Nordstrom moved one step closer to finding its first Manhattan location on Wednesday by hiring the Madison Retail Group, a retail real estate consulting and brokerage firm, to expedite the search.
The retailer has been besieged by landlords and brokers pushing locations and now intends to be more methodical in its quest for a Manhattan flagship.
"This is our most complicated real estate decision ever, for a number of factors," Pete Nordstrom, president of merchandising, told WWD.
For one, moving into Manhattan will be Nordstrom's most costly real estate decision. "It's expensive, but there's also huge volume potential and a host of ancillary issues," including the brand exposure a Manhattan presence provides, and vendor concerns.
"We want to give ourselves the best chance to have great information," Nordstrom said. "It's a big decision. We want to do it right. We needed an objective way to assess the market and all the opportunities there."
Madison Retail, based in New York City, will provide local expertise on demographics and shopping patterns, and will screen sites. Other brokers and landlords will now go through Madison Retail if they want to propose a location. Several real estate firms were interviewed by Nordstrom.
Aside from a few downtown locations in the U.S., such as in San Francisco and Seattle, Nordstrom said his company's experience in site selection has been primarily in malls.
The Seattle company has already examined properties in Manhattan.
Sources said the Penn Station area, Madison Avenue in the Fifties, lower Manhattan and the Columbus Circle vicinity were among the areas probed; specifically, the Pennsylvania Hotel near Penn Station, a property owned by Vornado; an office building on the southwest corner of 58th Street and Madison Avenue; 200 Fifth Avenue in the Flatiron area, and the corner of 42nd Street at Sixth Avenue.
Nordstrom also has to consider locations where vendors would be most inclined to sell to the chain. A move to the Upper East Side or Midtown could raise concerns with designers who already sell to Bloomingdale's, Bergdorf Goodman, Barneys New York and Saks Fifth Avenue.
"No doubt there will be some issues when it comes to distribution," Nordstrom said. "Where we locate will be a huge factor, but it's hard to predict. No one will give you a straight answer and you don't know for sure until you announce [where] you are opening a store."Asked if he had specific sites in mind, Nordstrom replied, "I can't get into that. There are some specific things we have looked at and considered or are still considering."
He said that for Nordstrom to make its best presentation, a box with at least 200,000 square feet would be required. However, the company could consider sites of different sizes, depending on the layout, the footprint of each level, ceiling heights and other physical factors. Nordstrom would require a location that attracts an upscale audience and has heavy pedestrian traffic all week and lots of public transportation.
Nordstrom stressed the company was "highly motivated" to find a flagship site. "This is something we are really seriously trying to do. Our board is really supportive of us." The hiring of Madison Retail Group, he added, "sends a signal that it's imminent."
"Our goal is to leave no stone unturned. We're looking at various markets in Manhattan," said Stephen Stephanou, principal of Madison Retail Group. He noted that in addition to identifying potential sites, Madison Retail would negotiate a transaction with a landlord.
Stephanou is a former Federated Department Store real estate executive who was involved in finding and negotiating locations. He already has some history with Nordstrom. After venturing into his own business, he represented Nordstrom in its deal to open a Façonnable store in Rockefeller Center.
Of all the possibilities in Manhattan for Nordstrom, Stephanou said the most likely scenario would be to reconfigure space in an existing building, though there could be ground-up development opportunities, too. He wouldn't comment on any neighborhoods for Nordstrom, aside from ruling out the Meatpacking District on the West Side because it lacks public transportation.
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