Much like the city itself, New York retail is in a constant state of flux.
Storefronts go dark, signage changes, new buildings rise. Even landmarks like Lord & Taylor on Fifth Avenue aren’t immune to the ebb and flow.
Over the next year or so, these transformations will be especially evident as several blockbuster projects open their doors around Manhattan, bringing shoppers to parts of the city that have, in many cases, languished for years, if not decades. On the Far West Side, Hudson Yards will become home to the city’s first Neiman Marcus, set to open in March 2019 as part of the first phase of the $25 billion mixed-use megadevelopment. Also among the retail offerings will be close to 100 other shops across a range of price points, including Zara, Stuart Weitzman, Dior and Forty Five Ten, a Dallas luxury boutique known for its eclectic point of view.
Then, in the fall of 2019, Nordstrom will finally join the exclusive cadre of Manhattan department stores, unveiling a 320,000-square-foot women’s store across from the 47,000-square-foot men’s shop that opened this spring just east of Columbus Circle.
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Before either of those projects makes its public debut, however, the developers of the newly revitalized South Street Seaport (now christened the Seaport District) hope to begin drawing shoppers downtown as soon as next month with the stateside touchdown of legendary Milanese concept store 10 Corso Como. At 28,000 square feet, the boutique will occupy the entire ground floor of the Fulton Market Building, complementing the neighborhood’s new entertainment and culinary attractions, including the glassy Pier 17 mall.
For all the doom and gloom surrounding physical retail in recent years, these projects illustrate that the industry isn’t afraid to place major bets on brick-and-mortar, so long as the location is right. Still, there is reason for apprehension. After several years of economic growth, the U.S. business cycle could be nearing its peak.
And looking at the stretches of empty storefronts in many once-bustling shopping New York corridors (not to mention the Lord & Taylor flagship sell-off), one might wonder if the city can support such an influx.
Experts say it can, though, pointing to some of the unique selling points these developments offer, not least of which their novelty.
“New York has always been survival of the fittest, and people gravitate toward what’s new,” said Bill Lewis, a director in the retail practice at consulting firm AlixPartners LLP. “If you’re not new and contemporary and digital-first, you’re going to be pushed down by others that are.”
This “adapt or die” philosophy goes for landlords, too. “They’re putting their best foot forward in order to compete,” he said. “The options are to do something like these projects and reimagine and reinvent how they present them to their customers or to go in a downward spiral toward irrelevance.”
It’s All Related
Arguably the boldest Big Apple real estate leap is Related Companies’ 28-acre Hudson Yards complex. By the time the project is completed in 2025, an estimated 125,000 people will pass through the neighborhood daily. The local population of office workers and residents in particular will be a major boon for retailers, argued Joanne Podell, executive vice chairman at Cushman & Wakefield, which negotiated two deals in Hudson Yards for tenants Muji and Vita Eyewear.
“This will become a destination for that Far West Side residential consumer,” she said, “not just the people who are living and working there but people along that whole corridor.”
The Shops and Restaurants at Hudson Yards complex will incorporate seven floors of retail and dining, the top three of which will be occupied by Neiman Marcus. (The department store reportedly shrank its footprint from 250,000 square feet to 190,000 square feet in the fall, though both the retailer and developer declined to comment specifically on the square footage.)
It is among the most ambitious in a series of vertical malls, including Brookfield Place and Westfield World Trade Center, that have sprung up around Manhattan since the Shops at Columbus Circle opened its doors in 2003, proving that shopping upstairs is no longer anathema to New Yorkers. Already the Shops at Hudson Yards is 80 percent leased.
“There’s a reinvention or rethinking of New York real estate in these centers. They’re tighter square footage, they’re better integrated with digital, and they have a stronger reason for being than just, ‘Hey, I’m going to rely on the foot traffic from one of the traditional avenues like Fifth or Madison,’” said Lewis. “I’m not saying those avenues are dead, but they don’t necessarily have the convenience and curation of these new centers.”
The Hudson Yards press kit touts even more prosaic amenities: “Think Soho and Madison Avenue, only climate-controlled and weatherproofed.”
Emblematic of retail’s current yen for foodie destinations, the center will also feature dining options from celebrity chefs like Thomas Keller and José Andrés. “Across projects, we’re always thinking about how consumers are evolving and how we can better meet and exceed their shopping preferences,” said Kenneth Himmel, president and CEO of Related Urban. “Shopping, paired with compelling and delicious restaurants and programming, will always outperform traditional retail offerings, and we’re excited to bring this model to life at Hudson Yards.”
Sea the Point
At the Seaport, Howard Hughes Corp. is also betting big on food and entertainment, pouring $785 million into the neighborhood in a bid to transform an area that for decades has mostly cleared out after commuters go home for the day. On its side is a rapidly growing residential population that sits at around 70,000, an increase of more than 50 percent since 2014. There’s also the quick connection to Downtown Brooklyn via the Fulton Transit Center, along with the crowds of tourists who flock to the World Trade Center Memorial and Oculus less than a mile away.
“There’s a dynamic population that’s being built down there that are going to be drawn to an extravagant seafood market, to a concert on the top of the Pier or a fashion show,” said Andrew Mandell, a managing partner at Ripco Real Estate. “[The developers] are trying very, very hard to maintain a mix of tenants, be it retail or food, that are different, that are unique, that are one of a kind, and if they stay that course, they’ll be very successful.”
At Long Last
While creating a diverse experience is more challenging in the confines of a single store, Nordstrom will open with a similar philosophy, prioritizing food and beverage options and high-low merchandising. Occupying seven stories at the base of Extell Development Co.’s Central Park Tower, the store is being built from the ground up at a reported cost of more than $500 million. Among the modern considerations are soaring ceiling heights (as tall as 21 feet in the great hall), unbeatable natural light (courtesy of a glass façade) and fast WiFi (not always a given in older structures).
Nordstrom spent well over a decade searching for the right location for its entry into Manhattan, ultimately settling on a site a few blocks west of most of the city’s big-name department stores.
This was a savvy move, explained Mandell, as it connects the store to the Time Warner Center and Upper West Side. “Over time, there will be a market that continues to grow as a result of this kind of anchor store landing in the area.”
He likens it to Bloomingdale’s iconic East Side flagship, an 859,000-square-foot behemoth that reportedly accounts for between 18 and 20 percent of Bloomingdale’s total annual volume. “From a success standpoint, I think that there’s going to be a lot of similarities between them,” said Mandell.
Despite the long hunt, Jamie Nordstrom, president of stores, said the location is hardly its most important calling card. “Although we’re pretty darn excited about Columbus Circle, we’re thinking about it as: How do we serve all of Manhattan and the five boroughs, and how do we take all of our capabilities and investments that we’ve made over the last number of years and bring those to bear to serve that customer the way that they want to be served?”
That means incorporating services that cater to tourists, like multilingual sales associates, international payment options and partnerships with local hotels, as well as seamless digital integration, including “buy online, pick up in store” and easy e-commerce returns.
Even with all these investments, though, the store is still a very expensive gamble at a time when many competitors are closing up shop and Amazon is gobbling up a huge share of consumer dollars. So is the company still as bullish as when it signed the deal?
To answer that, Nordstrom pointed to the company’s 117-year history. “At any given time, we get a lot of questions about: Is this the right time to be opening here? And our answer is pretty consistent: We’re not opening the store for this year; we’re opening for the next 50 or 100 years,” he said. “We’re not economists; we’re retailers. We know what’s durable, which is great product and great service. And if we keep that as our focus — giving the customer a great value, being relevant to what they’re looking for and how they want to shop — then we’ll be successful.”
