Defying Economic Gravity
Sales are up at The Shops at Columbus Circle and The Restaurant & Bar Collection, the retail and restaurant components of the 80-story, mixed-use Time Warner Center on New York City’s Columbus Circle. Sales rose 17% in February following a double-digit increase in January.
By contrast, the nation’s retail sales slumped 0.6% in February, while rising just 0.4% in January, according to the U.S. Commerce Department.
“The retailers are telling me that March was another strong month for us,” said David Froelke, senior VP of New York City-based Related Cos. and general manager of the center.
Current sales are continuing a trend of double-digit year-over-year increases since February 2004, when the center opened. Last year, sales per square foot reached $1,500, about 25% above 2006.
How does a developer put together such a center? First, it takes a New York City location. The developer, Related Cos., LP, in a joint venture with Apollo Real Estate Advisors, LP, chose Columbus Circle across from the entrance to Central Park. The target market included local residents with an average household income of $158,700 and wealthy tourists with household incomes of $190,000.
Despite the high-traffic location and eye-popping demographics, Columbus Circle had never succeeded as a retail venue. “Few developers would know how to handle a project like this,” Froelke said. “To satisfy New York City residents, you have to create an icon.”
Froelke credits Kenneth Himmel, president and CEO of Related Urban, as the visionary behind the project. “Ken Himmel was involved in Chicago’s Water Tower Place, Reston Town Center in Reston, Va., and Copley Place in Boston,” Froelke said. “Those projects transformed the retail business in those cities.”
Himmel describes the Time Warner Center as a Manhattan street constructed vertically, with hand-picked retailers and restaurants and a design that makes people want to go up. Last year, 16 million people wanted to go up. “We thought out of the box and the city has embraced it,” Himmel said.
A successful mixed-use center on the scale of the Time Warner Center has to run hard 24 hours a day, says Froelke. That requires a high-end hotel, residences, offices, entertainment, restaurants and retail.
Time Warner Center tenants include Time Warner Inc. world headquarters, Mandarin Oriental New York Hotel, Jazz at Lincoln Center with three performance halls, One Central Park Residences, The Residences at Mandarin Oriental, The Shops at Columbus Circle and The Restaurant & Bar Collection.
On the other hand, this level of center doesn’t need a traditional retail anchor. Food is the anchor here: a 50,000-sq.-ft. Whole Foods Market and six restaurants and nightlife lounges. “We handpicked the six greatest restaurants and lounges in the country and put them under one roof,” Froelke said. “This is more Ken Himmel magic. It is the most important culinary collection in the country—absolutely unique. It’s one more reason why New Yorkers have embraced the Center.”
OfficeMax 1Q sales fall on weak economy
NAPERVILLE, Ill. OfficeMax announced that for its first quarter ended March 29, total sales decreased 5.5% to $2.3 billion compared to the first quarter of 2007. Net income increased in the first quarter of 2008 to $63.3 million, or 81 cents per diluted share, from $58.5 million, or 76 cents per diluted share, in the first quarter of 2007.
OfficeMax Retail segment sales decreased 5.5% to $1.11 billion in the first quarter of 2008 compared to the first quarter of 2007, reflecting a same-store sales decrease of 8.7% partially offset by sales from new stores. Retail same-store sales for the first quarter of 2008 declined across all major product categories due to weaker U.S. consumer and small business spending and the negative impact of the Easter holiday occurring in the first quarter of 2008.
IKEA to open first U.S. manufacturing facility
DANVILLE, Va. IKEA, through its subsidiary Swedwood, announced that it will open its first U.S. furniture manufacturing facility on May 21 in Danville, Va. The 930,000 square-foot Swedwood factory will produce a variety of wood-based IKEA products, the company reported.
“We made excellent progress on construction last year and our installation of equipment and machinery has gone very smoothly,” said Bengt Danielsson, North American president of Swedwood. “Now our primary objective is to complete appropriate operational training for 175 coworkers as well as to ensure a seamless production and packaging process.”