Condé Conundrum Brews in Lower Manhattan
Karsten Strauss Dec. 6, 2012, 7:15 a.m.
Condé Nast, the mega-publisher behind such magazines as Vogue, The New Yorker and Vanity Fair, holds several events per month at the Lambs Club on West 44th Street, two blocks from its 4 Times Square headquarters. It’s also been known to hold events at Michael’s on 55th Street, and a host of other venues.
Now, with the company having leased over 1.1 million square feet at 1 World Trade Center and saying goodbye to its old quarters, a new posh venue for its gatherings will have to be found, all of which has brokers asking the question: will high-end dining and retail come to Manhattan’s southern tip?
Retailers are hungry for Manhattan retail space at the moment, but lower Manhattan luxury stores may take time, said Steve Rappaport, senior managing director with SINVIN Realty. For that to change, a high-end retailer may need to stake a claim early on and wait for value to grow, Mr. Rappaport said.
“Will it happen? Yes. When will it happen? That’s difficult to determine,” he said.
“Nobody’s asking me for Downtown, they’re asking me for Soho,” said Faith Hope Consolo, chairwoman of the retail division of Douglas Elliman Real Estate.
One of the barriers standing between Downtown and a string of luxury boutiques could be low population, she said.
“But that could change.”
Tropical Storm Sandy could cause retailers to think twice before setting up shop in lower Manhattan, said Pat Breslin, executive vice president of East Coast retail at Studley. That said, luxury retail returned to New Orleans following that city’s brush with oblivion, he noted. The World Trade Center and the Brookfield and Westfield developments could draw luxury offerings.
“I know they’ve been speaking to every high-end retailer in the world,” said Mr. Breslin.
Though Sandy exposed vulnerabilities in lower Manhattan, the hardest-hit areas were in the Financial East section, not so much Financial West—still rebuilding after 9/11—where Condé Nast will soon settle.
Lower Manhattan is on the rise, said Nicole LaRusso, senior vice president for planning and economic development with the Downtown Alliance—a research and advocacy group focused on lower Manhattan that will seek to attract retailers at this week’s International Council of Shopping Centers conference in New York.
According to the alliance, the residential population in the area has grown from about 24,000 in 2000 to a projected 61,600-plus in 2013, and that population is packing a healthy supply of disposable income, even by New York standards—the average household income was about $188,000 in 2010.
Attractions like the Statue of Liberty and the WTC Memorial draw tourists, and hotels have followed, Ms. LaRusso said. The number of hotels in the area now stands at 18—up from six in late 2001—with five more under construction. The development of the Financial District as a place to stay, not just a place to visit, could increase the foot traffic and exposure that shops crave. “It has a huge impact on retail,” said Ms. LaRusso. Already operating in the area are Canali, Hermès, Sarar, Morton’s and three new Danny Meyers restaurants, among others.
“The fundamentals of Downtown are extremely compelling,” said Ed Hogan, national director of leasing at Brookfield Properties. In the relatively small space between Broadway and West Street, about $20 billion of construction is underway, he explained. This includes the W Hotel, The Conrad Hotel, the new Fulton-Broadway subway station and others.
Mr. Hogan feels luxury will find a home in lower Manhattan. The World Financial Center—now called Brookfield Place—will feature developments specifically with retail in mind. Brookfield’s plans include a 25,000-square-foot marketplace, five restaurants, a 35,000-square-foot dining terrace with harbor views, a 30,000-square-foot health club and a 200,000-square-foot mall. There will be over 40 spaces for fashion retailers. And it will not only be a destination for shoppers from other neighborhoods: the nearby Battery Park City houses some 20,000 residents with average incomes of over $140,000 per year.
There are luxury boutiques on Wall Street that are doing well, Mr. Hogan said, but with its dense security and canyon-like atmosphere, it may not be an enjoyable shopping experience.
On top of Brookfield’s play, Westfield’s $612.5 million stake in developing retail around the WTC area is working to attract retailers now.