Retailing It Around Manhattan
Oh, the week of Thanksgiving—a few days off, a big meal and shopping until your credit cards explode. Yes, it’s that time of year again—Early Bird Thursday, Black Friday, Cyber Monday. There’s a lot of ground I want to cover here (due to the season and due to the expansion of retail locally), so let’s get started.
First the big picture: All the pundits have weighed in on what U.S. retail holiday sales will look like for 2013, and there is quite a wide range of opinions. The National Retail Federation quotes a decent 3.9 percent jump from last year, while Morgan Stanley released a very dismal 1.6 percent figure. Going down the list, there’s Wells Fargo at 3.7 percent, Customer Growth Partners at 2.9 percent and Shopper Trak at 2.4 percent. All of these predictions include multiple variables from household income growth to home sales to fuel prices to weather patterns to the D.C. dysfunction. In many cases, it is believed that high-end and low-end retailers will do well with the middle squeezed tight and forced to discount away to meet sales goals. And of course, the chunk of sales taken away from brick-and-mortar to the Internet continues to grow (for the most part). Showrooming (browsing in a physical store and buying online, possibly at a lower price point) has become hugely popular. Personally, I like to work the other direction, researching online and then having an opportunity to be touchy-feely in the store before purchasing with a real live person, though the insanity of shopping in Manhattan does dissuade me from that at times.
So let’s bring it back locally, shall we? New York City has seen a significant jump in retail jobs over the past few years. In just the last year, there has been a 3 percent rise to 334,600 positions. Over the past 10 years, the growth has been even more impressive with a jump of 27 percent! A lot of that growth has fallen into the categories of food and beverage stores, clothing and clothing accessories stores, general merchandise stores, and even good old-fashioned department stores. The two laggards in this sector have been furniture stores, and sports, book and music stores.
So who are all these ribbon clerks (to use a very old-fashioned term) selling to? Well, this little island of ours contains at all times a rather sizable collection of well-off residents. Of course, there is a major population at the lower end of the scale, and mixed in somewhere are the middle incomers (which has its own special definition in Manhattan). Meanwhile, NYC managed to squeeze in more than 52 million tourists last year, mostly domestic but 11 million of those were international visitors. Direct spending by all of those folks was in the neighborhood of $37 billion. One could witness them in action just strolling along Fifth Avenue in Midtown (and the Lower East Side and the Upper West Side and everywhere in between). And for being somewhat of a clean and safe big city and a gateway market, we have seen a boon in retailing to service “us” and “them” across the board (except maybe for the lack of a few well-placed grocery stores—I’m talking to you developers in Hell’s Kitchen!). And it’s about to get even more crowded over the next 30 days!
Keeping that level of demand in mind, it makes slightly more sense that there are now three H&M’s literally within blocks of each other in Midtown, including the newest 42,000-square-foot location in Times Square. As big as it is, you may have to squeeze your way in between the mobs and the Times Square reconstruction. And that’s why four-digit retail rents are commonplace not only on Fifth Avenue from 49th to 59th Streets (north of $3,000 per square foot) and on Madison Avenue from 57th to 72nd Streets (pushing $1,500 per square foot on average), but also now in Times Square (north of $2,000).
Seemingly insatiable retail demand also explains the “malling” of Manhattan. Sure, there has been “the” Manhattan Mall around for a while (middle-level retailers for the most part) and the original mall within the World Trade Center complex (servicing mostly neighborhood office workers). But then came the Time Warner Center and its Shops at Columbus Circle—some 325,000 square feet of them, in fact. Vertical retailing, which many thought could never succeed in Manhattan, has performed pretty well for the most part. A few years later, we will have similar and even larger facilities at Hudson Yards (around 750,000 square feet) and the new World Trade Center (400,000 square feet) plus Brookfield Place (a reconfigured and upscaled 200,000 square feet). And let’s not forget the likelihood of a rebuilt South Street Seaport into a festival marketplace planned with a local twist. There is even the boutique-like Grand Central Terminal, probably the most beautiful “transit mall” in the country!
This column would not be complete without a nod to stand-alone department stores. Macy’s with its $400 million renovation will be completed in 2015, giving Manhattan a total of 1.2 million square feet of retailing bliss (this site alone has 4,600 year-round employees and will be adding another 800). And before the end of the decade, Manhattan’s first full-scale Nordstrom department store will open its doors on West 57th Street.
On the other end of the spectrum, there remain unique retail experiences in all parts of Manhattan—you just might have to search a bit harder in between all of those national and international retailers, though. And with the holidays upon us, you have several pop-up markets to choose from, including Grand Central Terminal, Bryant Park and Union Square.
Can we honestly say Manhattan will be “under-retailed” after all of that?! Now get those comfortable shoes on, and let’s go shopping!