The Walmart Conundrum: Four Brokers Weigh In on Behemoth’s NYC Struggle

If one hot-button retail issue has dominated the New York real estate landscape in recent years, it’s been Walmart. The giant discount retailer has been trying to find a suitable location in the city for nearly a decade, but resistance has been fierce. The reasons for this resistance range from the big-box store’s labor practices to the perceived threat to local retailers.

The conflict came to a climax last year when Christine Quinn, democratic candidate for mayor, snarled, “As long as Walmart’s behavior remains the same, they’re not welcome in New York City.” Last week, The Commercial Observer spoke with some of New York’s leading retail brokers about the role of politics in retail real estate, what Walmart can do to ingratiate itself and which locations, if any, are suited to its footprint.

BlackDressHeadshotLightFaith Hope Consolo
Chairman, Douglas Elliman Retail

The Commercial Observer: With some New York politicians, including Christine Quinn, balking at the idea of Walmart coming to New York, do you think government should play a role or have a significant voice in real estate issues?

I think they will always have input. We will always have people that are pro retail and others that are not. Personal views come into how they try to control the growth. I know all the arguments for and against Walmart. I think if you talk to the developers, who are on both sides—if you talk to someone as smart as Related, for instance—they understand politics has a role, but they also understand the value of having the 800-pound gorilla on the street.

Look at when we brought in K-Mart [to Manhattan]. A few months later, everyone was thanking us, because it brought traffic and great advertising dollars to the area. I also think that at this time, more than any time, we can put a lot of people to work. Consumers want access to the same types of products at the same prices; it is important to give them choices. It is not much different than our own homegrown Fairway growing in the city.

This is value-oriented shopping. We’ve done it with fashion. Now we can do it with Walmart.

What does Walmart need to do be become a more attractive option for New York?
I was on a panel with [George Kinnard, vice president of realty at Walmart]. He said they were looking at structuring some special-type stores for each neighborhood. They could do something called an express store, which not only wouldn’t be as large, but it would have a lot of services: delivery and pickup to minimize the impact on the neighborhood. They need to provide access to all the products but make it very user-friendly.

They need to do what everybody does—kiss up to all the community boards. There’s always going to be the naysayers, but they need to do what fast food did: contribute to the neighborhood.

Say they went into the Bronx or part of Queens that needed development, or maybe they donate a park. Maybe they do a co-op with schools to hire students. This is a city very, very focused on education. That type of incentive is one way to endear themselves to the community.

Are there any potential locations that jump out?
In my opinion, anywhere they would go—whether it’s all the way north or all the way east—people would find their way there. They have the logistics and operational part to figure out. They don’t need to be at the corner at 14th Street and Fifth Avenue. They could be at the corner of 11th Avenue and 11th Street.

Is there a time line?
They’ve been working on this for years—working on it constantly. I can’t predict it. We don’t know the site and we don’t know the developer. It depends: if its Vornado or Related, it would move faster. It’s going to go well, depending on who they make the deal with.

I have nothing against Walmart coming here, and I don’t even shop the store. I have represented properties that they have visited, but I haven’t represented them. They’re focused on this. You’re not going to wear them out. They’ve got a bottomless budget.

If they want to do it, they’re going to spend the money to figure it out.

Christine_copyChristine Emery
Executive Managing Director, Emery Staav at MHP

The Commercial Observer: With some New York politicians, including Christine Quinn, balking at the idea of Walmart coming to New York, do you think government should play a role or have a significant voice in real estate issues?

I’m a real city girl. I don’t know if I’ve shopped it enough to have a real opinion. It’s like IKEA in Brooklyn. I love IKEA and how they’re using people from the neighborhood, but I think they should train them efficiently.

I believe government as it represents the public has a role. Of course, I think that it has to be devoid of silliness. Look at Barnes & Noble: a lot of bookstores disappeared when they started doing the big-boxes. Slowly but surely, it sunk into people’s consciousness that small proprietors had a role. I think people go into shock, but if they’re good retailers they won’t go out of business because of the big-boxes.

I always think there’s room for everyone in the marketplace

You mentioned IKEA; do you think Walmart should follow that model?
I think IKEA does take it seriously. But to really, really train people takes an unbelievable amount of time and energy, and I think [the public] would take that to heart a bit more, if Walmart were to do that. If the amount of money [employees are] making is less, if they’re receiving training, they can take that with them to the next spot and build their résumé.

Are there any potential locations that jump out?
The outer boroughs are used to it, to a degree. If they did a mini one, they should put it in the middle of Staten Island. It would be a home run.

Or they could do what Home Depot has done—little hubs.

If they get smart and choose wisely, there are a lot of different things they could do. They could go down to the Financial District, if they’re willing to take basements and subbasements. But it’ll be tough for them.

Do you think it’s something we will see?
Look at Nordstrom: they found something, but why do they think they need to be in Manhattan? There are a lot of reasons to be here, so it will be interesting.

I know Target, but that has a twist—the design element. Walmart is something else, and they’re also online, but I suppose bricks and mortar has its appeal.

Robert Futterman
Chairman and Chief Executive Officer, RKF

The Commercial Observer: With some New York politicians, including Christine Quinn, balking at the idea of Walmart coming to New York, do you think government should play a role or have a significant voice in real estate issues?
No, I don’t. I see real estate as “as of right.” Without it, you wouldn’t have development, wouldn’t have innovative retail and wouldn’t have neighborhood gentrification. No one is talking about changing any codes if it’s as of right.

What does Walmart need to do to make itself more palatable?
They could create a more urban prototype and show similarities to Target and Costco. Look at what Target did in Chicago. They opened in an old department store with 80,000 square feet.

I was out at my country house, and my girlfriend said, “Let’s go to Target,” and I said: “There’s a K-Mart 15 minutes away. Why drive to a Target that’s 45 minutes away?” Close your eyes, walk in and open them, they’re the same thing.

The difference is not that great. Are prices better? Maybe. Are they going to be putting retailers out of business? I don’t think so.

Why is one okay but not another? I think people are making much too much out of the issue.

Are there any potential locations that jump out at you?
It’s still hard to find the space. I’ve worked with Costco, I’ve worked with Target, and I’ve worked with Walmart to identify locations.

Walmart had parameters, which were for more ownership than lease, which is never ideal for Manhattan landlords.

It is hard to find space in a central business district. It’s hard to find it in Union Square, Herald Square or Soho. Are there pockets Downtown? Yes. There’s Downtown, the Far West Side and Upper Manhattan

If you go back 10 to 15 years, a lot of those areas would be considered remote, but with all the activity, it doesn’t seem so remote anymore. You have people willing to work and live in that part of town; it’s much less remote, much less pioneering.

If they can get the box down to 80,000 to 150,000 square feet, it would be less imposing. They could compare themselves with Target or Costco.

Will we see a Walmart?
It’s polarizing. The legislature in Albany would have to get behind it, and I think Walmart has done everything it can to show it’s not the evil empire.

The proof’s in the pudding with Costco and Target, who have gotten the opportunity. I would hope we would see a Walmart in the next five years

Are you still working with them?
It’s been a while since I’ve worked with them. Maybe they’ve just gotten discouraged. We had put together sites 18 months to two years ago, but not since.

USCREA_PABRESLIN_HighResPatrick Breslin
Executive Vice President, Studley National Retail Group

The Commercial Observer: With some New York politicians, including Christine Quinn, balking at the idea of Walmart coming to New York, do you think government should play a role or have a significant voice in real estate issues?
The last time I checked, this was the United States of America and this was the land of the free.
There are exceptions to the rule; you don’t want any creepy retailers. But Walmart? A lot of people say when they come in they kill the existing businesses, but on the other hand, they’re a major employer and a major vendor of purchasing goods.

I don’t think there’s any place for politicians to get involved in free trade.

So what does Walmart have to do to become more attractive?
The only issue is with the unions. Unions and politicians go hand in hand in this country. A lot of politicians rely on unions to get elected.

Is that the reason for the political pushback?
This goes way back, even when Vornado was trying to put them in Rego Park in Queens. I have never heard a legitimate reason politicians would be involved. In Rego Park there were no zoning issues. That type of tenant was allowed there. Walmart would have just been replacing a department store. I fully do believe unions had a say.

Are there any potential locations you have seen?
Except for Manhattan, where it’s hard to find their footprint. In the outer boroughs there are an abundance of properties that could fit into their criteria with no problems.

What about introducing smaller stores?
They have a prototype, like any other retailer—they know what works for them. There’s no better place than New York for a retailer like that. We have everything they need: bodies, buying power, properties. Zoning may be an issue, but nothing that can’t be overcome.

They have been operating in New Jersey and Long Island for years and years and years. I can’t speak for a Walmart opening up in a small town in Midwest and being a detriment, but here I don’t think that would be a factor. Target is here and came in without any problems whatsoever. Walmart just has a bad aura about its name.

I don’t like seeing mom and pops getting put out of business, but the people who shop there, it’stheir prerogative to shop where they want. I think they should let them come and make the New Yorkers make the decisions.

The biggest thing for me is jobs. They create jobs and create a tax base. With the way the economy is, we still have a lot of people without jobs in this city.

Instead of putting an ice rink up in the Bronx at the Armory, they should put a Walmart there.

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