The Sky’s the Limit for Nordstrom
The New York press has been all abuzz over the latest news about Nordstrom’s new Manhattan digs – that the West 57th Street space is officially Nordstrom’s.
The news first broke last June that the Seattle-based retailer, after a 20+-year search, had finally settled on a site for its first Manhattan store – in the base of a planned one million-sq.-ft skyscraper on 57th Street, east of Broadway. At the time, Nordstrom had agreed to buy its portion of the building – about 285,000 sq. ft. – with a slated move-in date of 2018.
Earlier this week, the New York Post reported that Nordstrom has paid $102.5 million to own its site at 225 W. 57th St., occupying the first seven floors of an 88-story residential condominium tower that will stretch past even the Empire State Building. The deal was propelled forward when New York real estate developer Gary Barnett (Extell Development) acquired the Beethoven piano building at 223 W. 58th St. for $25 million, securing the final piece to the planned skyscraper’s real estate puzzle.
According to the Post, that $100 million from Nordstrom – a down payment on what is said to be about a $300 million deal – will allow Barnett to launch development on the skyscraper; the plan is in design and has not been approved by the NYC buildings department.
The new Nordstrom will feature 175,000 sq. ft. of floor space, and is considered a really big deal among retail and real estate circles. A new department store in Manhattan is a rarity – and, if Nordstrom can continue its elevated service levels in the world’s biggest retail arena, the sky’s the limit. I, for one, will be watching the progress of this new store with great interest.
Retail Trends Across North America
Urbi et Orbi (The City and The World): The phrase is not just the theme of an annual speech from the Pope, but also summarizes what’s taking place in retail across North America: urbanization and globalization.
After decades of suburban malls and neighborhood centers dominating retail site selection, our city streets are once again becoming favored locations. And retailers looking at those sites come as never before from around the world, in a variety of rapidly expanding categories. The urbanization of North American retail is due in no small part to the near-cessation of new shopping center development during the most recent downturn.
With credit at a standstill, developers in the United States were unable to refinance projects that were already up and operating, let alone obtain funds for new projects. This may not necessarily have been a bad thing – according to the International Council of Shopping Centers, the United States has 23.1 sq. ft. of retail space per capita, some seven billion sq. ft. of shopping. The lack of new construction left existing space ready for new retailers to take quickly.
Meanwhile, luxury shoppers returned to the stores rapidly – the very affluent simply aren’t affected as badly during any recessionary period. So it wasn’t surprising that as the recovery began, the sectors that bounced back first were the discount stores (particularly the dollar stores) and the luxury market. This is a major factor in expansion patterns around the country, encouraging growth in and near cities.
Dollar stores and discounters rely on volume, and urban areas have the density of population needed for them to succeed. (In addition, many had already saturated the most convenient suburban locations.) On the other side of the spectrum, luxury retailers by nature tend to locate in urban locations first, particularly if they are coming from abroad, where they generally operate on High Streets. Thus, we saw an influx of new stores coming to Madison Avenue, Michigan Avenue, Rodeo Drive and more, all taking advantage of a temporary drop in asking rents to secure prime locations. But this trend was, and is, not just limited to luxury stores. Fifth Avenue in New York City, one of the most famous and expensive retail streets in the world, has been seeing an influx of more moderately priced chains seeking to establish themselves as international brands. It is indeed a street where Armani is across the street from Hollister, where Cartier and Uniqlo co-exist, where H&M can meet H. Stern.
But there is another major reason why retailers are seeking urban locations: According to the most recent census, just over 80% of Americans live in or near urban areas. Retailers are returning to the cities because that’s where the people are! This is in fact a global trend, so expect Main Streets, High Streets and vertical downtown malls (commonplace in other parts of the world, less so in North America) to remain most-favored-locations. The downturn also boosted an already existing trend toward globalization.
Once again, luxury led the way, as newcomers sought to establish themselves as major players. We saw U.S. entrants from Europe (Sandro, Maje, AllSaints, Topshop, Ted Baker, Marimekko, de Grisogono) India (Kimaya), South America (Nancy Gonzalez), Australia (Aesop) — and from neighboring Canada (Joe Fresh, lululemon athletica and the expansion of Aritzia). This is not just a phenomenon in the largest major markets such as New York, Los Angeles, and Chicago. Those cities have always been very oriented around High Street retail, and see retailers looking to establish themselves as international brands. Once they’ve done so, they then open locations in top malls. A case in point is Uniqlo, which opened a 90,000-sq-.ft. in New York City to great fanfare, taking the most expensive retail lease in the city’s history — $300 million for 15 years. Since then, Uniqlo has opened in Palisades Mall in West Nyack, N.Y., and Ridge Hill in Yonkers, N.Y., in addition to an existing location in Paramus, N.J.
Another truism is that retail tends to expand in packs, with certain categories seeming to explode at once. Fitness and health-related chains certainly are continuing to grow – in addition to the yoga-inspired lululemon, The Gap has launched Athleta, which sells fitness apparel at a slightly lower price point. Both of these retailers are locating in both better malls and in urban locations.
Whether it’s because of the popularity of “Mad Men,” or a historical tendency to dress more conservatively in a cautious economy, but menswear retailers are expanding everywhere! Even during the depth of the downturn, Jos. A. Bank continued to increase its store count around the United States. Today, we’re seeing new and expanding haberdashers at all price points, including luxury offerings from Lanvin, Berluti and Dior, among others, and moderate-priced retailers such as Men’s Wearhouse. Hugo Boss is creating a three-level flagship at the Time Warner Center in New York City.
Children’s apparel continues to grow as a specialty store sector, with entrants from around the world, including MonnaLisa from Italy, Caramel Baby & Child from the United Kingdom, and My Little Sunshine from the United States. MonnaLisa already has begun expanding to other Main Street locations around the United States, and look for the others to do the same.
There are also new shops for mom, particularly in the beauty sector. M.A.C. continues to expand in all locations, including one of the most expensive leases ever – a reported $3,000 per square foot on Fifth Avenue! Aesop, mentioned earlier, also is finding new locations, as is Bond No. 9, which offers fragrances inspired by New York City neighborhoods. Also keep an eye on Lush and L’Occitane en Provence. In addition, look for more Internet-based retailers to test physical stores – it seems bricks really are needed in addition to clicks! Microsoft is growing its store count around the country, and Gap is testing a store for its Piperlime e-commerce site. Other Internet-based shops have popped up, and will continue to do so as they learn the very different logistics of store-based retail.
And several individual retailers also continue to expand around the country. Value remains important for many shoppers, and Family Dollar, which plans some 500 new stores this year, is certainly working hard to accommodate them. Five Below plans 100 stores this year. The result: rents that now exceed pre-2007 levels in major coastal cities and an increasingly diverse retail. As the recovery takes hold even in the most-affected parts of the nation, expect both trends to continue and expand around the country. And, thus, from the city to the world!
Faith Hope Consolo is chairman of The Retail Group Douglas Elliman Real Estate. She also is known as a longtime supporter of women in real estate, working with organizations including CREW, NYCREW, AREW and YM/WREA, and as a philanthropist through her Real Estate Has a Heart Foundation. (Article from NYCrew)
Hershey deploys strategy for global growth
HERSHEY, Pa. — The Hershey Company has selected Universal McCann to handle its global media planning and buying activities.
Hershey’s global media assignment includes all paid media, including TV, print, digital and Hispanic for the U.S. business — the company’s largest — as well as Hershey’s growing international businesses.
The move is a result of the company’s governance policy of periodically assessing strategic supplier contracts to ensure effective and efficient service. And the timing was right for the company, which was ready to focus on global growth.
The company selected the agency based on a qualitative and quantitative analysis of the participating agencies, including capabilities in the U. S. and key international markets. Hershey’s appointment of Universal McCann succeeds incumbent agency OMD.
“After a comprehensive review, Universal McCann will be a strong partner for the Hershey Company and our portfolio of iconic brands,” said Denis Sison, VP, global marketing excellence and equity. “OMD has been a valuable partner to Hershey throughout the years. We would like to sincerely thank them for their work and dedication.”
The account transition to Universal McCann will begin Sept. 1.
Headquartered in Hershey, Pa., the Hershey Company has operations throughout the world and approximately 14,000 employees. It offers confectionery products under more than 80 brand names, including Hershey’s, Reese’s, Hershey’s Kisses, Hershey’s Bliss, Hershey’s Special Dark, Kit Kat, Twizzlers, Jolly Rancher and Ice Breakers.
The company is focused on growing its presence in key international markets such as China, Mexico and Brazil while continuing to build its competitive advantage in the United States and Canada.