Fashion tip: Barneys bound for Union Square
Sarah Duxbury
Barneys New York is getting ready to try on San Francisco.
Zeroing in on almost 60,000 square feet of retail space on Stockton Street, the upscale New York City fashion institution is primed to join the increasingly competitive fray of Union Square. Combined with next year's opening of Bloomingdale's, Barneys would bring the number of department stores within a five-block radius to six.
Barneys, purchased by Jones Apparel Group for $400 million last December, has ample cash to expand and has been looking for a spot for its first San Francisco store for more than a year. The Westfield San Francisco Centre was eager to win them as an accompaniment to the impending Bloomingdale's, but Barneys looks most likely to settle in the former home of FAO Schwarz at 47 Stockton St. That building, across the street from Macy's and Crate & Barrel and one block south of Neiman Marcus, has remained about three-quarters vacant since FAO Schwarz closed three years ago.
Expectations are that Barneys will sign a lease within several weeks. The company said it would not comment before a lease is signed, and a broker for the landlord said a deal is not yet in place.
"(Barneys is) certainly a tenant we continue to talk to, but nothing has been done," said Vikki Johnson of broker Johnson Hoke.
Other retail brokers believe a deal is imminent.
"They are way down the road on this site," said Julie Taylor, a broker with GVA Whitney Cressman. "It is all but confirmed."
Size-wise, 47 Stockton fits with Barney's criteria for a flagship store, which are all bigger than 40,000 square feet. Rent on the building is likely to range between $1.6 million and $2 million a year, according to sources familiar with the area.
Existing tenants Birkenstock and Ghirardelli, which have active leases in the building, would have to relocate to make way for Barneys. Only 30,000 square feet of the five-story building is currently vacant, with just 5,000 of them on the ground floor. Birkenstock has 17,900 square feet on the ground and basement floors, and Ghirardelli has about 1,200 square-feet at street level.
Fabrizio Parini, CEO of Ghirardelli, said that he has been told by the building's broker that a master tenant is eager to take over the entire building, including Ghirardelli's retail space. Parini said he has over four years remaining on his lease and will not finalize any agreement before Christmas. Birkenstock did not return a call seeking comment.
Barneys is eager to expand and has enjoyed same-store sales growth in excess of 15 percent for the past two years, as the luxury retail market boomed.
Howard Socol, president and CEO of Barneys, said in February 2003 that the company would open two new Barneys department stores by 2007.
In April, 2005, Barneys signed a 46,000-square-foot lease at Copley Place in Boston to open its first new flagship store in more than 11 years. It will open in the spring of 2006.
The company has flagship stores in New York, Chicago and Beverly Hills, with additional full-service stores in Seattle, Manhasset, N.Y. and Chestnut Hill, Mass. It also has seven, smaller and trendier Co-op locations, which it began expanding outside of New York City in 2003, and 11 outlet stores around the country.
Following this month's opening of European fashion retailer H&M, Barneys will be "a tremendous catalyst for Stockton Street," Taylor said. "Both Stockton and Powell have, within a year's time, brought in two tremendously powerful retail anchors, strengthening those north-south corridors."
That strengthening reflects the general firming up of the Union Square area, where vacancies are falling and rents have again begun to rise.
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