Big Box retailers still high on New York City.

The heads of real estate for three leading national retailers - Filene's Basement, Lechters, and, Levi's -- unanimously concluded that New York Cky is a primary location for their respective businesses in spite of having the highest asking rents in the country.

Over 125 members and guests of the Association of Real Estate Women (AREW) took part in "NYC: Shoppers Paradise," a seminar about "big box" retailers entering the New York market, which took place on February 24th at New York's quintessential retail venue, Rockefeller Center. Faith Consolo, president of AREW, coordinated the event with Kate Coburn, vice president of retail for Rockefeller Center, who acted as moderator for a panel which included Brian Booray, vice president of real estate for Filene's Basement; Frank O'Neill, vice president of real estate for Lechters; and Jack Podgur, head of real estate for Levi's.

"As a big box user, now located in eight downtown stores throughout America, we chose Manhattan because its urban neighborhoods are densely populated with business professionals and local residents who represent our core customers," said Bootay from Filene's.

Lechters' O'Neill added: "We targeted New York City because of the lack of competition - no other national housewares retailer is exactly like us. Although Target and Walmart sell housewares, they are more service oriented." The Lechters challenge is to sell products ranging from potato peelers, to picture frames, to pepper mills in a very attractive way. According to O'Neill, because baby boomers are spending more on their homes nowadays, the company is experiencing an 80 percent hit rate from their customers.

For Podgur of Levi's, New York City posed different problems and solutions. 'We wanted to have a presence in six American downtowns. New York City, with a massive population base and great neighborhood diversity, is virtually one huge downtown. The challenge for us was to find sufficient space - we needed 6,000 square feet in a very upscale area populated by both residents, businessmen/women, and tourists. We settled on Lexington Avenue within range of Bloomingdales and Banana Republic."

New York City as a retail location still presents the challenge of high asking rents as well as a paucity of space for big users like Filene's, who require between 40,000 and 50,000 square feet. "Urban settings pose all kinds of problems like loading dock complications, high construction costs, and negotiating favorable lease terms. For example, it's really tough to get five year (renewal) options at fixed rents," said Filene's Bootay.

Lechters, which sometimes operates on two levels in the City, as opposed to one in regional malls, combats the high rent syndrome by maintaining a New Jersey warehouse. 'When you have as many (products) as we do, automatic replenishment is paramount, said O'Neill. "We always have the option of shrinking and/or adjusting our product mix to fit our space, but anything less than 3,000 square feet doesn't work for us." O'Neill concedes that the risks and rents are higher in New York and that a retailer has to do double the volume to realize an acceptable return. But the pros outweigh the cons, he said, and now with 14 stores in Manhattan, three in Brooklyn, four in Queens and two in Staten Island, Lechters is contemplating further expansion strategies.

Levi's Podgut was equally amazed with the going rents in the City and by way of precaution negotiated an escape clause in his lease based on sales. "If we didn't attain a certain volume by the third year, we made sure we could get out of our lease commitment," he said. In fact, Levi's is doing four times that volume and one of the reasons is because the products are so popular with tourists. "We have to limit our sales to six jeans per foreign customer," said Podgut, "the majority of whom re-sell the stock abroad for up to two and a half times our sell price." Because of the tremendous volume of business transacted in the Lexington Avenue store, Levi's has just signed a lease for their second store to open in 1995 adjacent to Warner Bros. at 57th and Fifth.

All three panelists agreed the recession produced some fantastic locations which otherwise might not have been available. And all three concurred that New York had the essentials for doing high volumes of business: the right core customer - middle to upper class, professional, upscale; a booming tourist trade; and a wide selection of locations catering to both the business community and local residents.