Retailing sector isn't keeping up with other downtown Seattle growth, says association leader.

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Downtown Seattle is thriving with new office and residential activity, but needs to focus on beefing up its retail core, the president of the Downtown Seattle Association said in her annual “state of downtown” address Thursday.

Quality retailers who want to open larger stores downtown are having trouble finding space in good locations, Kate Joncas said.

It’s been nearly a decade since downtown’s last big retail development — Pacific Place and the flagship Nordstrom store — was completed, and mixed-use Westlake Center is 20 years old, Joncas said at the association’s annual State of Downtown Economic Forum at the Westin Hotel.

In the world of retail, “that’s eternity,” she added.

In an interview, she said retail-development efforts should focus on the corridor between the Washington State Convention & Trade Center and Pike Place Market.

Competition from downtown Bellevue is a concern, Joncas said, pointing to Neiman Marcus’ decision to locate its first Northwest store there rather than in Seattle.

“We didn’t have a site that big available immediately,” she said. “Nationally, Bellevue is very hot.”

Greater downtown, which stretches as far as Capitol Hill, South Lake Union and Lower Queen Anne, added about 400,000 square feet of retail space in 2007, increasing the total to 5 million square feet, the association said.

But statistics compiled by Officespace.com, a commercial real-estate clearinghouse, suggest most of that increase came in outlying areas rather than the downtown core.

In that broader area, vacancy rates for retail space increased slightly, from 5 percent to 6 percent, and lease rates dropped from an average of $25.02 per square foot in 2006 to $23.29 last year, according to the association.

In the central-city office market last year, demand exceeded supply. Average lease rates for top-end office space increased 25 percent, and vacancy rates fell, the association said, citing brokerage CB Richard Ellis.

“Last year was certainly the year to be an office-property owner in Seattle,” Joncas said.

Fourteen downtown apartment or condominium projects were completed in 2007, according to the association, and more than 5,700 new units are in the pipeline.

Living downtown has been mostly a lifestyle choice, said Brad Segal, who heads a Denver consulting firm that works to revitalize downtowns. But partly because of traffic and the rising cost of driving, “in the future, in my opinion, it will be more of an economic imperative,” he told the forum.

To continue to thrive, Segal said, downtowns in Seattle and elsewhere need to provide housing at a variety of prices, and offer amenities to keep young residents as they age and have children.

The association said downtown hotel projects added more than 650 rooms in 2007, and nearly 1,000 more are under construction or permitted.

The boom should go on because Seattle is becoming a preferred destination for work and play, said Isadore Sharp, chairman of Four Seasons Hotels and Resorts, who also addressed the forum. Four Seasons is building a 21-story tower of hotel rooms and luxury condos downtown.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com