Changes in New York Retail space growth by Business of Fashion

1.
Orvana
Designs
London
The
Shifting
Winds
of
New
York
Retail
—
Part
2:
Soho's
Renaissance
BY
SULEMAN
ANAYA
The Business of Fashion
WEDNESDAY,
8
MAY,
2013
The
northern
section
of
New
York's
Soho
|
Illustration:
Ricky
Richards
NEW
YORK,
United
States
—
It’s
just
about
a
half
dozen
city
blocks,
but
at
the
top
end
of
New
York’s
Soho
district,
the
concentration
of
international
fashion
and
luxury
brands
is
thicker
than
almost
anywhere
else
on
the
planet.
On
two
blocks
between
Houston
and
Prince
Streets,
Balenciaga,
Dior
Homme
and
Versace
have
recently
opened
or
are
about
to
open
new
boutiques,
joining
existing
brands
like
Marni
and
Marc
Jacobs.
Downtown
darling
Proenza
Schouler,
too,
has
inked
a
deal
for
a
space
on
this
small
stretch
of
land,
just
across
from
the
Apple
Store
on
the
corner
of
Prince
and
Greene
Streets.
Chloe
opened
a
store
on
Greene
Street
just
two
months
ago,
across
the
street
from
the
5,200
square-­‐foot
boutique
that
Stella
McCartney
unveiled
in
early
2012.
And
a
few
blocks
down,
a
new
Saint
Laurent
flagship,
designed
by
Hedi
Slimane,
is
due
to
open
later
this
month,
in
the
famous
space
once
occupied
by
Helmut
Lang.

2. Of
course,
international
big-­‐ticket
fashion
brands
aren’t
new
to
the
area.
Back
in
1983,
Rei
Kawakubo
chose
Soho’s
Wooster
Street
for
Comme
des
Garçons’
first
New
York
store.
And
over
the
years,
the
historic
lower
Manhattan
neighbourhood
—
known
for
its
landmarked
cast-­‐iron
architecture,
spacious
lofts
and
(now,
mostly
departed)
artist
population
—
has
attracted
a
remarkable
number
of
luxury
brands.
But
as
Soho
became
saturated
with
an
ever-­‐broader
range
of
retailers,
from
streetwear
labels
to
contemporary
brands,
some
high-­‐end
fashion
brands
deemed
its
increasingly
“outdoor
mall”
ambiance
contrary
to
the
image
they
were
trying
to
project.
And
while
retailers
like
Prada
and
Chanel
maintained
their
presence
in
Soho,
when
Balenciaga
opened
its
first
New
York
store
in
2003,
it
followed
in
the
footsteps
of
Comme
des
Garçons,
which
decamped
from
the
south-­‐of-­‐Houston
district
to
Far
West
Chelsea
in
1999,
converting
a
former
printing
plant
near
Tenth
Avenue
into
a
stark,
lunar-­‐feeling
boutique.
In
a
telling
turn
of
the
tides,
however,
Balenciaga
is
now
coming
to
Soho
with
not
one,
but
two
stores
(men’s
and
women’s)
set
to
open
in
the
coming
weeks,
across
from
each
other
on
Mercer
Street,
a
shift
that’s
indicative
of
the
brand’s
new
strategy
as
well
as
the
neighbourhood’s
current
appeal.
As
a
result
of
increased
demand,
rents
in
the
area
are
at
an
all-­‐time
record
high,
while
behind-­‐the-­‐
scenes
dealings
and
bidding
wars
between
landlords
and
brands
vying
for
a
presence
in
the
successful
shopping
district
are
more
heated
than
ever.
In
February,
Prada
agreed
to
pay
$1000
per
square
foot
to
renew
the
lease
on
its
10,000
square
foot,
multi-­‐level
space
that
stretches
the
entire
length
of
a
block,
from
Broadway
to
Mercer
Street,
the
highest
rent
ever
recorded
for
a
retail
store
south
of
Midtown,
confirming
what
Michael
O’Neill,
a
senior
director
at
Cushman
&
Wakefield,
stated
in
a
report
released
last
month:
“Soho
has
largely
been
driven
by
some
of
the
world’s
most
notable
fashion
and
luxury
brands,
which
have
created
desirable
co-­‐tenancy,
fuelled
increased
demand,
and
resulted
in
a
significant
year-­‐over-­‐year
increase
in
rent
expectations.”
Indeed,
Chris
Owles,
a
principal
at
Sinvin
Real
Estate,
told
BoF
that
rents
in
Soho
have
climbed
by
as
much
as
100
per
cent
per
cent
since
2007,
from
an
average
of
$300
per
square
foot
to
upward
of
$600
per
square
foot
on
the
main
arteries
of
Prince
and
Spring
Streets.
Similarly,
rents
on
side
streets
such
as
Wooster
and
Mercer
have
doubled
from
about
$150
per
square
foot
to
close
to
$300
per
square
foot
on
average.

3. Investors,
too,
have
caught
on
to
the
importance
of
Soho’s
retail
market,
further
driving
up
rents
to
justify
hefty
acquisition
tags.
According
to
Robin
Zendell,
a
founding
partner
at
brokerage
firm
Retail
Space
Partners,
three
such
groups
of
investors
are
buying
up
large
swaths
of
Soho
at
unprecedented
prices
and
making
the
rents
in
the
area
unattainable
except
for
the
most
deep-­‐
pocketed
of
retailers.
But
what’s
driving
all
the
current
interest
in
Soho?
Zendell
attributes
it
to
a
surge
in
spend-­‐happy
international
tourists.
Indeed,
according
to
the
city’s
tourism
agency,
NYC
and
Company,
in
2012
New
York
welcomed
an
all-­‐time
high
of
52
million
visitors,
of
which
a
record
11
million
were
from
overseas.
And
according
to
a
report
by
real
estate
investment
services
firm
Eastern
Consolidated,
these
visitors
are
leading
the
strongest
surge
in
retail
spending
growth
since
the
middle
of
the
20th
century,
with
a
huge
portion
of
this
spending
going
into
clothing.
Interestingly,
the
same
“outdoor
mall”
quality
that
was
once
considered
a
drawback
is
part
of
what
makes
the
area
so
appealing
today.
Affluent
residents
and
visitors
alike
love
being
able
to
“hop-­‐
shop”
between
boutiques
while
stopping
for
tea
at
Keith
McNally’s
Balthazar
or
a
drink
at
Fanelli’s,
a
storied
pub
on
the
southwest
corner
of
Prince
and
Mercer
Streets.
Indeed,
many
successful
retail
neighbourhoods
are
anchored
by
popular
destinations
and
local
landmarks,
like
restaurants
and
hotels.
In
northern
Soho,
more
than
anything,
this
role
is
played
by
the
20-­‐year-­‐old
Mercer
Hotel,
whose
discreet
lobby
doubles
as
a
meeting
and
deal-­‐making
spot
for
the
city’s
creative,
fashion
and
business
elites.
In
addition,
the
presence
of
New
York’s
first
Apple
store,
opened
in
2002
on
the
corner
of
Prince
and
Greene
streets,
and
the
presence
of
several
subway
stops
in
the
immediate
vicinity
—
including
the
busy
F,
6,
N
and
R
lines
—
bring
important
foot
traffic
to
the
area.
But
Soho’s
northern
edge
is
by
no
means
the
only
part
of
the
area
that’s
booming.
In
fact,
the
neighbourhood
is
segmented
into
smaller
subsections,
each
with
its
own
character,
and
each
catering
to
different
kinds
of
brands.
For
instance,
in
Soho’s
southern
section,
bordering
Canal
Street,
a
stone’s
throw
from
the
offices
of
V
and
Visionaire
magazines,
edgier
fashion
labels
like
Isabel
Marant
and
Alexander
Wang
have
found
an
environment
more
fitting
to
their
brands.
Indeed,
with
its
happening
art
galleries,
parties
and
proximity
to
Chinatown,
this
part
of
Soho
retains
some
of
the
artsy
feel
of
the
area’s
early
days.
As
Alexander
Wang’s
president
Rodrigo
Bazan
told
BoF,
“There
are
more
commercial
brands
north

4. of
Broome
Street.
But
south
of
Broome
going
all
the
way
down
to
Canal
Street,
Soho
maintains
its
original
artistic
and
loft
feeling.”
It’s
perhaps
little
wonder
that
Hedi
Slimane
chose
to
be
closer
to
this
part
of
Soho,
with
a
location
below
Spring
Street.
Yet
another
section
of
Soho,
extending
eastward
from
Broadway
and
crowded
around
the
intersection
of
Crosby
and
Howard
Streets,
has
emerged
as
its
own
flourishing
mini-­‐ecosystem,
with
a
number
of
important
fashion
tenants
that
find
the
nook’s
low-­‐key
appeal
to
be
a
good
fit
for
their
brands’
ethos.
Anchored
by
the
pioneering
presence
of
downtown
retailer
Opening
Ceremony,
which
arrived
here
in
2002,
this
is
where
Jil
Sander
opened
in
2008
and
where
ethical
luxury
label
Maiyet
is
set
to
open
its
first
store.
But
while
Soho
remains
irresistible
for
some
brands,
not
everyone
can
afford
to
be
here,
and
a
new
crop
of
aspiring
retail
neighbourhoods
are
sprouting
up
in
other
corners
of
the
city.
Tomorrow,
in
part
three
of
our
series
on
the
shifting
winds
of
New
York
retail
real
estate,
we
examine
Manhattan’s
hottest
emerging
shopping
districts.