Madison Avenue might be the quintessential American luxury shopping strip. But as rents continue their steep rise and the dollar remains weak, many domestic retailers are looking north of the traditional ultra-exclusive span from 57th to 72nd streets.
Don’t feel too sorry for the migrating stores. While spending less, they’re finding that a slightly younger — but still affluent — customer is in the northern neighborhood and ready to shop.
“There is a definite trend with retail and fashion tenants moving north on Madison because of lack of available space options and aggressive rents further down,” said Robin Abrams, executive vice president of Lansco Corporation. “Fashion and luxury brands were focused in the mid-60s, and then tenants moving to the mid-to-high 70s made it viable for fashion brands to look as high as 79th Street.”
Rents on Madison from 57th to 72nd streets are between $800 to $1,400 a square foot, depending on size and layout, while on the stretch from 79th to 86th streets, rents are between $350 to $400 per square foot.
However, while some retailers look north for lower rents, many international competitors are taking advantage of the cheap
dollar and staying put on the most coveted part of Madison.
“Many international brands that have headquarters abroad have revenue streams utilizing the euro, and with the euro conversion to the dollar, the prices are attractive here,” said Adam Modlin, president of the Modlin Group. “They can afford to buy or lease prime Madison Avenue space, and it’s not that big of a deal.
“A national brand with headquarters in the U.S. that can’t compete with the foreign money may move further up north. It’s a little less expensive, but still Madison Avenue,” Modlin said.
Luigi Rosabianca, managing member at Rosabianca and Associates, said that “the trend for moving north is predominately by U.S.-based retailers right now. The European retailers are staying within their hot zone” — i.e., the 50s and 60s on Madison.
Some retailers that have moved up Madison Avenue seem better suited for the northern neighborhood, which borders on Carnegie Hill, a residential area with plenty of local support for its businesses and a large number of young families. “Local New Yorkers preside further up north in the 80s and 90s in the Carnegie Hill area,” said Modlin. “The retailers are focused on primary residents.”
He added, “The neighborhood is starting to see even more of an influx of young upwardly mobile families, and the retail spaces are starting to reflect that, up through the 80s on Madison.” Hip clothing stores such as Intermix, Olive and Bette’s, Le Sportsac and Coach are on Madison between 77th and 85th streets.
“For certain retailers, it’s a better fit to go further up Madison,” said Karen Bellantoni, executive vice president at Robert K. Futterman & Associates. “Coach has a definite customer there, and for some retailers, it might have made sense for them to be further up.”
She also cited the Sharper Image, which had a store at 75th and Madison. “The beauty of that location was that it was across from the Whitney, but the age demographic of that neighborhood is mid-60s,” said Bellantoni.
J. Crew, a brand known for its preppy but fashionable clothes geared toward younger buyers, is opening its first store on the Upper East Side at 1035 Madison at 79th Street in late spring or early summer. The shop, which is about 2,400 square feet, will be a J. Crew Collection, a more upscale version of the chain’s standard store. “It will have more of our unique special pieces that we don’t typically put in our J. Crew stores, and the sign will still say J. Crew, but will be done in a way to signify a designer boutique,” said Margot Brunelle Fooshee, senior vice president of marketing and public relations for J. Crew.
Brunelle Fooshee added that there has been demand for a J. Crew store in the area. “We know there’s a great customer — our customer — on the Upper East Side.”
Bellantoni, who represented J. Crew in the deal, mentioned the proximity of many nearby private schools and co-tenants in boutiques like Olive and Bette’s as well as Betsey Johnson as ideal for the store’s new location.
Co-tenancy plays a significant role on status-conscious Madison Avenue, said Abrams. “Values for space on Madison are based on co-tenancy, who their neighbors are,” she said.
“It’s more important on Madison than in other areas, because that’s what makes Madison what it is,” she added. “Someone would pay more money to be next to Eileen Fisher, for example. On the other hand, a block with mostly local businesses that hasn’t really changed but has good tenants will draw other tenants because it’s validated the area.”
Several brokers emphasized that high-end designers were unlikely to seek space past 79th Street, but there are some short-term exceptions. Designer stores such as Ralph Lauren and Dolce & Gabbana, both of which have stores lower down on Madison, at 72nd and 69th, have taken temporary spaces farther up the avenue while their stores are being renovated, drawing customers uptown and potentially to the surrounding shops. Last year, Dolce & Gabbana moved into 1055 Madison at 80th Street while its store at 69th was enlarged; Ralph Lauren will temporarily move its secondary boutique across from its flagship store at 72nd and Madison into 1055 Madison while the store is rebuilt.
“When Dolce & Gabbana moved into 1055 Madison, people went up there because they knew the store, and that gets people walking around up there,” said Bellantoni.
And while tourists may congregate on the super-chic blocks of Madison where they can find Louis Vuitton and Chanel, Stuart Ellman, an executive director of Judson Realty, noted stores farther north are also closer to the Met and other museums on upper Fifth Avenue, which attract both tourists and residents. “Most of those retailers want to do more than just a local business,” Ellman said.
Said Rosabianca, “You have a fantastic tourist base that walks along the Museum Mile, turns east, and is suddenly buying jeans.”