Retail Redux: Robert K. Futterman on ICSC, Hurricane Sandy and More
Billy Gray Dec. 5, 2012, 7 a.m.
In the merely 13 years since its founding, the retail real estate brokerage Robert K. Futterman & Associates has been responsible for $20 billion worth of transactions. The firm’s chairman and chief executive, Robert K. Futterman, has helped tenants and landlords sign the dotted line on $10 billion worth of deals while making his company a presence in New York, Las Vegas, Los Angeles, New Jersey and San Francisco.
Mr. Futterman spoke to The Commercial Observer as he wrapped up prep work for the International Council of Shopping Centers’ chaotic New York conclave, sharing his thoughts on the past year and future of retail real estate, the rebound from Hurricane Sandy and Downtown’s increasingly amorphous boundary.
The Commercial Observer: This year the ICSC proceedings will run for two days, as opposed to three as it has in the past. Do you think this will improve the event?
Mr. Futterman: Can I tell you that my brokers are working Sunday? And really, they’re not going to stop until Thursday. So, yes within the confines of the Hilton, it’s two days. But the party starts this weekend. We have meetings, dinners, a cocktail party on Sunday. But it’s all ICSC-related. On Wednesday we’re out and about to do sight tours and to meet with landlords who aren’t attending the conference. Think about it: residential developers and office owners, your traditional New York landlords, don’t necessarily go to ICSC.
But in general, this week is a great time to meet people before everybody starts thinking about Christmas vacation. It’s a perfect time for deals to get started. I always say, at ICSC, nothing really gets done. Everything gets started. It’s our Super Bowl.
What developments from the Las Vegas ICSC convention in May do you expect to carry over into the New York conversation?
The good news is deals that started in Vegas in May have gotten done or are getting done right around now. And deals that you get started now, tenants you’re talking to this week, are looking to open in the fall, unless it’s big construction. That’s the name of the game. But the truth is, a retailer can start negotiating on a space with a 24-month horizon. Tenants budget years in advance from when they’re going to open stores. They plan out where they need to be strategically, and when they’re going to buy merchandise. And it’s not too early, if you have a space that you could lock down in a great location two years in advance.
So we’re involved in a lot of new construction. We have a project at 855 Sixth Avenue, which is a Durst [Organization] property. We’re working with Gary Barnett on 48th Street right off Fifth Avenue, which is a great opportunity. We’re representing Silverstein Properties on the old Mercedes-Benz site on 10th Avenue—that’s 240,000 feet of retail. So a lot of the meetings we’re having are with tenants that are looking to open 18 to 24 months from now.
Speaking of Vegas, how is Miracle Mile doing? The recession hit Sin City exceptionally hard. Has Miracle Mile weathered the storm?
Miracle Mile is one of the great success stories. The fact of the matter is, there are fewer high rollers coming through Vegas these days. Hotel rates have come down. And I think shopping is helping stabilize Vegas. For one thing, you’re targeting a more accessible customer. And given the central location on the Strip, near the Paris and the Bellagio, the shopping center sees quite a lot of foot traffic.
There’s been some media speculation that Downtown Las Vegas, away from the Strip, is the next big thing. Do you agree?
You hear and read a lot about Downtown. But I think a lot has to happen there—especially residential development. I think the recession hit the area even harder than the Strip. But the customers who used to go Downtown are now heading to the Strip, so in a way Downtown’s woes helped the Strip.
Global brands have arguably been the defining story in New York retail real estate over the past few years. Which companies do you think stand out as successes?
Uniqlo has made a huge splash. Topshop has done very well too.
Will international tenants continue to be a force down the possibly very long road when the European economy improves?
I think so. You see it now in hotel development and occupancy rates. You see it in the prices paid over at [Extell Development’s] One57. You see it in the expansion of parts of New York that are under development. A lot of international companies want to get their money out of Europe. America is really a time-tested safe haven, especially New York, Los Angeles, Chicago and Miami. You’re going to see retail growth and residential growth proceed even when Europe starts to rebound.
Which New York neighborhood or retail corridor has the best potential for growth right now?
I’m very bullish on the Lower East Side and the Bowery. I think that those are really promising areas. So many fashion retailers do well Downtown. And these days, Downtown—you can basically start saying you’re Downtown at 31st Street. Just look at the Ace Hotel. Or where the High Line ends. Call it Chelsea North, call it NoMad—there’s a very healthy growth pattern right there. I think The Ace and NoMad, all the way to the Hudson Yards, are thriving. From Sixth Avenue west is really surging. You can credit Eataly with that too.
But on the Lower East side, a lot of the new hotels being built are redefining the area. The Bowery is filing in very nicely. And it will only continue to improve.
On the note of changing or changed neighborhoods, RKF has had a presence in the Meatpacking District since it was still full of butchers in blood-soaked aprons. Do you think that area has, in a sense, completed the transition from grimy to glamorous?
Yeah, I do. Look, there’s a former car wash being redeveloped at 10th Avenue and 15th Street. That construction really creates a new access point, or gateway, to the neighborhood. The boundaries are shifting once again. You have the High Line, Chelsea Market. You have the Whitney Museum opening a new building in 2015.
There’s The Gansevoort, Little West 12th and 13th Street, which is getting developed. Washington Street is seeing a few different new developments. The Meatpacking District has become a seven day and seven night location. It’s not just a late-night or weekend destination like it was only a few years ago. People want to be there. Retailers see the sales volume. The restaurants are packed all day and all week. Hotels like The Standard have been really good for the neighborhood. There’s a true sense that this is a round-the-clock destination.
The Meatpacking District brings us to waterfront real estate. Could you talk about Hurricane Sandy, its impact and how long a full recovery might take?
It’s devastating all over. Even on a national basis—late October, you had pre-Sandy effects, a lot of people were worried and didn’t want to leave their houses. They were glued to the news. Post-Sandy, the devastation was obvious. You had some locations that were literally wiped out. Then, stores were losing power or had water damage, etc. I think Lower Manhattan will come back, and strongly. The fact that 1 World Trade Center is under construction signals that the area will endure. The South Street Seaport, which was heavily damaged, is and will continue redeveloping.
Also, Wall Street itself will be a fantastic place when the smoke clears and the dust settles. It’s just going to take a little bit of time.
What, to your mind, was the single biggest retail story in 2012?
Well, there’s certainly a trend for these supermarkets like Whole Foods and Fairway. That’s one end of the spectrum. Fashion is another big success story—your Rag & Bones, your Alice + Olivias. There’s Theory, Vince, Rebecca Taylor, Sandro, J.Crew. These are the tenants who are leading the change in terms of who’s expanding. You know, Louis Vuitton and that type of brand will always have its place in the market. But I think you’re seeing a lot of these innovative fresh faces starting to expand.
Biggest story? You’ve got a lot of ’em . New developments: Hudson Yards, the Trade Center. Even places like 41st and 10th. The West Side is being made over. The Seaport. All this stuff is exciting. And it never seems to stop.
And what’s the biggest project on tap at RKF?
I’d have to say 855 Sixth Avenue—that’s 150,000 square feet, a block or two from Herald Square—it’s very exciting considering it’s in that no-man’s-land area that’s really on the verge of exploding.