By  on September 19, 2007

SAN FRANCISCO — Barneys New York has a new flagship to go to with its new owner.

After a long quest, the luxury retailer is launching its first store here today under the ownership of the expansion-minded, Dubai-based investment fund Istithmar.

The Northern California store was planned long before Istithmar purchased Barneys from Jones Apparel Group for $942.3 million last month, but the investment fund has already indicated that more store openings are envisioned in the U.S. and possibly overseas. Barneys plans to open a Las Vegas flagship in several months and one in Scottsdale, Ariz., in 2009.

Barneys took its time to find the right location in San Francisco, tapping into some local merchant history. The retailer's sixth full-line store is about 60,000 square feet in a six-floor building at Stockton and O'Farrell Streets in downtown's Union Square. For 60 years until 1974, the tenant was Joseph Magnin, a high-end fashion retailer that, like Barneys, showcased designers and emerging trends. Magnin himself was the son of the owners of famed I. Magnin in Union Square.

"We've finally found an exciting building,'' said chief executive officer Howard Socol, describing similarities between the San Francisco and New York markets. "We consider it a jewel box. It's a city we can relate to. There are a lot of interesting neighborhoods, people. The city loves art, fashion and music. It's uptown and downtown."

The new store is another indicator of San Francisco's rising retail profile.

Bloomingdale's last year opened a 330,000-square-foot flagship in the expanded Westfield San Francisco Centre. Other stores that have launched in the Union Square district include Hennes and Mauritz, which pieced together 43,000 square feet from several mom-and-pop sites to open a flagship and its first store west of Chicago.

Forever 21 launched a 27,500-square-foot store in an old bank, while smaller storefronts of 10,000 square feet and less have been scooped up by retailers such as Zara, Kate Spade, Ted Baker, Thomas Pink, Lucky Brand Jeans and Juicy Couture. One of the latest entrants is Ben Sherman, the British clothier for men and women, which opened across from Barneys.

Barneys' immediate neighbors include Macy's West Coast flagship, Macy's Men's Store and Crate & Barrel. A few blocks away, the lineup is: Neiman Marcus, Saks Fifth Avenue, Nordstrom, San Francisco-based Levi's and Gap, Banana Republic and Old Navy flagships, and high-end boutiques, such as Marc Jacobs, Escada, Gucci, Prada, Celine, Burberry, Christian Dior, Versace, Hermès, Emporio Armani, Polo, Ferragamo and St. John.The Union Square district is also home to fine jewelry stores. Next year the global diamond giant De Beers is to open on Post Street in an old Brooks Brothers space, and Van Cleef & Arpels is slated for 2008. Tiffany & Co., Cartier and the country's only Boucheron are nearby, as is local competitor Shreve & Co. and several high-end boutiques.

The city is in the fifth year of an economic rebound after the Internet bubble burst in 2001-'02, hitting hard in nearby Silicon Valley. The subsequent downturn affected retail sales and several San Francisco storefronts shuttered, including an FAO Schwarz, which was in the space that Barneys now occupies.

In a ranking of more than 363 metropolitan areas compiled by the U.S. Department of Commerce and released last month, San Francisco was second in per capita income, at $55,801, behind the Stamford-Greenwich, Conn., area, at $71,901.

By San Francisco standards, the Barneys space is considered sizable and of proportions rarely available in Union Square.

"One thing retailers have to understand is, if they have extraordinary requirements and the desire for a great location here, it's a bit like finding a needle in a haystack," said real estate agent Vikki Johnson, who brokered the Barneys deal 15 years after first talking with the retailer.

The principal design architects, Jeffrey Hutchison & Assoc., worked with Barneys' team and Gensler architects to maintain the structure's historic essence. The 1909 neoclassical steel-and-iron-framed building's terra-cotta exterior has been preserved and painted a cream color. Its tall and wide windows and sheer white curtains help fill the high-ceilinged interior with light, creating an airy, modern feel. The floors are limestone and accented with marble mosaics.

"We're fortunate to get our space; it's incredible," said Michael Celestino, executive vice president, director of stores, as workers put finishing touches on the flagship. So precious is retail space, he noted, that 10,000 square feet is being rented next door for deliveries, stock and back office operations.

Women's merchandise exclusive to the San Francisco market includes Bottega Veneta, Rick Owens and Vionnet, sold in the third-floor designer collections. Like other Barneys, there also is clothing from Prada, Versace, Balenciaga, Lanvin and Givenchy, Martin Margiela, Erdem, Stella McCartney, Narciso Rodriguez, Thakoon and Proenza Schouler, among others, as well as fashions from Bay Area-natives Derek Lam and the Mulleavy sisters of Rodarte.Offerings include a Versace quilted sleeveless minidress with a wide, scooped collar and sequin inset across the top, $2,085; a Lanvin leather satchel, $1,890, and a Givenchy sheer silk evening jacket top with three slender bow closures in front and on the wrists, $1,210, matched with lightweight wool flared pants, $695.

"Local expectations for Barneys are high,'' said Judy Collinson, women's merchandise manager.

The store features whimsical arrangements of mannequins — faces made of lamp shades — hanging sculpture and subtle, back-lit murals, including collages behind cosmetic counters using Japanese colored-paper cutouts.

The New York-based artist John-Paul Philippe, whose work appears in other Barneys, has wrapped an abstract decorative metal grillwork around the first-floor perimeter, which looks like a huge chunky necklace. The metal is also an element of the grand staircase connecting the main floor of fine jewelry, handbags and accessories to the mezzanine women's shoe department and cosmetics, known as The Foundation, on the lower level. A second staircase links all floors except cosmetics.

On the fourth level, the women's Co-op offers contemporary fashion, including Marc by Marc Jacobs, Theory, Helmut Lang and Alexander Wang. Men's wear is on the upper floors.

Socol declined to estimate sales revenue projections, however, overall apparel sales in the city have been robust.

"We have found in general, retailers are recording some the highest sales volumes, better than pre-9/11," said Kazuko Morgan, senior director of retail in San Francisco for commercial real estate firm Cushman Wakefield. Morgan said in the last year retail rents in the Union Square area have increased 10 percent. Prices per square foot range from $400 for a prime spot on the square to $170 a few blocks away.

Revenues at San Francisco specialty apparel stores grew 10 percent last year to almost $1.1 billion, according to the city controller's office.

"There are a lot of great retailers in a very short distance,'' Socol said. "But we think we can provide a different experience."

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