Nordstrom and Extell Development: Patience is a Virtue
It turns out that patience is virtue for both Nordstrom and Extell Development. When the retailer announced Thursday that it would be opening a 285,000-square-foot, 7-story store at 225 West 57th Street some time in 2018, it represented the culmination of ten to 15 years of searching. Meanwhile, developer Gary Barnett had been quietly assembling the parcel where the store will open for almost a decade.
In the end, the deal was pulled off thanks to a team from Jones Lang LaSalle, the firm’s Derek Trulson telling The Commercial Observer that real estate expertise, not retail expertise, paved the way.
“It’s a structured real estate deal and it’s a complicated deal and I’ve had the luxury of being around complicated projects all of my career,” Mr. Trulson said. “We were hired as real estate experts, not retail experts and I think that was what actually allowed us to get this done.” Colleagues Mike Shenot and Bill Peters also worked on the search, which took JLL (JLL) over three years and, as Mr. Trulson said, was “kind of on the QT.”
Brooke White, a spokesperson for Nordstrom, said that the Nordstrom brothers—Blake, Peter and Erik—had been very involved in the search since it began about 15 years ago and which she described as having been “ongoing and essentially opportunistic.”
Part of the reason that it was opportunistic is that there were specific requirements that needed to be met, many of which ruled out existing buildings right off the bat. Mr. Trulson said that among these was size—at a minimum 250,000 to 300,000 square feet, minimum ground floor ceiling heights of 25 feet and floors above that had ceiling heights of at least 18 feet.
“It takes out of the equation a lot of the existing buildings,” he explained. “They just don’t work.”
Because of this, Mr. Trulson and his team sent out RFPs to prime targets in the development community. “Many of which didn’t formally respond but they had us in for meetings,” he said. “So we had a series of meetings with the likes of Boston Properties (BXP), Related, Extell, Silverstein, Durst… we met with all the usual suspects and we let everybody know, ‘Here’s our requirement and this is what we need and if you have sites that you’re working on or projects that you see in the future where our requirement works, let us know.’”
Ms. White, the Nordstrom spokesperson, remembered a long list of properties and sites the company was shown that didn’t quite fit the bill.
“There was another site off of Columbus Circle,” she said. “Hudson Yards was another possibility and there was a deal a long time ago—a property off of Madison—with Harry Macklowe. So there were things around town that worked to some degree, but this was the first time that we found a space that we think will really serve our needs well.” She echoed the space requirements that Mr. Trulson named as the biggest hurdle.
Now that the site has been found, Nordstrom and Extell are working together, she said, to choose an architecture firm to lead the project—a task that even sandwiched Thursday’s press conference. “Pete and Erik are working with Extell today meeting with architecture firms,” she said when reached by phone Thursday afternoon. “They met with them all day today and post the press conference as well.”
Once up and running, the store will likely change the retail landscape. Jeff Edelman, director of retail and consumer advisory services at consulting firm McGladrey, said that Nordstrom is a powerful store likely to generate “very high sales productivity” at the new location.
“I think Nordstrom’s the kind of a store where it could be a destination point and, as such, I think they can draw their target volume,” Mr. Edelman said. “They’ve got a very powerful store format that will draw people.” Nordstrom will probably, in fact, draw on the customer base of neighboring retailers.
Said Mr. Edelman: “My sense is that looking at their product mix and some of the other stores you will probably see a little more of a draw from Bloomingdales than you would from Bergdorf Goodman who would be down the street.”