Madison, SoHo and Flatiron are leading NY retail revival.
Madison Avenue has become the marquee location for international high-end fashion designers and manufacturers of luxury goods. Fifth Avenue at 57th Street is a crossroads where luxury goods meet middle-market and entertainment-related retailers, and locals and tourists intermingle.
SoHo, with its trendsetting shops, continues to attract a young, hipper crowd and is somewhat of a Downtown Madison Avenue. And, the Flatiron District, bounded by Fifth Avenue, Avenue of the Americas and Broadway, is the mecca for fashion and home furnishings.
A Madison Avenue address is much more than an opportunity to sell to wealthy locals and tourists. It's also a savvy market strategy that can be leveraged for advertising and marketing purposes. Just as Rodeo Drive in Los Angeles, Ginza in Tokyo, and Rive St. Honore in Paris, among other famous streets, immediately bring to mind high-end retail, Madison Avenue brings to mind designer clothiers and expensive accessories.
Conversely, Fifth Avenue from 49th to 59th streets has become a crazy jigsaw of a shopping area, where traditional mainstays such as Tiffanys share block space with Nike Town and the NBA, and Fendi, Prada and Ferragamo are literally yards from Warner Brothers and Disney stores, while Bergdof's, Bendel's and Saks still hold their ground as Fifth Avenue landmarks.
Go south to SoHo, with its plethora of trendsetting shops and funky food markets many with a distinct New Age, healthy theme - and a whole new consumer can be seen. Young, affluent and less conservative than typical Madison or Fifth Avenue shoppers, X-geners and Y2Ker's armed with credit cards and style "hang out" in SoHo the way their predecessors used to frequent Greenwich Village.
High-end, high-profile national and international retailers captivate SoHo audiences by offering lower priced lines while retaining their designer labels. Prada Sport, Calvin Klein Shoes, Polo Jeans (under construction), D&G from Dolce & Gabbana, as well as full-scale emporiums such as the recently opened Louis Vuitton, are all draws. The good news is that SoHo booms, but the demand is driving up already high retail rents, which means the smaller, less well capitalized tenants invariably find themselves outpriced from the market.
Not unlike the other three, the Flatiron District, with its own distinct character, attracts a particular segment of the consumer public. Strong in fashion and home furnishings, Flatiron benefits from the diversity of its adjacent neighborhoods - Gramercy to the east, Chelsea to the west, and Greenwich Village to the south. It also benefits from a workday crowd that includes people in the technology, publishing and communications industries.
Not surprisingly, Flatiron's fashion retailers such as Club Monaco, Emporio Armani, Banana Republic and Kenneth Cole have gravitated to Flatiron's Fifth Avenue, while Broadway has emerged as a strong home furnishings street, as evidenced by Restoration Hardware, Portico, See and ABC Carpet & Home. Less expensive stores and discounters reside on Avenue of the Americas, where you'll find Filene's Basement, Bed, Bath & Beyond and T.J. Maxx. What's the morale of this checkered retail story? New York's traditional (Madison and Fifth) as well as relatively new (SoHo and Flatiron) shopping neighborhoods continue to thrive at a time when the economy is healthy, jobs are increasing, the economic base is diversifying, and consumer confidence is high. At the same time, other areas of the City are experiencing a growing overabundance of retail space, compounded by escalating rents, partially due to the high prices REITs and Wall Street paid for buildings. Our challenge at Robert K. Futterman & Associates, as always, is to understand and facilitate the delicate balance between retailer and landlord, and achieve acceptable financial terms for each, so that the streetscape of New York can evolve in a way that ultimately serves the betterment of tourists and residents alike.
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|Title Annotation:||New York City real estate; First Quarter Review|
|Author:||Futterman, Robert K.|
|Publication:||Real Estate Weekly|
|Date:||Apr 7, 1999|
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