PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6c 
ACTION ITEM 
Date of Meeting     February 4, 2014 
DATE:    January 24, 2014 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:   James R. Schone, Director, Aviation Business Development 
Deanna R. Zachrisson, Manager, Concessions Business 
SUBJECT:  Amendment of Lease & Concession Agreement (Premises Notice) for Airport
Management Services LLC dba Hudson 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to amend the Lease and
Concession Agreement of Airport Management Services LLC (dba Hudson Group), substantially
as drafted in Exhibit A, to remove two news/gift locations from the lease premises at Seattle-
Tacoma International Airport. The Commission addressed this matter in December 2011, and
this authorization fulfills the intent of that initial action. 
SYNOPSIS 
This request amends the Airport's lease and concession agreement with Airport Management
Services LLC dba Hudson to remove two locations previously agreed upon by both parties. In
2011, Hudson, an Airport Concessions Disadvantaged Business Enterprise (ACDBE) joint
venture, assumed the operation of a 3,400 sq. ft. retail location (Exhibit B: CT-10) in the
Airport's Central Terminal.  The space had been  occupied by Borders Books until  that
company's liquidation closure on August 6, 2011. Although staff attempted to recruit a new,
preferably local, bookstore for the space, the effort failed to attract a viable operator. As an
alternative option, staff negotiated a lease for a new Hudson convenience retail concept to be
introduced in Seattle  for the U.S.  airport market  (formerly known as Hudson News). 
Commission approved the lease and concessions agreement on December 3, 2011. As part of the
negotiation with Hudson to assume this space, the company agreed to return two other retail
locations, at no cost to the Port, for re-lease as small business opportunities. The return of these
units was outlined in the 2011 lease approval. This request concludes the process with the
removal of these units from the Hudson premises. 
BACKGROUND 
The liquidation and closure of Borders Books' locations nationwide in the summer of 2011
transpired very quickly. The Airport location, on the northern flank of the Central Terminal, was
the largest specialty retail space in the main terminal.  Staff acted quickly to acquire the lease
from the bankruptcy assets, and issued a Request for Interest (RFI) in order to re-lease the space
to a local bookstore. However, the book retailing business was already struggling with increased

Template revised May 30, 2013.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 24, 2014 
Page 2 of 4 
competition from electronic media, and there was no interest in expansion at the Airport among
local bookstores. 
Hudson's new convenience retail concept  introduced in Seattle as the first in the country  
combined 'grab-n-go' foods, a wide variety of drugstore items and travel accessories with
traditional periodicals and books. The new concept opened after renovations were completed in
April 2013. Hudson invested $1.2 million in the re-concept of the space, and since opening has 
generated sales consistent with the pro forma estimate of $500,000 in monthly gross sales. This
sales level greatly exceeds the average sales generated by Borders Books in that same space.
Prior to assuming the Borders Books space, Hudson operated 16 news and gift locations in the
Airport, as well as two Alki Bakery cafs and four specialty retail locations. As a condition for
assuming this key Airport location, Hudson agreed to return two other nearby retail units to the
Port in such a condition that would allow new small businesses to move into and operate the
spaces with little investment.  Staff is planning the length of these small business tenancies in
order to 1) dovetail with the overall re-development of restaurant and retail locations; 2) recover
modest investment, and 3) provide sufficient time to evaluate interest in competing for long-term
leases at the Airport. 
Airport staff held an outreach session in May 2013 to promote upcoming dining and retail lease
opportunities.  At that time, staff solicited applications from specialty retailers for future
opportunities. The two retailers selected for the short-term operation of these locations were the
only businesses interested in a short-term operation at the Airport. Short-term tenancy for these
spaces offers advantages both to the Port and to the selected operators. For the tenant, it allows
the opportunity to gain experience of retail operations in an airport environment without the
investment risk of a typical 7-year retail term. For the Airport, it provides maximum flexibility
for potential use improvements in the future program while maintaining a stream of revenue and
consistent customer service. The traveling public also benefits from discovering a new local
offering that is unexpected and unique for an airport. 
The locations in detail: 
Both locations are proposed to be operated by local small businesses. 
1.  News/Gift location BC-06: This 1,346 sq. ft. space is located just around the corner from
the new Hudson location and offers a largely redundant product offering. The space is
configured ideally for a new, short term retail tenant to make use of the existing fixtures
(shelving, slat-walls), which Hudson will leave intact. The proposed short-term tenant for
this space is Metsker Maps, a renowned 100-year old company with its main location at
the Pike Place Market. The company plans to merchandise its namesake maps, but also a
wide variety of travel and local history-related books, Puget Sound souvenirs, globes, and
educational games and toys. Metsker Maps tenancy is anticipated to be approximately
1.5 years.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 24, 2014 
Page 3 of 4 
2.  Specialty Retail location CT-06:  This 1,768 sq. ft. space is currently operated as
"Discover Puget Sound" offering a variety of Puget Sound and Northwest souvenir
merchandise. This is also an ideal location for a new, short-term retail concept that can
take advantage of existing fixtures. The proposed short-term tenant is Sub Pop, famously
known as a local music label and that has a successful track record of retail sales of music
and music-related merchandise. Their retail concept includes music themed clothing, art
posters, CDs and vinyl records. Sub Pop's tenancy is anticipated to be approximately 1.5
years. 

FINANCIAL IMPLICATIONS 
In 2012, the news/gift BC-06 space generated $1.1 million in gross sales.  While sales have
continued to be strong in 2013, the merchandise is redundant of that offered in the new, nearby
Hudson location. The souvenir shop CT-06 generated $1.5 million. It is possible that the new
concepts will generate lower sales. However, the sales generated in these units, in combination
with the increased sales generated in the new Hudson convenience store concept, will likely
result in a net gain in sales from the previous levels generated in all three locations. The
resulting concession rent to the Port will thus likely increase. 
STRATEGIES AND OBJECTIVES 
The Port's activities are driven by an overarching vision contained in the Commission's Century
Agenda. In this roadmap, the Port has articulated a goal to become the 'gateway of choice' for
air travelers.  This action supports this vision by creating a diverse offering of products and
services that meet the expectations of an increasingly sophisticated traveling public. Equally
central to the Century Agenda, this action supports the growth of small businesses by providing
an opportunity for two local, small businesses to try operations in the Airport, and determine by
this experience if they would like to compete for future long-term lease opportunities. 
The approval of this premises notice amendment meets the following strategic objectives of the
Aviation Division: 
Maximizes financial performance by meeting customer demand 
Provides compelling customer and community value by bringing locally-owned and well-
known brand concepts into the Airport 
Develops new business opportunities for experienced retailers to be successful in a new
venue 
Provides additional opportunities for new employees and suppliers. Current Hudson
employees in these locations will remain working in other Hudson locations at the
Airport.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
January 24, 2014 
Page 4 of 4 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Defer a decision on removing these locations from the current lease agreement
premises. 
The window of opportunity for a short-term small business trial tenancy is rapidly closing due to
the planned re-development of all dining and retail locations in the Airport. The units will be
competitively re-leased for a typical 7-year lease as part of that re-development. In order for the
short-term leases to be fruitful as a trial tenancy, the proposed tenants must have at least 1.5
years in order to experience both slower and busier travel seasons. Roughly 30% of business is
done in the summer months, and thus operation during the summers of 2014 and 2015 would
provide the best prospects for success for new businesses. This is not the recommended
alternative. 
Alternative 2)    Continue to allow Airport Management Services LLC to operate these
locations. 
Continued operation would be inconsistent with the lease granted to Airport Management
Services LLC dba Hudson for operation of the former Borders Books space in December 2011
which stipulated the return of the units specified in this amendment. The continued operation of
these units by Hudson is redundant with the offerings now available in the former Borders
location. In addition, Hudson operates a total of 23 units in the Airport. Creating more diversity
of operators was another objective with the return of the two identified units. This is not the
recommended alternative. 
Alternative 3)  Remove the two identified locations from the premises notice of the Lease &
Concession Agreement.
The locations were specified in the 2011 Commission lease approval as agreed between the Port
and Airport Management Services LLC to be returned in order to create new small business
leasing opportunities. Approval of this amendment will allow both small businesses to be open
by April 1 for the spring and summer travel seasons. This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Exhibit A: Draft Lease and Concession Agreement 
Exhibit B: Map 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
December 6, 2011  Commission approved a new seven year Lease and Concession
Agreement with Airport Management Services LLC to operate a convenience retail store
in the Airport's Central Terminal.