New trend draws top retailers to Madison - Madison Avenue, New York, New York - Mid-Year Review and Forecast - Industry Overview

Recognized all around the world as the preeminent center for fashion retailing, New York City's Madison Avenue is where new trends originate and cutting-edge innovation is created. One key trend that has exploded on the scene is the growth of the showcase or multi-level store along Madison Avenue.

Retail space has become increasingly tight, due, in part, to the emergence of designers and manufacturers entering the retail market. As prime space on Madison Avenue has become more scarce, rents have risen to new heights. In 1994 alone, pricing increased 15 percent.

The answer to the scarcity of space and the climbing rents: multi-level retailing.

Multi-level retailing works because the cost of space per square foot is more economical when compared to ground level leasing. A retailer can lease prime ground floor space in conjunction with less expensive, second floor or basement space - space that as office space would not achieve as high a rent potential. Aside from the economic draw, retailers are attracted to the showcase multi-level store because the large space allows for displaying a complete line of merchandise. As a result their customers are exposed to a variety of goods in which to chose from, increasing sales.

The push toward multi-level retailing on Madison Avenue was marked by the opening of Barney's New York uptown store, a move that was quickly followed by the Calvin Klein flagship store lease at 654 Madison Avenue, a 23-story building situated at the southeast corner of 60th Street.

Barney's, and much of the new retailing attention on Madison Avenue, can be attributed to the tremendous success "carriage" trade retailers have experienced on Fifth Avenue and 57th Street. The Madison Avenue area benefits from the boost in pedestrian traffic and the influx of new retailers along the Fifth Avenue and 57th Street corridor. Due to the scarcity of multi-level space on Fifth Avenue, this area is out of reach to most retailers, yet they still benefit from the Fifth Avenue traffic through a location on Madison Avenue in the 60s. Madison Avenue has become the clear choice for those who desire high pedestrian traffic, and require the large selling space found typically in Midtown office buildings.

Located on the same block as Barney's New York uptown store, Calvin Klein is in the middle of this major retailing center booming with activity. Calvin Klein's lease was one of the biggest leasing transactions on Madison Avenue, encompassing more than 20,000 square feet and occupying the ground and second floors, as well as the basement.

Ann Taylor is continuing the trend with a new multi-level flagship store at 645 Madison Avenue, the corner of 60th street, creating a southern "anchor" in the area. AnnTaylor, one of the preeminent women's apparel retailers, will occupy approximately 25,000 square feet on the ground level, the second and third floors, and part of the basement.

In addition, Prada, a major Italian retailer will occupy 13,000 square feet on a combination of ground, lower and upper floors at Madison Avenue and 70th Street, solidifying the presence of multi-level retailing on Madison Avenue.

These showcase stores are an innovation which create a favorable atmosphere for both the retailer and the building owner. Retailers obtain prime space and good visibility at more affordable rents than ground floor space. The building owner increases the value of the property by bringing in quality retailers to occupy floors previously dedicated to office use. These quality retailers renovate and enhance their newly acquired space - an added bonus for the building owner.

Madison Avenue has long held a reputation for exclusive retailers such as Ralph Lauren, Giorgio Armani, Gianni Versace, and other top designers. But ESG has brought new life into an already prosperous business center and helped to re-define the southern boundary of this high-end retailing district. With the emergence of multi-level retailing, the area around Madison Avenue has been made even better.

COPYRIGHT 1995 Hagedorn Publication
COPYRIGHT 2004 Gale Group