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THE BEST STREET IN THE WORLD
June 5, 2012
| There’s only one place on earth where you can truly talk to international buyers—Fifth Avenue. “There’s no other street with that kind of conversation,” Diesel USA CEO Cristiano Quieti told 300 attendees yesterday during Bisnow’s second annual New York Retail Summit at the NY Bar Association. |
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| Eighty percent of customers who enter Diesel’s store at Fifth and 54th are tourists, Cristiano told Arent Fox partner Tony Lupo in a one-on-one interview. (We think it should be a stop on the Gray Line tour bus route.) It’s a location unlike any other Diesel stores, which total 46 across 25 cities. Can’t afford Fifth Avenue? He predicts that such retailers will instead open smaller stores in multiple neighborhoods to reach different customers. |
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| Diesel plans to open in Orlando, Houston, and secondary markets like Salt Lake City. Click the video above to hear Cristiano talk about the trend driving this expansion and how many stores the Italian brand plans to open over the next few years. |
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| Our national panel, fresh (and hopefully not broke) from a “fantastic”ICSC RECon in Las Vegas, offered mostly a positive outlook for the sector. Although it's a tenant’s market, RKF chairman Robert Futterman warns it may not last, and “tenants should hurry up and make deals.” We’re at 75% of pre-Lehman rents, and some markets are snagging prices even higher than those halcyon days. |
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| Retailers selling across multiple channels will succeed, says Acadia Realty Trust CEO Ken Bernstein. But their footprints might shrink—Staples, which started at an average 13k SF, grew to 20k SF and is now back to 13k SF, he says. Retailers want to see density, employment, and some affluence, so upper-quartile locations will make money even if a Staples leaves. (But you might have a harder time finding 8.5" x 11", 3-hole punched, 104 Euro Bright copy paper.) |
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| Downsizing will continue for the long term, says Levin Management Corp COO Matthew Harding. There’s now a greater difference between property classes, with top assets commanding the most attention. In the Tri-State ‘burbs, general fashion—think Lane Bryant and T.J. Maxx—are picking up again, as well as interest from supermarkets like Shop Rite and Stop & Shop. |
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| Everyone wants to be in urban markets, Robert told the crowd. We’re not only seeing domestic growth but interest from international tenants. “People want to put money here, and the first stop is an urban market—there are many more besides Uniqlo and Zara,” he says. It doesn't hurt that retail spending is up 42% in Manhattan since 2007. (We may be responsible for half of that.) |
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| But European brands can be picky, warns MPI CEO Andrea Olshan. She’s done three deals with The Gap in Manhasset, Long Island, a market that she thought was a “no-brainer” for Zara—but the Spanish clothier wasn’t ready yet. These international brand expansions into malls and secondary locations are still down the fairway. But we’ll get there: Swedish H&M is now sophisticated when it comes to real estate, but it took a while, she says. (The CRE palate must be acquired over time from careful tasting, like cheese.) |
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| Panel moderator David Rabinowitz, a director at great sponsor Goulston & Storrs. So where’s the opportunity? Ken says institutional capital is ready to play, and he’s seeing the debt that fell under “extend and pretend” coming to market. He says Acadia is watching the recap of the debt markets, “as well as all these tenants we’re talking about, which will pay higher rents.” Hear more from our local panel in tomorrow's issue. |
