air stairway between the two levels and would be considered what Bennett calls a "signature feature."

The late James S. Black Sr., together with the Walther family, of Spokane, developed Manito Shopping Center in 1968. A group of New York-area investors, along with Walther family heirs, now own the center through Manito Shopping Center Associates, Bennett says.

Original tenants in the center included Safeway, Pay 'n Save, Ernst Home Center, and Lamonts Apparel. As the retail landscape here changed over the decades, the Safeway and Ernst stores were replaced by the 52,500-square-foot Super 1 Foods store, owned by Rosauers Supermarkets Inc., and the Rite-Aid store took over the former Pay 'n Save space.

The Lamonts store there became a Gottschalks store 10 years ago, after the Fresno, Calif.-based Gottschalks Inc. chain bought the assets of the Kirkland, Wash.-based Lamonts chain, including two stores here, out of Bankruptcy Court. Gottschalks later ceased operating after running into financial difficulties of its own. Its lease of the Manito store space officially terminated 14 months ago.

Ross currently operates three other stores in the Spokane-Coeur d'Alene area—one at 5504 N. Division, in the Franklin Park Commons retail center; another at 15529 E. Broadway, in Spokane Valley; and the third at 225 W. Canfield Ave., in Coeur d'Alene.

Ross is a Fortune 500 company traded under the symbol NOST, and claims to be the nation's second largest "off-price" retailer. As of January, it was operating 953 Ross Dress for Less stores in 27 states and Guam, and 52 dd's Discounts stores in California, Arizona, Texas, and Florida.

It says on its Web site that Ross Dress for Less offers name brand and designer apparel, accessories, foot wear, and home fashions at savings of 20 percent to 60 percent off of department and specialty store prices.

For its 2009 fiscal year ended Jan. 30, Ross reported record net income of $442.8 million, or $3.54 cents a share, up sharply from $305.4 million, or $2.33 a share, in its prior fiscal year. Its overall sales last year of $7.18 billion were up 11 percent. It reported additional double-digit growth in its fiscal 2010 first quarter, prompting it to adjust upward its sales and earnings forecasts for the year.