Landmarked retail: Shopping in grand settings.
New York City's historic buildings -- which boast Roman arches and columns, grand staircases and ornate stonework -- are undergoing a modern retail renaissance.
Throughout the city, high-profile architectural jewels such as 20 Exchange Place in the Financial District, the Plaza Hotel in Midtown and the old Williamsburgh Savings Bank building in Brooklyn are being prepped to house 21st-century retailers.
But just as developers are champing at the bit to turn buildings with old-world charm into dramatic selling spaces -- confronting the challenges inherent in crafting workable, modern retail environments in some very old buildings -- they are also often tasked with adhering to the guidelines of the city's Landmarks Preservation Commission and the State Historic Preservation Office.
"You can't change [the windows]," noted Christine Emery, senior managing director of the Lansco Corp., who has confronted the problem in several cast-iron landmark retail buildings in Soho. "They're protected. It's a challenge, because it's not as easy as a floor-to-ceiling piece of glass in modern buildings, where you can see right into the store."
Andrew Mandell, a broker with Ripco Real Estate, agreed. "Windows large enough to display merchandise -- that is the most critical thing for a retailer."
Still, interest in these historic spaces seems to be strong. "A lot of landmarked buildings in the past were traditionally banks and post offices," said Faith Hope Consolo, chair of the retail leasing and sales division of Prudential Douglas Elliman. "What's happened over the years is that retailers realized that a lot of these buildings could work very well" for other types of retail like stores and restaurants.
The specialty grocer Trader Joe's is a prime example. In a much buzzed-about move, it opened a 14,500-square-foot store on Court Street in Brooklyn in September, in the landmarked Independence Community Bank building.
Mandell said retailers are becoming more nimble at working with the landmarks commission to convert these spaces into merchandising emporiums while maintaining their character, "which wasn't the case 10 years ago."
Elisabeth de Bourbon, a spokesperson for the LPC, said a number of national retailers, such as Home Depot, Bank of America, the Gap, Starbucks and Old Navy, now operate stores that reflect the character and features of the buildings they're in.
"We've seen a lot of creative proposals for businesses that take advantage of the historic features and character of a landmarked building," de Bourbon said.
The interest comes as the LPC is increasing the number of buildings with historic-district status. According to de Bourbon, there are approximately 25,000 landmarked properties across the city, up from about 23,000 in 2003.
Still, some retailers work better than others in landmarked buildings. Big-box merchants and retailers with rigid floor plans have serious hurdles to overcome. While not in a landmarked building, the Home Depot on 23rd Street had to reconfigure its normally sprawling floor plan into a vertical space to deal with a tight New York City layout.
In the Financial District, where New York City has its historic roots, a mini retail boom in older buildings has been in full swing, though that will likely change with the fallout in the financial services industry (see Retailers cautious about Lower Manhattan).
Tiffany, Thomas Pink and BMW are just some of the merchants that have set up shop in the area, in older (if not all officially landmarked) settings. Last fall, Tiffany opened a store at 37 Wall Street in a landmarked Beaux-Arts-style building that was constructed in 1907.
Now, the retail development of Depression-era skyscraper 20 Exchange Place is poised to round out the merchandising revival that's been under way in the area.
"The woodwork is still impeccable; it's ornate bronze and nickel stonework," said Jack Berman, vice president of Metro Loft Management, the developer behind the conversion of the landmarked Art Deco building. "It's certainly a trophy building, and one of our best properties."
The tower, which was finished in 1931, used to be the City Bank Farmers Trust Building, which later became Citigroup.
In addition to housing 850 apartments, it will lease 130,000 square feet of retail space on the ground floor and lower levels for about $100 per square foot.
Berman has set his retail expectations high. He is hoping to snag a high-end spa, upscale restaurant or luxury retailer like Gucci for the space by the end of the year. The lower level could be leased to a gourmet food market or a gym, said Darrell Rubens, managing director of Winick Realty, which is brokering the space.
Rents in such a landmark building are comparable to non-landmarked buildings, Berman said. "It's more location that determines the price," Berman said.
Meanwhile, around the corner, the New York Post reported that Apple had been looking at 23 Wall Street, a landmark building that is the former headquarters of JPMorgan, as the site for its next Manhattan store. But the company has since decided against occupying the Downtown space following the upheaval on Wall Street, according to Crain's.
Apple already operates stores in two landmarked buildings in Soho and Midtown.
Preserving and converting
Consolo is working on a number of landmarked retail spaces throughout the city. These include several historic mansions on Madison Avenue, she said.
The mansions in the 60s, 70s and 80s will likely be leased to fashion retailers from France, Italy and the U.K., according to Consolo. Asking rent will be in the $2 to $3 million range annually, she said.
But it's her listing at One Hanson Place in Brooklyn that has garnered all the attention of late.
The 33,000-square-foot retail space has remained empty for more than two years.
In April, the building swapped its Newmark Knight Frank broker for Consolo at Prudential. She said asking rent for the retail space is $2.5 million a year; according to published reports, that figure was around $3 million under Newmark. Consolo said she is eyeing Microsoft, Sony, Bose, a major furniture retailer like ABC Home -- even a museum store. But as of press time, no deals had yet been inked.
Whether the landmark designation has specifically kept retailers away is unclear, but it definitely presents a unique challenge that a store wouldn't face in a more run-of-the-mill building.
Jeffrey Roseman, executive vice president of Newmark Knight Frank, said the firm was negotiating with Borders to take over One Hanson Place, but that the bookstore's business was "in terrible shape." Although the fact that the building is landmarked didn't make it easier to lease, "that's not why the deal didn't happen," he said.
Indeed, he said, the LPC "is becoming a little more flexible." For example, with brass or marble tables often found in landmarked banks, the commission will now allow retailers to remove them or preserve them off the premises, he said.
He said one reason why One Hanson Place didn't lease is that "up until recently, Brooklyn has not been on every retailer's radar screen."
Roseman, who praised Consolo, said only a retailer with "demagogue" status, such as Crate & Barrel, Apple or Whole Foods, would be able to overcome the challenges at One Hanson Place, such as no ground-level windows and exterior signage limitations.
Window issues (they are way above ground level) and signage issues are, in fact, at the top of the list of challenges. To satisfy the LPC's requirements, retailers must come up with creative ways to create storefront signage that does not detract from the architectural features of the building. Preservation agencies typically frown upon neon signage and backlit channel letters, Mandell noted.
In the case of One Hanson Place, Prudential has submitted to the LPC for approval two blade signs displaying the name of the store that would run vertically on both sides of the building.
"You can see [the signs] way across the street, and it's tastefully done," Consolo said.
While landmarked buildings' exteriors are most often subject to preservation guidelines, sometimes, the interiors require careful handling, too.
For instance, the ultra-luxury Caudalie spa from Bordeaux, France, will open up on the second floor of the landmarked Plaza Hotel, a space with an asking rent of about $100 a square foot. When the demolition team was renovating the space, it uncovered an interior wall with rich architectural details that the LPC wanted to preserve.
The spa is just one facet of the Plaza's retail collection, a major renovation and retail revival that will be unveiled this year. The melange of shops also includes Austrian bakery Imperial & Royal Court Confectionery, Demel's Sons, and eyewear retailer Morgenthal Frederics.
In addition to interior detailing, in landmarked buildings, entrances and exits can be an issue. Often, the entrances in landmarked buildings are not at street level, so lifts have to be created. The buildings' changes must factor in the Americans with Disabilities Act.
Also, the buildings must be updated to meet fire-safety regulations. While modern retail buildings are constructed with two exits to meet fire safety requirements, many older structures are not. "That means digging into a facade to create exits, which causes headaches and is an expense," Lansco's Emery said.
If those headaches seem daunting to American chains, Consolo said international retailers don't seem overwhelmed by the rules and regulations of landmarks. Mandell echoed that point: "European companies tend to look at their stores and storefronts more as artwork, and architecture is more important to them."
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|Title Annotation:||retail stores in landmarked buildings|
|Publication:||The Real Deal|
|Date:||Nov 3, 2008|
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