Andrew Goldberg, Broker Behind Trump Tower’s Gucci Deal, Thinks Retail is Ready to Splurge on the West Side.
Daniel Geiger July 10, 2012, 7:15 a.m.
Andrew Goldberg is a retail executive at CBRE, where he is one of the firm’s top brokers, representing both landlords and tenants. With Nordstrom’s deal on 57th Street, retail leasing has been the talk of the town. Of course, Mr. Goldberg is no stranger to big-time leasing deals, having brokered Gucci’s 50,000-square-foot flagship at Trump Tower in 2006, one of the most valuable retail deals ever done in Manhattan. Mr. Goldberg spoke with The Commercial Observer recently about last month’s huge Nordstrom deal, the Drake development site, Gucci and Westfield’s plans for the World Trade Center.
The Commercial Observer: The big news in retail was Nordstrom’s decision to take space at Gary Barnett’s development site at 225 West 57th Street. What do you think of it?
Mr. Goldberg: I was just reading about it, actually. I think it’s great—we’ve read these headlines before with Nordstrom but I think it’s great. They’re a leader in the business and haven’t been able to get here. The only way was in a new development that was made for them and that only left a couple of opportunities. It’s going to be great for the West Side of Manhattan.
Why did they finally settle on this site? For years they had been rumored to be looking at one site after the next. They’ve seemed almost fickle.
I assume it’s a build to suit where they will have input in the design and development. It’s 57th Street and Broadway, which is a good location for them. You have what will be dedicated loading on 58th Street. That is a really important issue for them and it also seems like the floors are big enough so that they can lay out a department store. I don’t think it’s having to do with being fickle—it’s having a large company that’s used to having their stores work a certain way and not being able to readily find that. You have to find the right floorplate that has the right amount of columns and ceiling heights and loading, and you need it to be a location where the customer is.
Nordstrom might be an extreme example, but are all retail tenants exacting in their own ways?
Yes, almost all the time. Small retailers, there are more options and opportunities for them. But when you get bigger, it’s harder. We’re repping a theater chain that’s not in New York, it’s sort of the future for theaters, a newer concept. For them to build out a space the way they want to, it doesn’t exist in the city, or it’s very hard to find. It almost has to be in a new development because it’s too costly to retrofit for these uses.
Couldn’t they just retrofit an existing theater?
Yes, they could. That is more of a likelihood, but there aren’t that many theaters going out right now in places that you want to be. There are not that many new development projects out there either, but there are more than there were.
Are you talking to the builders of any new or proposed developments right now for this tenant?
We have several conversations going on right now. It’s so far out in terms of time. I mean, look, when you talk about Nordstrom they’re talking about a 2018 opening.
What is going on at the Drake development site? That could be a prominent new retail space, right?
The site is on 57th through to 56th and onto Park, and I think right now it’s a construction site. There’s a big hole in the ground and they’re planning to build a tower. I think Harry [site developer Harry Macklowe] has multiple options in terms of how the space can be laid out. The market is in his favor, and he’ll probably sit back and talk to people and let all the other things out there get taken, because there are not a lot of new options. I assume he’s in no rush to commit to the retail because the longer he waits it would seem, the more the market will play to his favor.
Could your theater tenant go there?
I don’t think a theater is really the highest and best use for that space in terms of economics.
You’re very familiar with Plaza district retail, right? You did that huge Gucci deal at Trump Tower.
Yes, Gucci is on 56th and Fifth. That was a tremendous deal at the time and even today that deal is a high watermark. It was just under 50,000 square feet. We had to assemble the space at the Trump Tower. It was a great deal—it gave Gucci over 100 feet of frontage on Fifth Avenue in a four-story, and it gave Donald [Trump] a premier brand at fabulous economics. [Editor’s Note: Donald Trump is the father-in-law of Jared Kushner, owner of The Commercial Observer]
Deals like that, and obviously Nordstrom as well, don’t come around that often, do they?
It would be great to have that every year, but no. It’s not everyday that the corner of Trump Tower becomes available and Donald Trump tells you that he wants you to go and arrange a blockbuster deal for him and do whatever you have to to get it done in terms of buying out the existing tenants and assembling the space.
Is that what he said?
At the time, we went to Donald and said we had a tenant in the space who we repped that wanted out of the space because maybe we didn’t need so much space and they were looking for other locations to decrease the size of the store. We moved them to Madison and 70th. At the same time we knew Gucci needed more space and we put the whole thing together. The timing worked out well. Many things had to happen all at once.
Seems like a lot is happening on 57th Street lately. Barnett landed Nordstrom and is creating space nearby at his residential development One57. There’s the Drake Hotel site. There’s 3 Columbus Circle, which is attracting tenants …
You just talked about a lot of different shopping areas, actually. On 57th Street there’s 5th Avenue, and then you go east to Mad and Park and that’s always been high-end luxury retail and that will continue to be that way. When you went west there was always, well, you didn’t have the same luxury going west. What will happen if Nordstrom does happen, I think that will help rent 3 Columbus, and once you have a tenant there I think all of that will come together, and that will help bring people west. You’ll start to see the weaker tenants on that block disappear and become infilled by stronger tenants drawn by those big tenants.
What’sgoing to be offered a the World Trade Center site in terms of the retail, and will you be doing deals there?
Westfield [the WTC retail operator] has been close to the vest in terms of what their plan is. The World Financial Center has come out with their plan, however. I am starting to talk to the brands, the tenants that they would like to see down there. I think over the next few months, maybe six months or so, you will start to hear about everyone’s plans in more detail, and people will start making commitments. A lot of tenants want to know what’s happening at the WTC site before they commit to the World Financial Center.
Who are your tenants?
I deal with more luxury brands. The bulk of my business on the tenant side really just evolved that way. We are doing things outside of that, such as the theater. I’m doing the rollout for Argo Tea—they’re great, they’re out of Chicago.
So are you focusing on doing deals at the World Financial Center?
Brookfield Properties has been positioning their redevelopment of the retail there in order to draw luxury tenants. We’re certainly looking at the project, yes.
Is it realistic for them to assume they’re going to be able to land big names like Gucci and Hermes and the rest?
You know, they’re very smart developers. And Lower Manhattan certainly has demand for the product.
Do you do most of your deals in Midtown?
I would say so. We also have a lot on the landlord side and a lot of that is in Midtown. We’re also working in other markets.
Right now it’s back to major cities. We have leases in San Francisco and Las Vegas and L.A. and Hawaii. A lot of luxury brands that we represent are doing deals there, like Valentino and Max Mara and Roberto Cavalli. It all goes in waves. It just seems like last year it was fixing up vacancies that were open on Madison Avenue and now we’ve got other markets where there are expirations or where tenants want to expand to. Everyone is looking to grow again.
What agency spaces are you handling right now in Manhattan?
Well, we have action on 1333 Broadway at Herald Square. It’s 60,000 square feet of space in a prominent location. We have a deal that’s pending, a traditional big box retailer.