Even before the Barneys announcement, 2019 was off to a rocky start with the closing of the Henri Bendel’s venerable 712 Fifth Avenue emporium which shut its doors in January after 123 years in business. To its legions of fans from across the country and around the world, Henri Bendel represented a throwback to a more refined era of retail where service, elegant design and a comfortable environment reigned supreme. Also in January, Saks Fifth Avenue closed its 225 Liberty Street women’s store, and Gap closed its 3-story former flagship at 680 Fifth Avenue in March. Tommy Hilfiger shuttered its 22,000 sq. ft. global flagship at 681 Fifth Avenue. While shifting consumer attitudes and especially the explosion of online shopping suggest that an expensive brick and mortar presence in Manhattan is no longer viable, Jeff Roseman points the finger at recent NYC laws including commercial rent control that were enacted in an attempt to reduce vacancies and bureaucratic red tape but which in his opinion have had the opposite effect. These regulations, says Roseman, makes doing business in New York, “way more difficult than it should be.” Adding to the woes of the sector is the news that the appraised value of Saks Fifth Avenue’s flagship store at 611 Fifth Avenue has declined by almost 60% to $1.6bn from over $3.7bn just 5-years ago. According to parent company Hudson’s Bay, the reasons for the decline include “the performance of the store relative to expectations in 2014, changes in market rents on New York’s Fifth Avenue, and the changes in the retail landscape”. The appraisal was prepared by CBRE and in its detailed 205-page report notes that Saks Fifth Avenue is near completion of a multi-year, $279m renovation project which equates to $423.83 per sq. ft. of gross building area (GBA). The report also highlights some of the issues facing by high end retail in Manhattan including changing demographics, the weakness of the retail market and general economic uncertainty. Clearly news like this rattles an already challenged market and won’t make great reading for holders of large retail spaces.
The Vessel at Hudson Yards
However, despite a seemingly unending bad news, it’s not all is doom and gloom in the retail sector.
In March, Related Companies unveiled its long-anticipated Hudson Yards development, a stunning addition to the Manhattan cityscape that contains 720,000 sq. ft. of retail in a shopping mall spread across 7 floors featuring upscale retailers including Cartier, Van Cleef & Arpels, Nieman Marcus, Chanel, Dior, Fendi, Piaget and Louis Vuitton. Hudson Yards which has been built on top of the west side rail yards, is transforming the surrounding area. In a recent interview with EQ, Ryan Serhant of Nest Seekers and “Million Dollar Listing” fame stated that “Related and everyone at Hudson Yards have done an amazing job at marketing Hudson Yards.” In fact, it was Related’s marketing efforts that spurred Serhant and his team to come up with the “SoHY” (South of Hudson Yards) as branding for his listing at 550 West 29th and the surrounding area. “Overnight, Hudson Yards became an immediate “must see” sensation in New York, people are going to see Hudson Yards before they visit the Empire State Building!” Referring to how the retail in Hudson Yards has enhanced the area and assisted the real estate market, Serhant adds that, “the stores in Hudson Yards have made a big difference to that location…it’s such a cool experience”.