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Faith Hope Consolo
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In the News

Downtown Goes Upscale

Is Wall Street becoming the new Fifth Avenue?Drawn by some of the country's wealthiest households, a daytime work force that is doing even better, a bevy of swank condominium projects and relatively low commercial rents, blue-chip retailers are for the first time beginning to covet the street synonymous with money. Last week venerable jeweler Tiffany & Co. said it is bringing its trademark blue boxes to the neighborhood of the New York Stock Exchange. That followed Paris fashion house Hermès's disclosure earlier this year that it would open a store across from the Big Board.

37 Wall Street (future home of Tiffany)For now, the upscale retailers are focused in the immediate vicinity of the stock exchange at 11 Wall St. But retailers and developers who have watched a surge of luxury condos open in Lower Manhattan over the past three years believe the announcements could be the beginning of a broader transformation as high-dollar retailers follow their high-rolling customers downtown.Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman, says she has a dozen luxury-retail clients that have begun looking in the financial district in the past six months, including a "very big Italian shoe company and a French perfumery that are in negotiations now. They haven't put their toes in the water; they've put their arms and legs."

"Luxury is going to own the financial district by the end of this year," she adds.The south side of Wall Street from the exchange to the East River is almost all residential now or being converted to it. The fusty former headquarters of J.P. Morgan is being converted into Downtown by Philippe Starck, where condo units go for a minimum of $1.2 million. The new Hermès is moving into the first floor. Tiffany will set up shop next door at 37 Wall Street at the base of the former Trust Co. of America building, now being turned into luxury apartments.

Down the street model Naomi Campbell, actor Bruce Willis and movie producer Harvey Weinstein are moving into the former 55 Wall Street, which once housed the stock exchange, last was a luxury hotel and now is being souped up as the pricey Cipriani Club Residences. Last week real-estate broker Dolly Lenz flew to London to host a lunch for the Duchess of York and 80 of her closest friends -- to promote the Duchess's coming book and to help sell luxury condos at 55 Wall Street. By the end of a seven-hour event that also included breakfast, tea and cocktails, Ms. Lenz sold two luxury apartments at the building to friends of the Duchess.

Even without royal friends, Lower Manhattan has among the best demographics in the country: A residential population with median household income of $87,000 -- roughly twice the New York City average -- and more of that income to spend because 81% have no children, according to the Alliance for Downtown New York, a nonprofit group representing business and property owners. Defying expectations after the Sept. 11, 2001, attacks, the population of Lower Manhattan, south of Chambers Street, has swelled to more than 36,000 from 20,000 before terrorists brought down the Twin Towers.

"It's an ideal place for high-end retailers," says Carl Weisbrod, president of Trinity Real Estate and a former head of the Downtown Alliance.

Add to that the 311,000 workers who spend most of their weekdays in the area, and retailers have an underserved market. About 212,000 of the workers downtown are private-sector office workers who make $136,500 on average. Just yesterday BearingPoint Inc. announced that it will locate 633 workers in the World Financial Center, a major downtown office complex owned by Brookfield Properties Corp., in exchange for up to $3.1 million in state and city subsidies.

Those well-paid workers already have fueled strong starts for BMW AG and Hickey Freeman, an upscale men's wear store, which both opened stores near the stock exchange last year. "Since we opened in September of last year, we have been building our client base faster than anticipated with repeat customers, and exceeding our planned sales goals," says Paulette Garafalo, group president of Hickey Freeman and Bobby Jones.

That doesn't surprise Alan Napack, director of retail services at New York-based commercial real-estate services firm Cushman & Wakefield Inc. "A guy just made that $2 billion deal, why not head down to BMW and pick up a couple of 745s?" he asks.Luxury retailers also are attracted by the much lower rents downtown. Fifth Avenue rents have reached $1,400 a square foot, compared with $38 for space in the average American mall and $60 to $225 in Lower Manhattan.Still, the question remains: Is this enough to make the financial district the next frontier for Manhattan luxury retail? SoHo once seemed like the likely successor to Fifth Avenue, but luxury retailers have had mixed success there, says Ms. Consolo of Prudential Douglas Elliman.

For all its riches, Wall Street has never been a retail center, says John Steele Gordon, a historian and author of "The Great Game," a history of Wall Street. Once a fashionable place to live -- when George Washington gave the first Inaugural Address there in 1789, Wall Street was lined with the houses of the rich and famous -- the street became a financial hub within decades.

Today, while Fifth Avenue has Bulgari, Louis Vuitton and Bergdorf Goodman, Wall Street has small personal-service outlets including a tanning salon, a shoe-repair shop and a fitness center.

Since Sept. 11, Wall Street has been mostly blocked off to cars and pedestrians must negotiate a maze of security precautions. It will need to continue to make itself look less fortress-like if the city wants to draw shoppers to the area.

Perhaps the biggest unknown downtown is the redevelopment of the World Trade Center retail space, which had been located under the Twin Towers. At least 500,000 square feet -- about half the size of an average shopping mall -- of retail space is planned for the three new WTC buildings and a train station on Church Street.But much will depend on the configuration of the new space, which still must be negotiated by World Trade Center developer Larry Silverstein, the Port Authority of New York and New Jersey and Westfield Group, which controlled the WTC retail space before Sept. 11 and maintains a legal "right of first offer" on any new retail development there. Westfield is likely to exercise that right, says a person familiar with the company. The World Trade Center mall was one of the highest grossing retail spaces in the world, bringing in sales of $900 a square foot, then more than triple the national average.

After the Sept. 11 attacks slowed growth downtown, government subsidies helped lure residents and corporations back downtown in the years following the attacks and the residential population has jumped by 61% since 2001. To serve that rising clientele, Bobby Van's Steakhouse opened last year, and after a three year hiatus, Harry's, a Wall Street institution, just reopened with a cafe and a steakhouse in India House."The retail community recognizes the buying power in Lower Manhattan and isn't waiting for some of the larger things to happen," says Eric Deustch, head of the Downtown Alliance.

For Tiffany, it is a homecoming of sorts, and the move tracks the evolution of New York itself, says Mr. Gordon, the historian. Its first store opened on Broadway just around the corner from Wall Street in 1837, but as the city's population exploded and the fashionable neighborhoods gradually moved uptown, Tiffany followed, first to Union Square, then to 37th Street and finally to its current store at 57th and Fifth Avenue in 1940.

Hillary Smith, an assistant at trading-floor firm Bear Wagner Specialists LLC, which has offices in the Trump Building at 40 Wall Street, says the new stores will make her job easier. "A lot of times we have to go to Tiffany's, and we get the car service and go all the way uptown" to get personalized gifts for clients, she says. It will also be good for some of her co-workers, Ms. Smith adds. "They always forget their wives' birthdays."

 

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