David Firestein Brought Starbucks to New York City 30 Years Ago. What’s Next?
A lot of it depends on return to office, the broker says
Firestein brought the very first Starbucks to Manhattan in 1994 when it opened on West 87th Street and Broadway. Since then, he’s done more than 300 deals with the coffee giant, but he’s more than just Starbucks’ go-to broker.
The 6-foot-3 founder of SCG Retail, The Shopping Center Group’s urban commercial real estate division, has worked in-house for AMC and helped represent big-name retailers such as REI, Whole Foods and Sweetgreen.
But Firestein is probably known most for his Starbucks deals, helping the retailer open its 23,000-square-foot roastery in Chelsea in 2016, its mobile-only kiosk in Penn Plaza in 2020, and the 23,000-square-foot Starbucks in the Empire State Building. (He credits Empire State Realty Trust for cooperating with Starbucks on the timing of that project, so the store wasn’t forced to open within the first year of the pandemic.)
Now, roughly 30 years after Firestein brought Starbucks to Manhattan, he has no interest in slowing down. He still loves the rush of opening night at a new store, working with clients, and keeping them for decades. Firestein anticipated a lot of changes to the post-pandemic retail landscape — like an uptick in drive-thrus and the closure or conversion of some movie theaters — and he expects to keep playing a part in that evolution.
CO met up with him last week at, of course, Starbucks (in this case, the newest one at the Empire State Building) for some coffee talk.
This interview has been edited for length and clarity.
Commercial Observer: How did you get started with Starbucks?
David Firestein: The first location opened on April 23, 1994. I’m probably one of two people that has the original invitation from Howard Schultz for the opening. Starbucks had their 50th anniversary about a year ago, and they said can you send us that invitation. I said I won’t send it to you, but I would send a copy of it. I was afraid I’d send it and I’d never see it again. It’s very valuable to me.
When we opened that first store people would ask me why we picked the Upper West Side. We specifically picked the Upper West Side because people would mail-order in the beans from Seattle, and the Upper West Side had the highest level of orders.
Did you always want to be a retail broker? I know you ran a restaurant in St. Martin.
I did have a restaurant. I got out of graduate school at the University of Massachusetts. The real estate market was really soft, and I thought I’d go to the Caribbean for a few years. And I taught tennis and had a restaurant. I was getting into my late 20s and my dad said, “You’ve got to come back now or you’re never coming back.”
I knew I wanted to do real estate but I didn’t know that I wanted to do retail. When I started off I was doing mainly office and retail, and honestly I thought office was boring, but also it was the same to me. I found retail interesting because every retailer was different.
Over the years I’ve represented people where I didn’t necessarily use the product, but I think it’s probably gotten to the point now where I am either a fan or a customer of a lot of the people we represent. I’m obviously a big Starbucks fan, a big Costco fan. I’m a big fan of Whole Foods and Sweetgreen. My wife loves their salads. It’s nice when you like the product and you have passion for the product. In real estate you can work for Starbucks and not drink coffee. There are even people who work for Starbucks and drink other things, but it’s nice when you drink the Kool-Aid — or the coffee.
Starting out, did you have a sense of how big Starbucks would become?
No. To be honest, I don’t think they did, either. When they got to New York they had something like 250 stores period. We have more than that in New York City now. When they first came to the market, I was doing the entire market. I was doing Manhattan, the boroughs, I was in New Jersey, I was in Long Island, I was in Westchester. I had a lot of territory.
I would say within the first year they came to me and said, “We want to take New Jersey away from you.’” I was like, “What?” Real estate guys, they’re just like generals, they don’t like to give up [territory]. They just like to conquer more land. Honestly, I was upset that they were taking it. But they said we want you to concentrate on the city.
It was better for the company and the properties. But we’re doing most of New Jersey right now. We basically have the part of New Jersey that are Giants fans. Eagles fans — when you get into South Jersey — that’s not our jurisdiction.
I know New Yorkers were pretty upset when they lit up the Empire State Building for the Eagles.
They had an easy out — they could have said they lit it green for Starbucks. But they didn’t.
It’s a Katz and Associates team representing Starbucks in Brooklyn now. Did you feel similarly when they took over?
There’s actually been a few teams in Brooklyn. I did it for a good part of the 1990s, then Winick [Realty Group] had it for a lot of years.
There’s been lots of retail changeover. All the original brokers that did deals in all the major cities, over the years they’ve changed in number for a variety of reasons. People move on, and I’ve managed to keep doing this.
Do you all ever get together?
Yeah, we do. Next year, when it’s the 30th anniversary of the store, I’m planning on doing a bit of a reunion of people not only that currently work for Starbucks but people that formerly worked for Starbucks. Starbucks is one of the only companies [where, for] the people who work there, it’s almost like the college they went to. They will still walk and talk Starbucks after 10 or 20 years.
What’s the most recent Starbucks you’ve opened, and what’s in the works?
This location at the Empire State Building opened in November.
We’re going to open a relocated store at 88th and Broadway at 86th, 87th and Broadway. That will open in May and that’s across the street from the very first Starbucks [which closed in 2003]. The other store was a couple of blocks [away] but this one is right across the street. And it’s kind of like coming home or coming back almost in time for the 30th anniversary of its first store.
What’s Starbucks’ post-pandemic strategy?
I think we had a strategy during the pandemic, where in New York most of the stores that we did were pickup stores. Even the stores that were traditional stores, people weren’t going in and sitting down, but we did a number of stores for pickup, mobile apps and you could walk in and order.
More recently, we’ve went back to more traditional stores and cafes, though we still have that pickup piece of it.
Has the pandemic changed its strategy?
I think the one change for Starbucks and for lots of other food services is that — I’ve never done a drive-thru for Starbucks, but drive-thrus have become very popular and they’re very competitive now. So that’s something, even though they had them before.
The deal for the Empire State Building location closed during the pandemic. What was it like getting it done?
It took a long time to open. The pandemic slowed down the process. We weren’t ready for people to come in, so it was done just prior, but it took most of the pandemic to get it open. I think the best partnership for Starbucks, or any retailer, is with a landlord.
I was talking about being passionate about the brand. This landlord was passionate about the brand. We have lots of deals with them. We have three in the Empire State Building and we have probably something around another seven or eight total with them.
All the way up to the top with [ESRT Chairman] Tony Malkin, he’s a great partner. Those guys really work hard to try to make a deal work. Obviously, everybody has to make a deal on rents, but putting this together wasn’t a problem.
What are Starbucks’ plans for its large format stores?
I’m not the decision-maker on that, I’m the undertaker on that. In the U.S. there’s four, and worldwide I think there’s another three: Milan, Shanghai and Tokyo.
It’s a very big undertaking. I don’t know what their plans are. I think the few they have make them really unique, so if you go to Seattle or Los Angeles it’s probably going to be on your list. Or, if you’re going to a city like New York, it’ll be on your list, whereas if there’s one in every city [it may not be].
Does Starbucks come up in return-to-
office conversations? Do landlords ask about it as an amenity? Do you pitch it as a way to get workers back to work?
Yes. It is an amenity to an office building, and I don’t think every office landlord recognizes that, but most of them do.
There was a study five or six years ago published by Stanford Press. They did office buildings in Manhattan and they found that rent was higher in a building with a Starbucks than one without. It made me think, “You guys should be paying us,” but it never quite worked out like that.
For folks debating huge spaces where everything else is equal, it can be part of the decision.
You’ve represented REI, Whole Foods and AMC among others. Movie theaters have been struggling recently, with Regal Cinemas announcing the closure of its Union Square location. Who do you think will replace theaters?
I think there’s going to be a lot fewer screens.
Even some multiplexes are going away, and it’s a combination of factors. COVID had a lot of impact, and it’s not even that people who were used to going to the movies on a regular basis stopped, but television changed, too, during COVID. I know when I’m at home, my wife would rather watch a series on HBO or Netflix or whatever, and a lot of those are great. And you can buy the movie, too.
I think theaters have a tough road ahead of them. I worked in-house for the theater companies way back. When video came out, and Blockbuster, everybody said that’s going to be the death of movie theaters, and it wasn’t. So the theaters have been counted out a lot of times. I think they’ll survive, but I think there’s going to be way less screens than there were in the past. That’s sort of good for those that are still around, and hopefully they’ll survive.
What could replace them?
This is not my world at all, but I think gaming and interactive gaming. I think some of those screens could get somehow converted to some of that, where people come and interact. I think that’s probably the alternative, and I’ve heard conversations on that.
You’ve been brokering for more than 30 years. Do you have friendly rivalries with other brokers?
For sure there are rivalries where it’s competitive. But I don’t think it’s any different than being on a sports team. I play tennis and I’m competitive with my friends when I’m playing.
Our company does landlord work, too, and I think that side of the business is more competitive. I think it’s easier for landlords to switch brokers on that side. Probably the thing that I’m most proud of as a tenant broker is, with a number of our clients, how long we’ve represented them. When you represent someone for 30 years, I’m not working with the same real estate people. Some of them are still with the company but some have gone off to other stuff, and we’ve had to work with a lot of different people over the years. The fact that we’re with Starbucks for that long — we’ve done Costco for that long, we’ve done Whole Foods for over 20 years — it really says something.
This is like a marriage, and a lot of marriages don’t last that long. There’s honestly a skill to that and, just like the analogy with marriage, if you start to take the other person or take the client [for granted,] we have good clients and people want to steal those clients. If you don’t do a good job or you take them for granted, you’re going to lose them.
Sometimes you just lose them through no fault of your own. The real estate people switch out, other people switch out, they have their relationships, and you do the best you can not to take that personally. But you do, to some degree. You fight it, but it’s human nature — you can’t help it. Especially when you go, “Oh we’ve done such a good job.” It’s a little painful, and you have to get over it and you move on.
Have you ever taken that home with you?
Yes, 100 percent. I’ll go home and talk to my wife about it and commiserate about it.
We did a good deal with Lululemon in this market and worked really hard for them. They’re a great brand. We lost that account when the real estate people shifted out and gave it to somebody else, and they gave us part of the market but not Manhattan. I was a little stubborn about that. And I should’ve not been, but I was. But I do still wear their stuff, which just tells you how good a brand they are.
Sweetgreen has expanded pretty considerably in the city. What are their plans for NYC?
I think they’ll continue to grow and expand. With a lot of these companies, some of the things they had in the pipeline got sped up during COVID, so I would say that’s true of Sweetgreen. They were looking at places outside the city, and for sure that got sped up during COVID because people were home.
They’ve experimented. We’ve not done any drive-thrus for them, but for sure they’re testing that model out.
Do you know what the next Starbucks will be?
I wish I knew that. I mean, there are brands that come out and they have a hundred stores and somebody will say they are the next Starbucks. But Starbucks is at 30,000, which is quite remarkable.
You’ve been doing this for more than 30 years. Do you have any retirement plans?
I love the business and I feel blessed. On Sunday I’m not going, “Oh no, tomorrow’s Monday.” I’m like someone getting ready to go back on the field. I’m ready to go on Monday. So, as long as I’m representing tenants that I’m joyous and passionate about, I’m going to keep doing it.
I would say when you represent tenants they’re like children — you’re never going to say this one’s my favorite. But I break that rule with Starbucks. I don’t say who my second favorite is. I’d never do that. But all my other tenants know who my favorite is. My vanity plate is SBUX. I wear it on my sleeve.
Celia Young can be reached at firstname.lastname@example.org.