Soon more residents of the outer boroughs will be able to shop for upscale home furnishings in their own neighborhoods, just like residents in Manhattan, who will also be getting even more venues to buy leather club chairs and cashmere baby clothes.
Williams-Sonoma Inc., the parent company of several furniture and housewares brands like Williams-Sonoma, Pottery Barn and West Elm, is known for being one of the first retailers in Soho and sniffing out emerging neighborhoods. It has embarked on an expansion of its brands in New York City.
Some of the brands are new, such as Threads, a test store for upscale children’s clothing. The company is also planning on opening its first New York City location for Williams-Sonoma Home, a recent spin-off brand, on either 59th Street near Bloomingdale’s or in the Flatiron District next year, said Mark Finkelstein, president of Retail Strategies and Williams-Sonoma’s broker.
The retailer also plans to bring West Elm, a furniture chain aimed at younger consumers, to the Upper West Side.
Beyond Manhattan, look for Pottery Barn to make its Brooklyn debut in either Brooklyn Heights, Cobble Hill or Park Slope in late 2008 or early 2009. Queens and Harlem could also be on tap, Finkelstein said.
The store openings follow Williams-Sonoma’s time-tested real estate strategy.
The San Francisco-based company, which has $3.8 billion in revenue and is the fifth-largest retailer of home goods, is notoriously rent-sensitive. It cushions the blow of high New York rents by placing stores on less-expensive side streets and by pioneering uncharted territory, making it an early entrant into both Soho and Dumbo in Brooklyn.
The retailer declined comment for this story.
Threads builds on Williams-Sonoma’s bid to broaden its portfolio of home concepts. The test store is based on children’s apparel sold at Pottery Barn Kids and is located at 1551 Second Avenue at 76th Street, mere blocks from Pottery Barn Kids. That’s an example of a classic Williams-Sonoma strategy — clustering complementary retail brands just a few blocks apart.
The Threads store used to house Chambers, the now-defunct Williams-Sonoma brand, reflecting Williams-Sonoma’s practice of recycling its stores to test new concepts in secondary locations as opposed to using new, prime real estate, said Robin Abrams, executive vice president at the Lansco Corp.
Second Avenue in the East 70s has blossomed into a destination for kid’s clothing, with retailers such as Talbots Kids and Lester’s, Abrams said. Retail rents on Second Avenue in the 70s average between $150 and $200 a square foot.
Life in Bloomie’s Country
The retailer faces pricier rents in what’s been called “Bloomie’s Country” on Third Avenue in the 50s — for its tony Williams-Sonoma Home concept, which sells mother-of-pearl-handled cheese servers and custom-upholstered couches.
Rent in that neighborhood is around $250 to $300 per square foot.
In addition to longtime marquee fixture Bloomingdale’s, the area is home to more recent tenants such as the Home Depot, Ethan Allen and Domain.
A spot for Williams-Sonoma Home near the Decoration & Design Building, at 979 Third Avenue, which houses over 100 upscale home showrooms, is ideal, Finkelstein said.
The retailer “works closely with the decorators and designers in the D & D Building and also serves as an alternative to the design showrooms,” he said. “If they move into the D & D area, they’ll get the designer and decorator business, the tourist traffic that comes from all over the world to shop in that neighborhood and the bridge-and-tunnel crowd,” said Faith Hope Consolo, chairman of the retail leasing and sales division at Prudential Douglas Elliman.
The retailer will also likely consider side streets, possibly angling for a spot on 59th Street off Lexington or Third avenues to shave costs.
It currently operates a Williams-Sonoma kitchenware store and a Pottery Barn furniture store on 59th Street near Lexington Avenue, and a West Elm furnishings store on 18th Street.
“Side streets are half to a third of the rent of a major avenue,” Abrams said. “It was unusual for a national chain to go on a side street.”
Farther downtown in the Flatiron District, another possible location for Williams-Sonoma Home, rents are even steeper. They range from $400 to $500 per square foot on Fifth Avenue and are about $300 per square foot on Broadway by ABC Carpet, sources said.
Like “home furnishings-centric” 59th Street, the Flatiron District is dotted with stores like Design Within Reach, Waterworks and Ann Sachs Tile & Stone.
In both neighborhoods, Finkelstein said, “It’s about finding the right opportunity and affordability. They need to show profitability at the bottom line.”
Although the cost of doing business in New York is high, so is the potential payoff.
“The New York stores do well,” Finkelstein said. The Williams-Sonoma, Pottery Barn and West Elm brands can generate volume of roughly $1,000 to $1,400 per square foot in New York, sources estimate.
West Elm branches out
Emboldened by the success of West Elm stores in Dumbo and Chelsea, which offer more moderately priced furnishings, the retailer is looking to open a third New York City unit on the Upper West side in the Lincoln Center area.
The retailer also operates catalogs and Web sites for its brands, which aid it in choosing new locations.
“Williams-Sonoma has a tremendous advantage with all their catalogs,” Finkelstein said. “Their demographic maps show where each sale came from in each zip code. [That tells them] where they’re missing a store and where a store would be good.”
To that end, the retailer is scouting locations for Pottery Barn in Brooklyn Heights, Park Slope and Cobble Hill, where rents range from about $100 to $150 per square foot, Finkelstein said.
And a store in the Forest Hills section of Queens could come down the pike, he said.
“The boroughs have long been underserved. There is a big population there with buying power,” Abrams said.
Finding the next hot spot
Brokers said Williams-Sonoma has a good nose for sniffing out emerging neighborhoods and underserved areas.
“They’re very good at selecting locations ahead of the curve,” Finkelstein said. “In Soho they were one of the first on Broadway and Houston — it was a very cheap deal then. They could never have afforded it today.”
The same is true of 86th Street and Madison Avenue, where Williams-Sonoma opened a Pottery Barn about 15 years ago. At the time 86th Street, with its mom-and-pop stores, was a nondescript neighborhood considered too far north for high-profile commercial real estate.
Today, Carnegie Hill is filled with chic restaurants, national retailers like Borders and new residential development, Consolo said.
Will Williams-Sonoma continue north to Harlem? “I hear they’re looking at 125th Street,” Consolo said. Don’t be surprised “if in the next year or 18 months they lease something up there.”