Luxury firms are ultracautious choosing their terra firma. Yet with the shopping center component of the sprawling Hudson Yards mixed-use development in Manhattan, there were unique issues for Neiman’s, like whether designer brands sold at Neiman’s sister division, Bergdorf Goodman on Fifth Avenue and 57th Street, would also sell Neiman’s at its Hudson Yards site, on Tenth Avenue between 31st and 32nd Streets.
“They were worried they could actually convince all of them to go to the West Side,” said Kenneth Himmel, president and chief executive officer of Related Urban, a division of the Related Cos., developer of Hudson Yards along with Oxford Properties Group. “It took Neiman’s about two months to get the response they needed. It was 95 percent positive in support of coming here.”
Of 15 major brands Neiman’s sought for its Hudson Yards store, “they’ve already made deals with 12 or 13 of them,” Himmel said. “No one will be disappointed with the brands at Neiman’s.”
Still, Neiman’s executives had other concerns, which Himmel addressed during an exclusive interview on the retail vision for the $25 billion, 28-acre Hudson Yards project, and what it took to get Neiman’s to commit to the site’s 1-million-square-foot shopping center, with 750,000 square feet that’s rentable. He said Neiman’s signed a long-term lease with built-in protections; that the store will have large, unobstructed floor plates — 80,000 square feet for each of its three levels; about 300 feet of frontage along Tenth Avenue; outdoor signage; multiple means of access, including an express elevator. With Neiman’s housed on levels five, six and seven of the shopping center, it was very important to have special accommodations. It’s the first time Neiman’s main floor won’t be on the ground level of a center, or shopping street.
“How did I get Neiman’s to agree to go to the top — we literally designed a project to make sure the top penthouse levels were the most appealing,” Himmel said. “For a department store, that means very large floor plates, and very high floor-to-ceiling heights with no obstructions or impediments like structural columns and elevator banks. What happens when you go into the base of one of these other mixed-use buildings is you are completely overpowered by columns and elevator shafts. You don’t get a great floor plate.
“Because the plates here are as big as they are, the circulation will be tremendous, and we are able to set the building back, actually move the floor plate and create a street on the fifth level of the project. That’s never been done by anyone in the world. When you arrive on level five, it will be like you are on the ground floor of a project,” providing a grander, spacious entrance to Neiman’s.
Then there was the issue of getting around a long-standing agreement NMG had with the Goodman family, the original owner of Bergdorf Goodman, prohibiting Neiman’s from opening a store in Manhattan that could potentially compete with Bergdorf’s. In 1972, the late Andrew Goodman sold Bergdorf Goodman to Broadway-Hale Stores, which became Carter Hawley Hale Stores, which spun off Bergdorf’s and Neiman’s into the Neiman Marcus Group. “We reached an agreement with the Goodman family that opened up the restriction,” Himmel said. “They did receive a payment — that’s what unlocked it. They didn’t do it for free.”
Regarding the lease, “We gave Neiman’s a break on the first three years, and in years four and on, it starts to ramp up. I can’t give you the numbers. We invested in the store with them.”
Another concern won’t be resolved until well after the scheduled opening of the shopping center in fall 2018 — whether the far West Side of Midtown Manhattan, long a wasteland of parking lots, abandoned businesses and warehouses, could be transformed into a successful shopping mecca spurring Neiman’s business.
“We were truly cynical at first,” Karen Katz, president and ceo of the Neiman Marcus Group, told WWD. “Clearly, we didn’t need to have another store in New York. We already have the most beautiful store in the world with Bergdorf’s. But we were presented with an interesting opportunity by Ken Himmel and Steve Ross [founder and chairman of the Related Cos.]. The more time we spent together and the more we talked about it, the more we found it to be a very bold and innovative project.”
For Katz and the Neiman’s team, it was a rare expansion opportunity, considering there are only a few affluent, high-fashion-minded communities left in the U.S. where Neiman’s doesn’t have a store — New York among them.
Asked if Bergdorf’s and Neiman’s can coexist in Manhattan without cannibalizing each other’s business, Katz replied, “There is significant vendor overlap, but because we have two separate merchandising organizations and two separate marketing organizations, we have this ability to differentiate. Many of the same vendors can look very different.”
In fall 2014, Neiman’s said it had an agreement with Related to open at Hudson Yards, marking Neiman’s first Manhattan store. “The breakthrough was when we and Neiman’s decided we could create something spectacular at the top of the mall,” Himmel said. By scoring Neiman’s as the center’s sole anchor, Related’s ability to lure additional tenants increased multifold. Several additional retailers are expected to be disclosed soon.
“The Cartiers, the Van Cleefs, the Pradas, the Hermèses of the world, luxury watch brands — those are the kind of tenants we are in dialogue with. I can’t tell you who exactly. Don’t forget, Neiman’s is going to deliver an enormous assortment of luxury,” Himmel said. “I’m not sure what they will say, but I absolutely believe they will do $200 million a year out of the box. That’s my projection.”
He’s also forecasting high productivity for the specialty stores. “At third-year stabilized numbers, we’re looking at over $2,000 a square foot on average. The ground level, which will have a lot of luxury, will be off the charts — $4,000 a foot.”
Hudson Yards won’t be all luxury, though the category will occupy 20 percent of the retail space, including Neiman’s. “I can’t say I have completed deals with them, but if you ask if we should have a Victoria’s Secret here, I would say so. It’s an enormously successful and great retailer,” Himmel said. “Should we have a Banana Republic and Gap? I would say so. There will be a democratic mix. Should we have a Nike? An Under Armour? And deliver the sports category? Yup. We haven’t made deals with all of them yet, but that’s part of the tenant mix you hope to bring.”
Rents on the first retail level will run from $400 to $750 a foot, with smaller retailers like jewelers paying higher rents. The upper levels are in the $200-a-foot range. Generally, Hudson Yards is signing seven- to 15-year leases, so there won’t be too many long-term leases limiting the ability to attract new retail concepts, and too many leases expiring simultaneously, creating pressure to re-tenant.
Along with the Neiman’s anchor, there will be two “mini-anchors” ranging from 24,000 to 30,000 square feet, situated in large corner spaces, and more than 100 stores and restaurants in total. Zara will be one of the mini-anchors, while Tory Burch and Stuart Weitzman are also opening shops.
Restaurants will be on four, five and six to encourage people to ascend the center to dine and visit Neiman’s. In total, the restaurants will occupy less than 100,000 square feet, representing about 15 percent of the overall mall space, which is 5 percent more space than urban projects generally provide for food and beverage, according to Himmel.
Three restaurants, by Thomas Keller, José Andrés and Costas Spiliadis, have been confirmed so far. A cocktail lounge on an observation deck, and 30,000-square-foot food “experience” on the street level at 10 Hudson Yards, just south of The Shops and Restaurants at Hudson Yards, are also under consideration. Neiman’s, which has chosen Janson Goldstein LLP to design its interior, is expected to have a restaurant as well with a view all the way down to the Statue of Liberty.
“Thomas will be doing a retro-classic American grill, which is much more than a steakhouse. There will be many different items. Yes, many people will come because it will be the best dry-aged, hand-selected corn-fed beef that you can possibly get and there will be open-grill cooking.”
Keller and Spiliadis will have “commanding dominant restaurants,” with Keller’s on two levels covering 18,000 square feet and Spiliadis’ Milos at about 15,000 square feet. Both will have outdoor terraces. “These two flagship restaurants will integrate with Neiman’s on the fifth and sixth levels,” Himmel said. The environment will feel “porous and open,” Himmel explained, so people inside the restaurants can gaze out over the outdoor public space and the atrium, and those outside can peer in. The idea is to create a dining experience of a caliber not typically associated with malls.
Visitors, Himmel said unabashedly, will be on “over-stimulus….They’ll be so blown away by what they see and experience, they’re not going to know where to turn. But it’s not going to be intimidating. When I say ‘blown away,’ it’s about an incredibly bespoke, very comfortable environment that allows retailers and restaurants to express themselves. It’s a stage setting.”
If Hudson Yards succeeds in getting shoppers to frequent its mall, it will be a crowning achievement in a town where street shopping reigns, vertical retail has had limited success and consumers are notoriously jaded. Hudson Yards is considered the largest private development in the history of the U.S., larger than Rockefeller Center at 22 acres or the World Trade Center — 16 acres. It sits atop two huge concrete platforms covering the railroad yards funneling into Penn Station. Aside from the shopping center, the development includes 14 acres of open public space; 5,000 apartments; a hotel; a Culture Shed for New York Fashion Week, exhibitions and performing arts, and several supertall office towers — 30 Hudson Yards will be 90 stories, 35 Hudson Yards is 70 stories, and 50 Hudson Yards is 62 stories — where Coach, L’Oréal, VaynerMedia, Time Warner, KKR and Wells Fargo Securities are among the tenants signed on. The centerpiece of the project will be a monumental sculpture by Thomas Heatherwick that anchors the outdoor public space and is being kept under wraps for now.
In effect, Hudson Yards creates a new neighborhood in a dilapidated section of the city that has been neglected for decades. In its unfinished state, it seems a world apart from Manhattan’s famous retail enclaves. It extends from 30th to 33rd Streets, between 10th and 12th Avenues, and from 33rd to 34th Streets, between 10th and 11th Avenues. The hope is that Hudson Yards becomes a hub and a destination, fueled by the proliferation of residential and office buildings rising in and around Hudson Yards and the new 7 subway extension, and with the Whitney Museum of American Art feeding into the High Line, which leads right into the project.
“In order to make something like this a success, each component of a mixed-use development has to succeed. You can’t fall down on one part and not have it ricochet,” said Howard Elkus of Elkus Manfredi Architects, who is designing the retail mall.
“The mall is the hole in the doughnut,” Elkus said. “One challenge was to determine the DNA of the area, that feels natural. Out of that search was born an architectural sensibility of iron, steel and masonry, working rails and the waters’ edge. We spent a lot of time answering that question — how do you put those elements together in a way that isn’t trite, and at the same time trying to create something new that doesn’t exist.”
The concept for The Shops and Restaurants at Hudson Yards didn’t come out of the blue. It’s been informed by past mixed-use projects that Himmel and Elkus worked on together since the Eighties, after they met on a chairlift at a New Hampshire ski resort. First came Boston’s Copley Place, followed by 730 North Michigan Avenue in Chicago; then Pacific Place in Seattle, where Nordstrom occupies the top levels; CityPlace in West Palm Beach, Fla., and The Galleria and Al Maryah Central in Abu Dhabi.
“Copley Place is really the predecessor of Hudson Yards,” observed Elkus. “It exercised the urban design principles that connect all of these projects — integrating into the fabric of the city, so it has the mentality of streets and public spaces. That’s the key.”
In designing the Shops and Restaurants at Hudson Yards, “We sought a way of getting away from the traditional look of stacked retail mall,” Elkus said. “We don’t use the word ‘mall’ here. We are calling it a vertical retail center. Whatever your interests are, the things you wear or technology, it’s all going to be here, and it’s all going to be integrated with food that has many shades, from popular to sophisticated. I don’t think you will get hot dogs here. If you do, they’ll be Danny Meyer hot dogs. This center will have a recognizable identity, the way Rockefeller Center has a recognizable identity. With the restaurants on the fourth, fifth and sixth floors, you don’t want to feel like you are in a shopping center. They are positioned to take advantage of the outside, with these great windows looking out. In some instances, you will be outside.”
“Everything is being customized. Neiman’s will be customized. All the restaurants are customized,” Himmel said. “You won’t be able to change Neiman’s easily. They can change what they are doing inside the store, but you can’t change it in terms of the three big levels. The restaurants, too, are not easily changed [into a different use] because of the infrastructure of a restaurant — the waterproofing, the kitchens, everything that is required. You have to know where you are putting the restaurants in a project. You can’t just put them in line.
“These projects, the way we do them, are very different from how everyone else does them,” he explained. “You have to handpick and decide this programming up front. We build these uses into the architecture of the building, which is not how most shopping centers are done. Shopping centers are designed with spaces inline and you just move the lease line around.”
There’s no need for vertical malls to be anathema to New Yorkers, as Himmel sees it. “To move people up vertically in a project, to get people out of their homes, off the computer and off their handheld devices, you have to deliver something special. You have to be creative in your programming and your design. People are not walking into boxes any longer. They have to be stimulated, and the stimulation comes from good architecture, good interior design, great programming — and it’s not just retail. It’s the whole experience. We will be providing incredible circulation so there are escalators, elevator banks — every single point on the corners of the project provides a way to go up and down. Guess what drives you up as much as anything? Neiman’s, and food and beverage. You may not go luxury shopping or even bridge shopping twice, or three times a week, but if we do the job in the food and beverage choices, you may actually come here twice a week. If we get you to eat, you may actually shop.”
Having a strong food dimension to his projects, Himmel said, has been “a trademark of all of the work I’ve done in 35 years, and it’s more so here. We learned from Time Warner Center [another Related project on Columbus Circle] how much it is in demand and how good it is for the retailers. Food has been underplayed but not by us. You can order and get it delivered to your home, but you can’t have the social experience. You can’t experience the quality of the operator and the quality of the interiors. That’s what we are going to deliver in this project.
“No one is ever going to take retailing away from Madison and Fifth,” Himmel added. “But guess what happens at 6 p.m. on Madison and Fifth? It shuts down.” But at Hudson Yards, “merchants will be keeping late hours,” some up to midnight.