Change doesn’t come often to Madison Avenue, a bastion of pricey jewelry and designer fashions, but there are definite signs that a subtle transformation is taking place.
A greater diversity of tenants, including stores that cater to a younger crowd, are giving the top retail corridor in Manhattan a makeover. The new arrivals are even showing up on Madison’s most high-end stretch, from 57th to 72nd streets. And these tenants are paying more than ever to set up shop and outfit their stores.
Juicy Couture, known for casual wear, such as its celebrity-favored sweat suits, took over a space formerly occupied by a maternity boutique at 860 Madison. Intermix, which stocks a range of high-end hipster clothing, has expanded on both sides of its current store at 77th Street. In addition, Dolce & Gabbana is enlarging its current store at 69th Street (construction will begin in the spring).
Also, in spring 2007, designer Tom Ford is opening his first stand-alone store at 845 Madison near 70th, next door to Yves Saint Laurent and across the street from Cartier and Gucci.
“In the past, some stores on Madison have been intimidating. The newer stores are designed with more of what’s happening today,” says Stuart Ellman, executive director at Judson Realty.
“The fact that Tom Ford and Dolce & Gabbana have made big commitments there shows that Madison is still very strong for all kinds of fashion,” says Robin Abrams, an executive vice president at the Lansco Corporation.
Certain elements of Madison Avenue’s overall look will always be maintained — the span of blocks from 61st to 72nd are part of the Upper East Side Historic District, which enforces rules about signage, lighting and other design elements. Still, along with stocking younger fashions, the stores are reaching out to customers in new ways and are adopting more modern appearances.
Boutiques like high-end gadget purveyor Porsche Design at 59th Street and fashion label Issey Miyake at 67th Street have adapted a very clean merchandising approach (and in the case of Porsche Design, radio-tagged merchandise that customers can take to a scanner to read the product’s specs). This makes the shopping experience less formal and more accessible, which is in contrast to the gilded and bejeweled neighbors on the avenue.
Creating those unique, up-to-the-minute looks for boutiques on Madison has resulted in much higher build-out costs.
“Costs have doubled in the past 10 years on Madison and in general,” says Andy Frankl, president of IBEX Construction, whose firm did store build-outs for Stuart Weitzman’s footwear mecca and Fred Leighton’s house of gems, both on Madison. “$100 or $200 a square foot used to be considered a lot; now that’s on the lower end. Armani is redoing their store, and they’ll probably spend $1,000 a square foot,” says Frankl.
By contrast, stores in the city that carry less expensive merchandise — sometimes referred to as “vanilla-box stores” — spend substantially less: about $100 per square foot for basic sheetrock and $100 per square foot for fixtures, according to Abrams.
Abrams also notes that Madison has acquired a more international flavor in recent years, with designers from Spain, Sweden, Japan and Germany joining what used to be primarily French and Italian companies. These newer tenants “are no longer satisfied carrying their line in one of the upscale department stores and want to showcase the brand in its own setting,” Abrams says.
And the variety of merchandise available is also broader. “There are more shoe, accessory and jewelry tenants than ever before on Madison Avenue,” says Abrams.
Of course, rents are continuing to rise, and the market is so tight on Madison that available spaces are often gone before they even go on the market. Several months ago, when the jeweler Chopard leased a space at 709 Madison (formerly occupied by a Timberland store), Lansco, Abrams’ firm, inquired about the status of Chopard’s previous location at 725 Madison. “The landlord already had a lease out on the space, with backups,” Abrams says. “Neither of those spaces had been formally marketed; both were leased while the spaces had tenants in them still open for business.”
A fall 2006 retail report from the Real Estate Board of New York pegged the median price for leasing space on Madison at $1,000 per square foot, a 26 percent increase from the previous year. Storefronts in the 60s have historically tended to command higher prices than those in the 70s, according to brokers. “On Madison in the 60s, landlords ask anywhere from $750 to $1,200 on the ground floor, but generally most deals are made between $800 and $1,000 in the 70s,” says Abrams.
When stores are forced to relocate (usually because of rising rents), they are often able to remain on Madison by moving within blocks of their original location, which most brokers agree speaks to the continued power of the avenue.
“Retailers are jockeying for space and better opportunities, but we’re not seeing them fold; it shows a real strength,” says Ellman. He cited several stores that had recently moved within the neighborhood: Wolford Boutique, which sells fine lingerie, moved from 996 Madison Avenue to 997 Madison between 77th and 78th; Steven Russell Jewelers moved four doors from its previous location to the corner of 76th; and clothing store AS Parker moved two blocks farther north to 77th.
Lingering vacancies on Madison are most often caused by problematic spaces, as tenants are unwilling to move into a store that does not meet most of their criteria. At 655 Madison, for example, a 1,100-square-foot store (plus 2,300 square feet of retail space below ground) has been on the market for roughly six months. The space sits between Anne Klein and DKNY, but DKNY also occupies the second floor, which sits above the vacant store. “It’s a great space and economical, but there’s a concern that a tenant would get lost there,” says Abrams. “Space that has compromising issues, like a uniform storefront or low ceilings, seems to stay on the market for a longer time. Tenants are less willing to rent a store that does not fit their idea of how their flagship store should look.”
But Ed Brock, managing director for GVA Williams, the leasing agent for the property, says that it also may just be a matter of finding a tenant that the landlord deems suitable. “We’ve had offers, but the ownership is very selective about the right tenant and the right look,” says Brock.
Similarly, in the former Revlon Building at 625 Madison, the storefronts all have uniform red awnings, and for some retailers the style doesn’t allow for enough of a personal stamp. “I had an Italian retailer who loved the location but thought that he would look like everyone else and would not move ahead with the deal,” says Alan Victor, an executive vice president of Lansco Corporation.
Ten or 15 years ago, there was a bit more available space on Madison, says Victor. “But that had to do with the economy of the time,” he says. “Now there’s probably a little less turnover. The people who are leasing the space are better able to afford it. Fifteen years ago, when more space was available, the requirements were less stringent, but now landlords are very concerned with who is leasing the space.”
Jeffrey Roseman, executive vice president and principal of Newmark Knight Frank Retail, says, “Turnover on Madison is slow right now; generally the companies that go up there are pros at what they do. It’s not a street for the faint of heart, because the rents are so high.”
The essence of the street itself, though, is the one thing that remains constant. “Madison has stayed true to its roots, which is luxury,” says Roseman.
“It’s a luxury street, and it’s not going to change. There’s something kind of nice about that.”