NEW YORK — The Shops at Columbus Circle has been a lightning rod for scrutiny since opening here in 2004.

In this most vertical of cities, vertical malls have struggled, and the Shops was viewed as a brash attempt to flout conventional wisdom. The gamble was heightened by the high-profile venue in the $1.7 billion Time Warner Center, headquarters of the media company, as well as the use of costly materials and design, including marble floors, a four-level glass facade and two bronze Fernando Botero sculptures standing sentry in the concourse.

Many real estate brokers and community leaders credit The Shops with invigorating the upper West Side’s retail environment.

“The streets are much more crowded,” said Monica Blum, president of Lincoln Square Business Improvement District. “We’re seeing the halo effect all over the neighborhood. We are getting trendier stores. BCBG Max Azria is opening farther north. Even restaurants that aren’t in the center are feeling the effects. Rosa Mexicana’s lunchtime business has gone up 20 percent and we think that’s directly related.”

Zeckendorf Development’s redevelopment of the former Mayflower Hotel one block north of the Shops, has 85,000 square feet of retail up for grabs. At Broadway and 63rd Street, the Empire Hotel will have 40,000 square feet of new stores. “It’s certainly changed the neighborhood for the better,” Blum said.

Urban malls have had a troubled history in the city. The retail component of Manhattan Mall at Sixth Avenue and 33rd Street, was downsized in 2004 to four levels from nine. Herald Center on Sixth Avenue and 34th Street failed as a luxury venue and is now home to Daffy’s, Modell’s, Mrs. Field’s and Staples.

The Shops has been closely watched by other developers and retailers. Skeptics have cited the demise of V, chef Jean-Georges Vongerichten’s steak restaurant, and a planned restaurant by Chicago chef Charlie Trotter, which never opened, as signs of trouble. Some also read dire messages into the June 23 closing of a Joseph Abboud store.

But The Shops’ 40 stores with 350,000 square foot of retail space are fully rented, and Bebe in September will take over the two-level Joseph Abboud space.

This story first appeared in the July 21, 2006 issue of WWD. Subscribe Today.

“The expense structure didn’t work for us in that location,’’ said Marty Staff, chief executive officer at Joseph Abboud. “When the store opened, we were a principally a men’s suit company and there wasn’t the breadth of product to support the space. Next year we’re going into fragrance and women’s wear.”

The final pieces of the dining puzzle are Porterhouse New York, chef Michael Lomonaco’s steakhouse concept with fish and regional specialties, and Landmarc, a bistro operated by Marc Murphy.

“The location in the Time Warner Center will give us great visibility for an underserved market in New York,” said Greg Scott, ceo of Bebe. “We’re going to show Manhattan what Bebe is about today. We know it will be our largest-volume store. It will have more of a luxury assortment and a dedicated shoe and handbag area. This was a once- in-10-year opportunity.”

Some brokers said the Shops’ mix is fairly predictable. Although there are some offbeat tenants, including J.W. Cooper and Montmartre, others such as United Colors of Benetton, Sephora, Coach, J. Crew, Cache, Solstice and Borders Books & Music are mall staples.

One retail broker who asked not to be named because she may do a deal at the Shops in the future, said, “It suffers from too much of the same tenants, the Coaches and J. Crews. The selection is boring. It needs an influx of a few more interesting retailers. That would give New Yorkers a reason to go there.”

Still, Joanne Podell, senior director of Cushman and Wakefield, the real estate company, credited The Shops with boosting the West Side. “They get a targeted destination-driven customer,’’ she added. “Maybe they get less foot traffic but they get the numbers.”

Kenneth Himmel, president and chief executive officer of Related Urban Development, has heard the comments about the tenant mix, including the question of why there aren’t more luxury stores.

“Why didn’t we bring more luxury retailers from Fifth and Madison Avenues? Because we catered to people who live on the West Side. Between 60 percent and 65 percent of customers are local. These are the things that bring them to the project every day,” he said, referring to Whole Foods, Borders, Sephora and J. Crew.

“The health of retail is sales per square foot,” Himmel said. “Stores here do north of $1,200 a square foot. It’s a pretty remarkable story.”

Stuart Weitzman has an 1,800-square-foot store for his signature shoes, range in price from about $250 to $475. The unit has access from the street as well as the mall’s interior.

“For us, it’s been great and anybody else on the ground floor would give kudos,” Weitzman said. “It’s a nice mall, you can walk quickly through it. Whole Foods has really been quite unbelievable and helping us all,” by drawing big crowds.

Weitzman said most of his traffic comes from the mall. About 30 percent is tourists, and most of the others are West Side office workers or residents.

Himmel highlighted the retail performance of several stores. He said A|X Armani Exchange is up 16 percent to 17 percent in comp-store sales year-to-date. Cache’s same-store sales are up 26.5 percent, Eileen Fisher, 25 percent and Hugo Boss, 32 percent over last year, and 44 percent for the month of May.

Williams-Sonoma’s flagship at the Shops is the company’s highest-volume store, Himmel said.

Whole Foods’ 58,000-square-foot unit is among its top 1 percent of stores and is expected to do $80 million in sales for 2006, said a retail source. An estimated 4 million people will pass through the store this year.

The Face Stockholm unit at the Shops is “the second most profitable store after SoHo, which is always our most popular,” said spokeswoman Molly Hamann. “It does an average of $1,000 a square foot in sales. There’s a great mix of local New Yorkers and tourists. In addition, there are extended hours. The Center is open until 9 p.m. and our other stores close at 7 p.m. We definitely get business from the hotel.”

“It seems like the mall has really matured,” said Todd Rauchwerger, owner of J.W. Cooper, an accessories shop that sells belt buckle sets priced from $200 to $15,000. “We’re seeing double-digit sales increases. A lot more people are coming from the East Side and downtown. The first year and a half it was an iffy kind of thing. Now, people are coming here specifically to shop.”

Montmartre, which sells labels such as M. Missoni, R.E.D. Valentino, Tocca, Tahari and Vivienne Tam, is also seeing positive results.

“We’re doing great,” the store manager said. “We’re getting a mix of tourists from the Mandarin Oriental Hotel [part of the complex], neighborhood residents and employees of Time Warner and CNN. We’re doing $1,000 a square foot. Last year we had huge increases. This year we’ve been up a little, down a little. We’re pretty much flat to 5 percent ahead. That’s compared to a 35 percent hike in our second year. This is our highest-volume store in Manhattan.”

Many stores stay open late to take advantage of diners going to restaurants such as Per Se, Masa and Cafe Gray, and performances at Jazz at Lincoln Center, which is in the building.

“We’re doing very well,” said Allison Slater, vice president of retail marketing at Sephora. “We’ve seen incremental growth year after year. We’ve noticed that the busiest times are lunchtime and after hours.”

“The sweetest revenge of all for all the naysayers is that the retailers are doing well,” Himmel said.

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