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Barney's: boon to neighborhood.

Retail experts agreed the opening of the Barneys uptown store on Madison Avenue and 60th Street would be a boon to the neighborhood, increasing local store rents if not holding them firm. Those that had visited the 250.000 square foot store heaped accolades on the design and details calling it, |the one to beat.'

Cushman & Wakefield's manager of retail services, Michael E. Butler gave it a "15" on a scale of one to ten after making several purchases. The former Texan was awed by everything from the lighting on the ties to the musical selections that included country and western among other styles. "Everything they did, they did well," he said.

Butler is convinced that if any stores become available across the street there will be a lot of competition. "It's going to pull a lot more traffic into the area and bump the value of the retail stores in the area. There are some people asking as much as $300 a foot and that is a good $40 a foot increase in asking price," he observed.

Kurt Barnard, president Barnard's Retail Consulting Group which also publishes Barnard's Retail Marketing Report agreed the new store is good for Madison Avenue. "Barneys will be considered an additional power magnet in the area and likely to do for the area more than it will do for itself," he predicted. "It is going to have a tough row to hoe."

Barnard believes Barneys will have to capture market. share away from its rivals "who are not likely to lie down and play dead." He adds, "It is hardly the time for another expensive retailer."

Retail Strategies' President, Mark Finkelstein, like other retail leasing experts, is also concerned about Barneys faring against the competition: Bloomingdale's down the street on Lexington Avenue; Henri Bendel's and Bergdorf Goodman on Fifth Avenue and the 57th Street Galeries Lafayette. The Parisian department store welcomed the new store with ads stating that it had also moved uptown, from Downtown Paris.

"It's not 17th Street," warned Finkelstein comparing the new store location to Barneys long-time downtown establishment that brought life to its Chelsea area. "There is a lot of competition. You can only wear a suit so long but there is resistance to price." This aspect may not bode well for the retailer which has a reputation for being pricey.

But Butler compared the opening of the new Barneys to the addition of a major anchor tenant in a mall. This is just an outdoor mall, he explained, and the addition of an anchor tenant bumps everyone's business."

Some of the brokers believe it will be the Galeries that will suffer the most, although Butler says most tourists take a tour through Trump Tower and then enter the Galeries connecting doors before walking through to 57th Street, continuing to Tiffany's, Bergdorf's and then across the North side of 57th Street to Madison Avenue and Bloomingdale's.

"It's going to give Bloomingdale's a run for it's money," Butler believes. "Only the dedicated shoppers will make it that far."

He also called Barneys connecting door to Bulgari jewelers in the adjoining Hotel Pierre a major coup.

Most brokers believe the Barneys addition will be good for everyone. "It's very positive for New York City and that area to have another retailer," said Edward A. Friedman, president, Newmark Retail Services. "Having one that is a dynamite retailer and someone who has done an impossible job on 17th street says something."

Finkelstein said retail leasing in the area has been pretty strong although the Madison Avenue strip has had some troubled retailers. "It's a good solid retail area with strong demographics," he insisted. "Obviously it will help it to a certain extent by creating excitement there. Everyone will walk through the space."

Barneys is going to create more traffic so there is going to be more demand for retail stores in that area, Friedman agreed, but so far, he said, he hasn't seen it affect the asking prices of stores.

"It's hard to say if there will be an [additional] price point," Friedman said. The rents in the area have not gone down, however, with some owners asking high rents of $200 a foot. "I don't think they will get much more than that," he added.

Where there is availability, Friedman says it helps to have a major tenant like Barneys nearby. "It doesn't hurt the fact that Barneys brings the type of people who buy not only from Barneys but buy in a retail environment from the neighborhood. The area can't be hurt from the new traffic."

Barneys will also turn heads and help traffic on the West Coast when zip code 90210 welcomes its own 125,000 square foot baby this spring.

The Barney's expansion, which already has 13 smaller stores located around the country, has been fueled by a real estate partnership with Isetan, the mammoth Japanese retailer. Together they purchased the lower eleven floors of the 22-story building from Metropolitan Life for a reported 100 million in 1990.
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Title Annotation:opening of store on Madison Avenue, New York, New York expected to stimulate retail rental business
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Sep 15, 1993
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