Wal-Mart and BJ’s Wholesale Club recently shelved plans to set up (giant) shop in Queens and the Bronx, respectively, which might lead casual observers to predict that New York City has shut its doors to national chains with stores the size of city blocks.
But national chains say they’re not giving up, despite pledges on the part of labor unions and smaller store owners to fight big box retailers. Retail real estate brokers say the reward is too great for big box stores to reject New York City altogether, especially after the way has been paved in gold by other national chains that have opened throughout the five boroughs. Big box retailers are here to stay.
“It used to be that national companies wouldn’t come to New York –they couldn’t pay the rents,” said James Buslik, a principal with Adams & Company, who recently brokered a deal with P.C. Richard & Son on West 23rd Street in Chelsea. “Then they learned that they could do the volume here, so they came.”
One of the first national chains to enter Manhattan was Kmart, which opened its doors at 770 Broadway at Astor Place Hope Consolo, chairman of Prudential Douglas Elliman’s retail leasing and sales division.
There was plenty of neighborhood opposition, but Consolo maintains that the store ended up helping nearby smaller retailers. “Once [Kmart] was in the neighborhood, they realized that the big box generated a lot of business and actually brought great traffic and helped invigorate areas of the neighborhood.”
Now there are two Kmarts in Manhattan, and in the past year, Home Depot opened a pair of stores here, including one on West 23rd Street, which Consolo asserts is a burgeoning residential area due to its big box retail.
“There are neighborhoods created around big box retail, and Ladies’ Mile in Chelsea is one of them,” she said. “And you saw the spinoff, because Ladies’ Mile was so successful. We brought Bed Bath & Beyond, Filene’s, TJ Maxx and Burlington Coat Factory. So when Home Depot wanted to choose a space, they chose 23rd Street near Ladies’ Mile.”
The store there, which opened this past September, as well as the more recent Home Depot store which opened in the Bloomberg Tower on East 59th Street, thrive because retailers learned their market, which was urban and sophisticated, said Don Harrison, a company spokesman. The 23rd Street store is stocked with lighting fixtures, door pulls, paints, flooring and throw rugs, along with 24-hour locksmith services, to serve a Manhattan market looking for easy ways to give apartments a quick makeover, Harrison said. “You study the market first, do the focus groups, and you understand the customer you’re serving, and only then do you open the store,” he said. Home Depot stores in Manhattan learned quickly from focus groups to offer the very best same-day or next-day delivery service, Harrison said.
“Manhattanites are inclined to have a lot of stuff delivered since they don’t drive — everything from a hamburger to a dinette set,” he said. It may require spending precious time to find a site structured for deliveries and making other concessions to the market. That’s a far cry from when the former Bradlees department store once opened on 14th Street, blithely offering a ground floor full of lawn furniture, said Jeffrey Roseman, an executive vice president at Newmark New Spectrum Retail.
Big box retailers face obstacles: they need huge footprints, sometimes 100,000 to 150,000 square feet of space, which are almost impossible to find in Manhattan. Retail brokers are torn over whether recent mergers in the retail industry might open up space. Consolo said all the spaces that could potentially be opened by the mergers of Kmart and Sears, or Federated and May department stores, are already spoken for. Buslik doesn’t agree.
“There may be existing retail space that becomes available,” he said. “If it came up, it would be gobbled up.”
Besides space created by mergers, normal turnover can be counted on to open up some space.
One building attracting interest is the 1.2-million-square-foot St. John’s Center, at 340 West St.
But not all retail brokers think it’s a viable location for big box retail, since it sits in a prime location on the Hudson River. “New big box retail has to go to old industrial space,” Buslik said. “The problem is it will compete with the possible tear-down and building of new residential space. You have views of the water here. Do you want to build retail or create high-rise residential, which seems to be the shining star right now?”
Given the difficulty of finding scarce Manhattan locations, the indications are that neither Wal-Mart nor BJ’s Wholesale have written off the outer boroughs for store locations.
In February, a City Council panel had rejected an application from BJ’s for zoning changes they needed to open a store, with some reports saying organized labor had intensely lobbied lawmakers to deny the changes. BJ’s pulled the plug on their application before it went to the full council.
Wal-Mart spokeswoman Mia Masten said that the company may have been rebuffed in Rego Park, Queens, but it remains interested in finding what would be its first New York City location. Vornado Realty Trust dropped plans to include the store in a shopping center complex it is planning, also in February, after community and union opposition.