MORE and more retailers are choosing New York as the site of their flagship locations. According to a recent
retail report by the Real Estate Board of New York, over 50 flagships now decorate Manhattan streets,with
more signing on every day.
“2005 is the year of the flagship,” proclaimed Faith Hope Consolo,queen of city retail. “It ‘s been an extravaganza of Flagships.”
Consolo,Chairman of the Retail Leasing and Sales Division of Prudential Douglas Elliman,says flagships are “all about the vision and the excitement.”
Chris Owles,managing director of Sinvin Realty, says many of the “true ” flagships are created along Fifth and Madison Avenues where the rents are partly subsidized by the advertising budgets,because the tab can easily be $1,000 a foot.
“I ‘ve never heard of a place doing $10,000 a foot, and that ‘s what you want in sales to cover the costs of a
regular store,” Owles explained.
Corey Zelnik president in Winick Realty Group, quipped, “Call anybody at Nike and they will say the store on 57th St.is their best, but who knows if they are making money?”
Steven B.Greenberg President of his eponymous company that acts as real estate advisors to leading retailers says he is always cautious about flagships. “The word flagship is overdone,” said Greenberg. “They are usually bigger than they should be and are often losing money.”
On Fifth Ave.he pointed to the huge Hugo Boss store that he says won ‘t ever make money. “It was a mausoleum
to the company president and the company will suffer with it for a long time,” said Greenberg.
Zelnik believes marketing comes first because when retailers advertise in magazines,they must be able to state they are located in the retail capital of the world.
These stores may not make money but they are always luxurious,designed by prominent architects and have glamorous finishes. “None of them can make a statement outside of their own store and frankly,bigger is better,” believes Consolo.
Consolo just worked both sides of a deal to expand Searle ‘s flagship at 635 Madison into 25,000 feet on three
In SoHo,she and her team just dropped Belstaff into 15,000 square feet at 382 W. Broadway for its first U.S. store and flagship. Companies may also want to capture Wall Streets movers and shakers with a flagship,said Jeffrey Roseman executive vice president of Newmark Retail.
“Anytime a company is going public they think of creating a city flagship,” said Roseman.
Many years ago,Lechter ‘s had stores of 2,500 feet,but before it went public,Roseman helped lease a 25,000
foot store on the corner of 57th St.and Broadway. “It was not your cookie cutter store,” said Roseman of the kitchen goods firm that later went bankrupt. “As visible as a high profile success might be,it ‘s also as visible as a failure, and there have been some companies that have retreated,” said Roseman..
Nevertheless,he ‘s a big booster of city locations for stores that need to make a statement.Roseman was involved in Whole Foods first city venture in Chelsea on Seventh Ave.
“They had locations out of town but when they opened in New York they were on the cover of every magazine,” said Roseman. “Look at H&M when they decided to come to the states for the first time,” Roseman noted. “Where are they going to go?Ohio?”
Mall developers also walk the streets to see the latest stores in case they want them in their properties. Owles pointed to Theory, which leased a building at 40 Ganesvoort St.in the Meatpacking District,for their offices and showrooms as well as a retail store.
“When you have a store at corner of Broadway and 42nd or Fifth Ave.and 57th it ‘s seen by millions of people and it is a billboard,” said Roseman. “It gets everyone ‘s attention.”