Barneys New York hasn’t given up on brick-and-mortar retail.
While the luxury retailer would not confirm whether it’s opening in American Dream, sources have said Barneys’ lease is fully executed.
Don Ghermezian, president and chief executive officer of American Dream, who is spearheading the $3 billion project, couldn’t be reached for comment.
Barneys will occupy about 50,000 square feet of the 119,605 square feet originally intended for Lord & Taylor, with the balance going to a high-end Asian food hall, considered the first in North America, sources said. Last week, L&T closed its Fifth Avenue flagship and the department store chain has set a handful of other closings. Hudson’s Bay Company, the parent of Saks Fifth Avenue, Saks Off 5th and Lord & Taylor, has extricated itself from L&T and Saks Off 5th leases at American Dream.
HBC will proceed with a 130,906-square-foot Saks unit at American Dream, but not with a 30,000-square-foot Saks Off 5th.
WWD has also learned that Saint Laurent and Dolce & Gabbana are among the luxury brands that have signed leases at American Dream, joining Hermès, which previously announced it was taking space at the complex while leaving The Shops at Riverside in Hackensack, N.J. Hermès will open an 8,000-square-foot, two-level unit when American Dream bows in late spring or early summer.
Louis Vuitton and Moncler will also have stores at American Dream. The project’s “Collections” luxury zone will house 110 retailers spread across two floors. Overall, the project will contain about 450 stores, including large-format H&M and Zara units. In addition, there will be an off-price area including Century 21 and Primark.
Parent company Triple Five has said it expects to draw 45 million visitors annually, including 22 million tourists. Entertainment will account for 1.6 million square feet of the total 3.1 million-square-foot complex, including an eight-acre, glass-domed DreamWorks water park with Shrek’s Swamp and cabana and jacuzzi rentals; an 800-foot indoor ski slope and snowboard park; a Nickelodeon Universe theme park; a Sea Life aquarium; a Legoland Discovery Center, a KidZania; a 5,000-seat performing arts center; two miniature golf courses; an NHL regulation-size ice skating rink and a dining terrace with about 15 restaurants.
In addition to tour buses operating from Times Square and New York-area airports, American Dream reportedly acquired a helicopter company. “We’re planning to build landing strips for ferrying VIP’s from the Hamptons to New Jersey,” said a source close to the complex.
Many other brick-and-mortar players have been streamlining store fleets, yet Barneys has been expanding, albeit cautiously. Barneys has agreed to open a store in Bal Harbour Shops in north Miami, as previously reported, taking 53,000 square feet in a new wing, expected to open in 2023. And three years ago, Barneys opened a 58,000-square-foot store on Seventh Avenue between 16th and 17th streets, on the same Manhattan site where the company was founded by Barney Pressman in 1923.
It’s likely that Barneys gets a break on the rent at American Dream, as well as a kick-out clause. Triple Five could also fund much of the store’s construction.
Triple Five owns the two largest shopping and entertainment centers in North America: Mall of America in Bloomington, Minn., and West Edmonton Mall in Canada. The ratio of retail to entertainment at those projects is about 80 percent to 20 percent.
The American Dream complex has been delayed for years, impeded by financial troubles, cost overruns, local politics and ownership changes. It was conceived by the former Mills Corp., then taken over by Colony Capital and eventually Triple Five took it over. For several years, it seemed the project would never be completed.
Word that Barneys is headed to New Jersey comes just when the luxury retailer got socked with rent increases at its Madison Avenue and Beverly Hills flagships. Barneys must rachet up events and exclusive offerings to increase shopper traffic and revenues to offset the higher costs.
The expansion comes amid concerns over the 264,000-square-foot Madison Avenue flagship. Barneys had been paying around $16 million in annual rent there, well below market rates, on a lease signed back in the late Eighties after Barneys came out of bankruptcy. But this year, the tab went up to around $38 million.
Barneys was disappointed by the outcome after an arbitration process and talks with its landlord Ashkenazy Acquisition Corp., leaving the luxury retailer under pressure to increase sales and shopper traffic at the 660 Madison Avenue site. The higher rent will eat into profits.
“Richard Perry came to every single arbitration hearing,” said one source, referring to Barneys owner. “He led everything.”
The source said Ashkenazy offered to take back some space to mitigate the rent increase, but Perry refused.
Still, Barneys has been developing new kinds of experiences for its customers such as thedrop@barneys featuring designer appearances and exclusive product, and has been doubling down on efforts to lift online sales and make technology advances. And business for the luxury retailer is said to have shown some uptick recently.