NEW YORK, United States — In parts one and two of this report, we saw how fast a major luxury retail zone like the Meatpacking District can rise and be recast and examined the enduring importance of Soho. But alongside luxury stalwarts like Soho — a shopping district rivalled only by Madison Avenue, newly relevant thanks to a set of younger brands that have opened in the neighbourhood — a number of new clusters of luxury retail activity have emerged in recent years.
In 2008, for instance, the opening of the Rogan store on the Bowery heralded the rise of a new cluster for trendy restaurants and fashion stores in a formerly grey zone north of Houston Street, anchored by the Bowery Hotel. John Varvatos soon followed, taking over the old CBGB venue, while conceptual fashion boutique Oak opened down the street from Rogan, on Bond Street, the same year. But the area never really gained traction as a serious luxury retail zone and, last month, Rogan closed shop, perhaps prompted by the influx of retailers like Anthropologie and Intermix, as well as the jarring presence of a 7-Eleven right across the street.
Today, all eyes have shifted to a patch of Manhattan two dozen blocks north: NoMad, or North of Madison Square Park.
There are many factors that make a neighbourhood a successful high-end retail zone, most importantly high foot-traffic and rents that are within the reach of retailers. A pioneering anchor, often a hotel, can also play a critical role. And indeed, the 2009 opening of the Ace Hotel on 29th Street sparked the development of a formerly rough-around-the-edges, under-the-radar sector of Manhattan now called NoMad, an area centered around Broadway between the Flatiron and Garment districts, traditionally known for (and still full of) wholesale and import shops.
The hotel, whose lobby soon doubled as a de facto office for young professionals from the increasingly converging creative and tech fields, brought with it a tightly curated collection of in-house shops from downtown fashion emporiums Opening Ceremony and Project No. 8, as well as a number of similarly hip food and coffee establishments, setting the tone for the nascent neighbourhood. This was to be an area for young, trendy, alternative, but upscale brands.
More recently, another, more upscale hotel in the area, the NoMad, has embraced the Ace's concept, inviting Parisian fashion label Maison Kitsuné to occupy the ground floor retail space.
“There are a lot creatives living in the neighbourhood, as well lots tourists and uptown residents who are making the journey downtown specifically to shop at the boutique. It is a destination area, but I also think there is this je ne sais quoi of novelty that makes shopping there a very charming experience,” Maison Kitsuné founders Gildas Loaec and Masaya Kuroki told BoF. “We were excited to launch in a neighbourhood that was still launching itself, being a part of that from the ground up was exciting for us."
Whether these initial openings will attract other fashion brands to NoMad remains to be seen. So far, real estate brokers report that while clients inquire with increasing frequency about the area, they are ultimately deterred by the ratio between the area’s comparatively low foot-traffic and its fast-rising rents. While last year, rents in the area were $150 per square foot, they range from $200 to $250 per square foot today.
“[When you open a store], in addition to rent, you have to pay your employees, insurance, and other overhead costs, it’s a huge expense, so you can’t afford into a neighbourhood where there are no shoppers,” Robin Zendell, a principal at Retail Space Parnters, a firm specialising in commercial luxury real estate, told BoF. According to Zendell, NoMad could be a viable location for luxury brands down the road, but “that would be like a ten-year play.” For now, she says, luxury brands need to be in areas where people have traditionally spent more time and money.
Nonetheless, a few blocks away, in Murray Hill — often called ‘Curry Hill’ for its concentration of reasonably priced Indian and Pakistani restaurants — Comme des Garçons is establishing its pioneering status once again. Thirty years after putting Soho on the shopping map and more than a decade after helping to transform a now chic block of Far West Chelsea, designer Rei Kawakubo and her husband and business partner Adrian Joffe are set to open a New York branch of Dover Street Market, the luxury bazaar-style retail concept the brand introduced in London in 2004, in an impressive Neoclassical building that sits on untried turf at 30th Street and Lexington Avenue.
The move seems to be motivated as much by economic considerations as by a desire to stand out with an original and unexpected location. Indeed, Kawakubo and Joffe could not have found the type of presence, and price, they have no doubt secured in Curry Hill anywhere else in Manhattan. As for the area’s potential to evolve into a a hub for luxury fashion retail, for the moment, the prospects are limited.
“I think [Comme des Garçons’] decision to open a Dover Street Market on 30th and Lexington had so much to do with finding the right property that was affordable. And, out of the 20 retailers I work with, only one asked me if there was anything nearby the new Dover Street. When I looked, very little was available since this has never really been a shopping district. I think overtime things can change, but many retailers don't like to take too many chances since they have investors who want to see returns,” said Zendell.
“Just because one neighbourhood works for one brand doesn’t mean it’s going to work for another. And just because you are on a great street does not mean you’ll make money.”
Editor’s Note: This article was revised on 8 May, 2013. An earlier version of this article misstated that the Ace Hotel and the NoMad Hotel were under the same ownership. In fact, Ace Hotel, which was developed by a partnership between Sydell Partners L.L.C. (now known as the Sydell Group) and Allen Gross of GFI, has no direct relationship with the NoMad Hotel, which was developed solely by the Sydell Group.