SEVENTH AVENUE RENTS SPUR APPAREL MAKERS TOWARD FASHION EXODUS

Byline: Leonard McCants

NEW YORK — Welcome to the suburbs of fashion.
Facing higher rents within Manhattan’s traditional garment district, where rates have jumped as much as 20 percent during the real estate boom of the past year, many of Seventh Avenue’s longtime residents have begun to explore far-off pockets of the city, previously uncharted by the fashion elite, from West Chelsea and the meatpacking district to the Lower East Side.
As a result, a number of “hot properties” have developed on fashion’s radar, where designer companies are racing to fill hip buildings like the Starrett Lehigh and 450 West 15th Street at opposite ends of Chelsea, and 270 Lafayette Street near SoHo, where a Roots store is located.
While some are in search of presumably cheaper rents, considering those in the garment district now average $30 to $45 per square foot, what they’re finding is that, ironically, their fashionable demand has already helped push up rents in burgeoning neighborhoods to levels comparable to midtown, much as the interest of Internet and advertising companies helped increase rates there in the past couple of years.
But the move out of the fashion center is about more than just money. For many, the garment center, with its overcrowded sidewalks, rolling-rack-clogged streets and cookie-cutter buildings, represents a harried lifestyle they are seeking to avoid. To break away from that mold, they are looking for nontraditional spaces and neighborhoods in an effort to gain more inspiration and creativity.
“More and more of these companies are going to the far reaches of Chelsea, the meatpacking district and SoHo,” said Caroline P. Banker, executive vice president of Douglas Elliman and a specialist in assisting fashion, cosmetics and home-furnishing companies find property downtown.
“They like the idea of being with advertising companies, art galleries and furniture companies,” Banker said, “and the demand for space of that nature far exceeds the supply.”
Designers said they crave the serenity, light and space that breakaway buildings offer. But also, they added, far-flung offices establish them as independent thinkers — trailblazers in some cases — and forces buyers off the beaten path to hunt them down.
“We felt like this area was an inspiring area to be in,” said Nickelson Wooster, president of John Bartlett, who moved the company’s design studio from West 28th Street and Seventh Avenue to 450 West 15th Street in the meatpacking district two years ago.
“For us, it wasn’t a question of being in the garment center that was important,” Wooster said. “It’s one town — you can get anywhere pretty easily.”
The current 4,000-square-foot space leased by John Bartlett also will allow the designer to incorporate a showroom, which will open in September.
“It fit our budget criteria and it was an amazing value for what we were getting,” Wooster said. “We knew this was going to be the best neighborhood we could afford.”
At 450 West 15th, which is also home to Tse, the cashmere sportswear company, and fashion public relations firm KCD, employees and visitors are often impressed with views of the Statue of Liberty and watercraft plying the Hudson River. Another benefit, tenants said, is the light afforded by large floor-to-ceiling windows.
“This building has high ceilings and an open floor plan that can only be allowed below 23rd Street,” said Joann Casa, Tse’s U.S. executive vice president of merchandising, product development, marketing and sales.
Tse moved into the building in January, taking 33,000 square feet, to consolidate its U.S. offices, which had been spread out between 745 Fifth Avenue and 220 Park Avenue South in midtown.
“This building provides us with a progressive area, and it reinforces Tse’s image,” Casa said.
And contrary to the perception that designers are moving off Seventh Avenue simply to save on rents, some of these firms are paying dearly for progressive neighborhoods, said Banker, the real-estate broker.
Just as Internet companies, advertising firms and a dearth of prime office space in midtown have driven up real estate prices in the garment center, these breakaway fashion firms are contributing to the skyrocketing rents in their new neighborhoods.
In January 1999, the average rent at 450 West 15th was about $20 per square foot. Currently, the price has doubled and the building is completely occupied, Banker said.
“All of the buildings in the immediate vicinity are riding on the coattails of these buildings,” she said.
The property owners, hip to the notion that their properties are hot, have been forcing tenants to pay real-estate taxes and operating expenses, which customarily are included in the rent, Banker noted. Owners are also remeasuring floor plans to include unusable space in the square footage quoted.
“The landlords are all pushing the envelope,” she said. “You don’t even know if you are comparing apples to apples.”
But that has not stemmed the tide of designers looking in these new areas — the West Chelsea, Flatiron District and NoLIta neighborhoods. Hugo Boss, Club Monaco, Kenneth Cole, Marc Bouwer, Anand Jon and Adidas are among the firms that have either recently signed on or are looking for space in nontraditional districts.
While most of the designers said they wanted to either get away from the perceived calamity of the garment center or not deal with it at all, not everyone is searching for locations downtown.
This month, Anand Jon relocated his showroom from 241 West 36th Street to 221 East 59th Street near Third Avenue, a block away from Bloomingdale’s, to be closer to his private clients.
“The biggest advantage to having been [in the garment center] is that people knew that Anand Jon was a fashion house,” Jon said. “I think it was important to be there initially but it didn’t reflect what we are about, and it’s not our market.”
His new place, while more expensive than the previous showroom, is closer to his private clients, and the calm of the neighborhood outweighs the added expense, he said.
“This place is not just bigger, it’s more welcoming,” he said. “My biggest concern with the fashion district is that it’s very cookie-cutter. We wanted to have the building itself be different.”
Paul Margolin, president of Marc Bouwer, said the designer eveningwear company has outgrown its headquarters and showroom on 27 West 20th Street, spurring a search for additional space over the past few months.
“We looked all over,” he said. “But we didn’t look in the garment center. You need to feel peace of mind where you work and I find that area stressful.”
Bouwer and Margolin looked at the Starrett Lehigh Building at 601 West 26th Street and at spaces on lower Fifth Avenue but, in the end, they are taking more space across the hall from their current location, a building that houses a diverse and edgy roster of companies from Sofia Coppola’s film production offices to the West Side Club.
“Both Marc and I live in the West Village and we can walk to work,” Margolin said. “I love waking up and going to work every day and I really believe that has a lot to do with where we work.”
The Starrett Lehigh building, which sits on a full-block footprint in far West Chelsea and is equipped with elevators large enough for trucks, is one of the more unusual buildings to which fashion firms have flocked. The building counts the Comme des Garcons’ showroom and photographer Patrick Demarchelier’s studio among its current tenants, in addition to Martha Stewart’s Internet operations.
Joining them will be Club Monaco and Hugo Boss, which will move its U.S. operations into a 22,000-square-foot space with additional access to a 10,000-square-foot roof in June.
“The starting point was that I didn’t want to do a lot more business to make a landlord rich,” said Marty Staff, president and chief executive officer of Hugo Boss Fashions.
He said the landlord at his current headquarters at Olympic Towers at 645 Fifth Avenue wanted to raise his rent “in excess of $1 million.”
“I didn’t want to give the appearance to our customers that we were spending lavishly on things like rent,” Staff said.
But that does not mean that his new offices and showrooms will be typical. Plans call for built-in kitchen areas, video monitors, etched-glass walls and enough space for fashion shows.
Still, he said, “our occupancy expenses will decrease by 20 percent.”
With views of the Hudson River, the financial district and the Upper West Side, Staff hopes that when buyers make their appointments they will come at the end of the day to unwind.
“It’s going to be like going to a place to be entertained, rather than a clinical place to buy clothes,” he said. “How great will it be to look out onto the Hudson River at night?”
Being one of the first tenants in an out-of-the-way location does have its drawbacks.
For example, there is little public transportation nearby, and restaurant options are limited. Staff said Hugo Boss plans to purchase at least one vehicle to ferry employees and customers around town. Most of the firms there have employee pantries with refrigerators and microwaves.
When KCD first moved into its space at 450 West 15th Street, the neighborhood was much different from how it is today. For one thing, meatpacking businesses outnumbered art galleries and photo studios. The building had cinderblock walls and no windows, remnants from its days as a warehouse.
Now the district is home to some of the trendiest boutiques and restaurants in the city. The Jeffrey store is next door, and several new restaurants like Markt and Pastis have popped up recently, all within a few blocks.
“It’s more of an incentive to come here because there are a lot of things to do in this neighborhood,” Wooster of John Bartlett said. “If you’re going to take that time out you might as well make it productive.”
After 16 years in its previous location at 853 Seventh Avenue, near 55th Street, KCD, the public relations firm that handles such clients as Marc Jacobs, Versace and Anna Sui, had outgrown its 3,000-square-foot space, said Julie Mannion, a partner.
“Our first priority was looking for size, and that was going to knock us out, pricewise, from midtown,” she said.
The company moved into its current location two years ago, with minimally designed offices where the staff huddles together near large windows, framed by bright yellow curtains, that face south and west.
“We love the light and we love the water,” Mannion said. “The serenity sort of outweighed what was then the inconvenience” of the neighborhood.
When the company moved, Mannion imagined “a horrible trek because I live on the Upper West Side,” she said. “It’s been much, much easier than I thought it would be. It maybe takes five to 10 minutes more to get to a meeting and, because we are so far west, we can avoid all the internal traffic. It’s become a non-issue.”
Even as these designers seek out and find other areas for their businesses, there are those who believe the garment center is still the most fashionable address in town.
Sean John, Mecca, Aris and Fubu are some of the fashion firms that have recently signed on to take space in the the traditional confines of the district, according to Marc Kritzer, president of Fashion Realty Group whose real-estate firm represented them.
Sean John moved into 525 Seventh Avenue, Mecca took a space at 1385 Broadway, and Fubu and Aris took spaces at 463 Seventh Avenue.
Bud Konheim, ceo of Nicole Miller, recently renewed his company’s lease at 525 Seventh Avenue after looking at properties in SoHo, Chelsea and on 12th Avenue near the district.
“There are still hundreds and hundreds of guys in this area,” Konheim said. “With all the people moving out, there are also people moving in.”
There is something to be said about working in a mostly fashion environment, he said. Although the fashion makeup of the district has decreased in recent years, it still represents 44.6 percent of the industry within the boundaries of the Fashion Center Business Improvement District — roughly between 35th and 41st Streets, and Fifth to Ninth Avenues.
“The whole point of us being anywhere is to be convenient to buyers,” Konheim added. “But more than that, it’s close to our suppliers.”
But those on the move have a different perspective.
Banker of Douglas Elliman added, “I think it’s great that the markets are being expanded, and it’s great for the city. I just wish there were more product around.”