Neiman Marcus has renewed the lease for its Minneapolis store in Gaviidae Common, a welcome development for upscale shoppers and a downtown retail market that has lost several merchants in recent years.

The Dallas-based retailer arrived in Minneapolis in 1991, when its store opened as part of the second phase of Gaviidae at 5th Street and the Nicollet Mall. Its first lease ran 15 years and the renewed lease was set to expire next year.

The new lease expires in 2013, said David Sternberg, senior vice president of the Minneapolis office of Brookfield Properties, Gaviidae's Toronto-based owner.

"There was a lot of speculation that Neiman Marcus would move out [of downtown], maybe to one of the suburban malls like Southdale," said Mike Sims, principal at the Minnesota office of Mid-America Real Estate Group. "The decision to remain downtown is a real positive."

The new lease is on the short side for Brookfield's retailers, which typically lock in for five to 10 years, Sternberg said. Neither Sternberg nor Neiman Marcus would discuss other lease terms, including rent.

Even so, Sims and other local retail market experts said retaining Neiman Marcus as an anchor is a significant accomplishment. The 120,000-square-foot store occupies most of the space in Gaviidae's Phase II and is about the same size as Saks, which anchors Gaviidae's Phase I. Keeping Neiman Marcus allows Gaviidae's overall occupancy to remain a relatively healthy 90 percent, Sternberg said. The Saks lease doesn't expire until 2015.

Unlike Saks, which converted to a discount outlet in 2005 after struggling as a full-line department store, Neiman Marcus is keeping its current upscale merchandising format, with a close-out department confined to just part of one floor.

Neiman Marcus spokeswoman Ginger Reeder declined to comment on sales results for the Minneapolis store. But the 40-store chain is among many department and specialty store companies that have seen their overall sales plunge in the current weak economy. Its sales in October were almost 28 percent lower than the same month last year.

High-end retailers have had an especially difficult time doing business downtown in recent years. Several -- including Polo Ralph Lauren, Kuhlman and Willams-Sonoma -- have closed or moved out. Other closings, such as Crate & Barrel, Borders Books and Badiner Jewelers, have combined to bring downtown's retail vacancy rate to 19.1 percent as of midyear. That compares with a vacancy rate of 7.6 percent for the Twin Cities overall, according to Bloomington-based NorthMarq, a commercial real estate services firm.

The downtown Macy's store has been unable to find a tenant to fill a spot vacated in January by J.B. Hudson Jewelers, which moved to the former Polo Ralph Lauren space on Nicollet. Downtown also has been unable to attract another department store or a large retail tenant, such as a Best Buy store. Lund Food Holdings Inc. announced plans in August for a grocery store as part of a project to be built on Hennepin Avenue between 10th and 11th streets, but no firm opening date has been set.

Retaining Neiman Marcus could help efforts to land another department store or large retailer, according to Sam Grabarski, president and CEO of the Minneapolis Downtown Council.

"It helps keep those conversations alive," Grabarski said.

Susan Feyder • 612-673-1723