The Shifting Winds of New York Retail — Part 2: Soho's Renaissance
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The Shifting Winds of New York Retail — Part 2: Soho's Renaissance

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Changes in New York Retail space growth by Business of Fashion

Changes in New York Retail space growth by Business of Fashion

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The Shifting Winds of New York Retail — Part 2: Soho's Renaissance The Shifting Winds of New York Retail — Part 2: Soho's Renaissance Document Transcript

  •                                              Orvana  Designs  London        The  Shifting  Winds  of  New  York  Retail  —  Part  2:  Sohos  Renaissance  BY  SULEMAN  ANAYA      The Business of FashionWEDNESDAY,  8  MAY,  2013  The  northern  section  of  New  Yorks  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.  
  • 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.  
  • 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  
  • 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.