The Plaza may be New York s most venerable hotel, but its recent sale may turn an old-money institution into one of the city s hottest shopping spots.
Developers have announced they will create retail space in the hotel, which sits in the middle of Fifth Avenue s stretch of luxury department stores. “Our concept for retail is to custom build between 150,000 and 160,000 square feet on five to six levels for a department store even more exclusive than Saks Fifth Avenue, Bergdorf Goodman or Harrods of London,” announced Miki Naftali, president of Elad Properties, which purchased the Plaza last August for $675 million.
Retail brokers are enthusiastic. “This has it all,” said Faith Hope Consolo, chairwoman of Prudential Douglas Elliman s retail leasing and sales division. “It has landmark status, but it has the location too.”
She compared a few Continental luxury retail locations worldwide that might rival the Plaza, spots on the rue de Faubourg Saint-Honor in Paris or Bond Street in London or Via Montenapoleone in Milan. “The Plaza is the closest thing to Europe that you re going to get in America,” she said.
The Plaza s owners say they aim to preserve its treasured status. Naftali said he will maintain the historic interiors near and dear to New Yorkers hearts, though they re not landmarked. Media reports have indicated that the retail space will be in the Grand Ballroom and Terrace, with the Palm Court leading visitors at the main Fifth Avenue entrance to the department store.
“From an architectural standpoint, our most important priority is to achieve these important changes at the Plaza without compromising the integrity of this hallowed space,” said Gal Nauer of Gal Nauer Architects, which is working with Costas Kondylis and Partners to renovate and convert the property.
It will be a challenge to find retailers willing to deal with the complications that historic interiors often pose, retail brokers said, but it has been done before. Cipriani 42nd Street adapted to the old Italian Renaissance-style Bowery Bank building with its 65-foot ceilings. And Sephora has done well in the 12,482-square-foot Scribner Building at 597 Fifth Ave.
“It s not going to be easy, but it doesn t mean that somebody can t work with the landlord,” said Robin Abrams, executive vice president of the Lansco Corp., pointing out that a Neiman-Marcus would be perfect in the location.
Robert Kunikoff, senior managing director of Garrick-Aug Associates, agreed, though he mentioned that retailers have needs that are often not easily met in historic spaces. “Most retailers are going to want to know what type of visibility they re going to have from the street,” he said. “This is a landmarked building, and it s very old. Actually, the windows are somewhat average-sized, which could be an obstacle.”
Still, the Plaza has location working in its favor, being the namesake of the “Plaza District” on Fifth Avenue, which gets some of the highest rents in the country, if not the world recently as high as $1,440 a square foot.
“If you re going to do it very upscale, that s the place to do it in Manhattan,” Kunikoff said.
Developers reportedly would like to sell, rather than lease, the space to a retail investor or retailer. Abrams noted that 150,000 square feet, while big by New York City standards for retail space, is very small for most full-sized department stores.
“That doesn t mean there aren t retailers that could work, and they don t necessarily have to be national department stores,” she said. “There are a lot of wonderful specialty stores that may want to come in and do a flagship in New York.”
Consolo suggested a Browns of London, or Colette of Paris, or even the first Canyon Ranch day spa in New York.
A Canyon Ranch spokeswoman said elsewhere that its development team is looking at The Plaza. Harrods has publicly said it has no interest in an American location. But Consolo proposed Harvey Nichols or Fortnum & Mason.
Retail brokers also suggested foregoing a department store for independent retailers on various floors, which could pull in higher, possibly record-breaking rents.
“If they divvy it up and put multiple users in, it s going to be easier to get more aggressive numbers,” Abrams said.
But brokers warned it would require a well-thought-out design plan, such as the one at the Shops at Columbus Circle, to drive people through the building.
Consolo said that whether or not the retail rents at The Plaza break records, as the residential prices are expected to do, will also depend on when it becomes available.
“We re at the height of the luxury market,” she said. “We ve seen rents top in that neighborhood. But Fifth Avenue has always retained its value good times and bad times so it will depend on how many contenders are vying for the location.”