The Real Deal New York

Fashion and furnishings lead a retail revival in Southampton

Brokers are getting higher rents this summer, but many deals are just for the season
By Adrienne Gaffney | July 05, 2017 12:00PM

Home furnishings store One Kings Lane is setting up its first brick-and-mortar shop in Southampton this summer.

This summer it will be baskets and butcher blocks, plus maybe a few (fancy) books, at the former Rogers Memorial Library in Southampton.

One Kings Lane will be setting up its first brick-and-mortar shop in the 19th-century building for the season. The online home furnishings company, which was founded in 2009, had something very specific in mind as it planned its entry into the physical world, either in New York City or somewhere in the Hamptons.

“We wanted to pick a space that had character, and could bring our assortment to life for our customer in a way that feels comfortable and authentic,” said Suki LaBarre, One Kings Lane’s director of retail operations.

The place had to have the feel of a home, the retailer specified. Jeffrey Roseman, EVP and principal at Newmark Knight Frank Retail, knew the nearly 7,000-square-foot library was just the place.

“It’s the best corner in Southampton and, arguably, in the Hamptons,” said Roseman, who brokered the lease, which is for Memorial Day through Labor Day. “So it’s about having a very unique building, but it’s also at Main and Main.”

One Kings Lane will use the 3,500-square-foot first floor to showcase its luxury furniture and home décor. The second floor will be used for storage. The company declined to say how much it paid for the lease. The Rogers Memorial Library relocated to 91 Coopers Farm Road in 2000, and the old building was sold to the Parrish Art Museum for its education center. It was purchased for $2.88 million in 2012 by Jonathan Sobel, a supporter of the Parrish and former Goldman Sachs executive. Westchester-based RPW Group is the current owner.

Southampton’s new wave

The entry of One Kings Lane marks a positive turn for the Hamptons during a troubled time for retail across the U.S. Bluemercury and Greenwich, Connecticut, fashion boutique Copious Row are recent arrivals on the East End, and jewelry chain Kendra Scott has a pop-up this season.

Hal Zwick

Sabre Real Estate Group broker Stephanie Zulic handled the deal for the Kendra Scott store. The brand took a 1,200-square-foot space at 44 Main Street for one year, with an option to stay for five years. While Zulic would not specify the details of the lease, she said that in general, rents hover around $140-$150 per square foot on Main Street, while on Jobs Lane, they’re about $100-$110 per square foot. She added that the quality of tenants on Southampton’s Main Street is a step up from years prior.

“I think this year is definitely a turn in a positive direction compared to last year,” she said. “Last year it seemed like a lot of the retailers wanted Champagne on a beer budget, and they didn’t want to pay what the landlords were asking.”

This year, she said, she’s gotten many more offers at asking rent than in 2016, including Kendra Scott and a publicly traded women’s brand that ended up not taking the space.

Other are more measured but still see progress.

“It’s not like Ralph Lauren and Gucci and Hermès,” said Hal Zwick, Town & Country Hamptons’ director of commercial real estate. “It’s a nice diverse mix of retailers. We’ve seen more home furnishings come in, which is always nice because that draws people into the village. It’s definitely not a boom, I will say that.”

Zwick brokered recent deals, both permanent, for the Candied Anchor sweet shop, which rented 87 Jobs Lane, and Laviano Design Studio, a new women’s fashion brand that will open up an 800-square-foot shop at 77 Jobs Lane in August. Those new additions are joining a roster of  arrivals that includes skincare chain Bluemercury, which now has a 2,165-square-foot location at 46 Main Street.

David Chines just opened a 600-square-foot outpost for his brand Copious Row in Southampton after closing a store in Sag Harbor, explaining that he wanted to be closer to the homes of his customers.

“Southampton really is a draw for retail because it is appealing to all kinds of people and offers something different. It’s a really great place to be, it’s a great place for a brand to build or even to start, and there’s a very loyal client base,” he said.

Chines signed a multiyear lease, but many of his new neighbors, including One Kings Lane, have so far only signed up for the summer.

Summer pop-ups

Real estate pros are split on whether the pop-up trend is a good thing. Town and Country’s Zwick said rents for pop-up stores — which generally stay for four to six months — are going for two-thirds to three-fourths of the annual asking rent. He thinks most landlords would be much happier with tenants booking longer stays, with leases anywhere between three and 10 years.

“There’s a lot more seasonal stores than the landlords would like and than the village would like, because that means they’re not being utilized in the winter,” he said.

Copious Row recently opened a location in Southampton.

But Roseman of Newmark Knight Frank Retail said this kind of retail agreement works for both the tenant and the landlord.

“Many pop-ups get what a monthly rent would be,” he said. “It’s been a great way for retailers to test-drive particular locations. As opposed to signing up for a 10- or 15-year lease that may or may not work out, you can go in and test it out and say, ‘Wow, this really is great.’”

While One Kings Lane is a pop-up, it has an option to stay longer, Roseman said.

“If the first few weeks are any indication, they probably will,” said the broker. “It was always either a library or a school, so they’ve figured out the nuances of retailing out of there, which is great. So we hope that they stay, but if not I think they set the tone.”

Roseman added that money isn’t always the only factor in Hamptons deals. In fact, the owner of the library space was adamant about wanting a tenant who was going to make a splash, even if that didn’t come with a multiyear commitment.

“If somebody can add a lot of value and buzz to the space, an owner might look at them a little differently,” he said. It might be worth it “to just get them in for a reduced amount to activate the space, liven it up.”

But pop-ups are hardly a guaranteed success.

A much-heralded summer collaboration between Southampton restaurant and nightspot Kozu and Manhattan steakhouse TBar went awry — three weeks after launching, TBar at Kozu shut down.

The owners, Zach Erdem of Kozu and Tony Fortuna of TBar, attributed the issues leading to the  shutdown to larger crowds than they had anticipated. “It was a little too stressful, a little too much work and lacking a little bit of staff,” Fortuna told the New York Post.

Staffing for pop-ups is a common pitfall. Staff members often can’t afford to stay in Southampton, so they stay in neighboring areas. “Then the commute can take them an hour on Saturday. Those are the sort of issues that they run into,” Sabre’s Zulic explained.

One of 2017’s splashiest summer pop-ups, a few miles over in Easthampton, is EMP Summer House. Chef Daniel Humm has decamped to the former Moby’s site while his Eleven Madison Park in Manhattan is renovated. Reservations have become one of the hottest commodities of the year.

All about the branding

Zulic said national brands are aware of what they’re up against when they launch a pop-up.

“They know they’re probably not going to make their money back in rent, especially if you’re paying $150,000 a season. It’s a lot of sales you have to do, especially considering you have to have staff and housing is extremely expensive,” she said.

But for some major national brands paying a premium for a one-summer store, buzz may be a higher priority than profit.

Last summer, Land’s End took a space from early August through early September, which garnered the brand quite a bit of Insta-attention. “A lot of the bloggers summer out east,” said Zulic.

Whether or not the shop actually makes money is sometimes beside the point, she said.“It’s a social media blitz. Having a location in the Hamptons is very marketable; you can get a lot of press from it.”