Location: Your family has been involved in real estate for decades, owning various commercial, industrial and residential buildings throughout New York City. But a shopping mall? Retail is a new frontier for the Hemmerdinger clan, no?
Mr. Hemmerdinger: The interest in retail is all me.
What’s the allure?
Retail is about people and how they spend their time and how they spend their money. Your success in retail is directly tied to whether you enhance the quality of other people’s lives. I think that’s pretty remarkable. On the landlord-tenant side, with office or housing, the owner has a commodity and the tenant wants the commodity. You can be a law firm here or there. You might like this one better, but at the end of the day, it doesn’t matter to the core of your business. Retail is not like that. Tenants need developers to create projects with enough synergy, putting enough of the right tenants together, to be successful. It’s just a completely different animal.
You’ve built the Shops at Atlas Park in Glendale, Queens, on land that has been in your family for a long time.
About 80 years. It used to be about one million square feet of industrial park. At that point, there were real companies doing real work. There was a company called International Container that made most of the cardboard boxes in the U.S. There was a company called Victoria Vogue that made powder puffs. General Foods had a small operation here. …
Starting in the 1960’s, manufacturing started to fall off in the city. By the late 1990’s, it was mostly used for storage. It went from being real tenants doing real things to smaller businesses just really trying to hang on for dear life. …
We needed to do something. And we looked at all sorts of uses. We looked at an office park. We looked at housing. We looked at movies, soundstages, big-box retail …
We thought about everything. But we realized a couple of things. First, that there’s a surprising concentration of affluent house-holds in this area. Now, affluent means a lot of different things to different people. What I mean is people with income to spend on leisure time and on buying things that they don’t necessarily need.
If you look at households earning over $100,000, there are many, many more hundred-thousand-dollar households within three and a half miles of this site than within three and a half miles of downtown Stamford, Conn. Yet, Queens has less than half of the national average of square feet of retail per person—that’s all together, from car dealerships to delis. Compared to, say, Atlanta, it’s actually about a third. There’s roughly nine and a half square feet of retail per person in Queens. Twenty is the national average. Atlanta is 28.
What we wanted to do was create a place where, if you lived in central Queens or eastern Brooklyn, this could be a place where you choose to come for all kinds of different reasons. You might come at 7 o’clock in the morning to exercise. Then you might come back at night to have dinner with your girlfriend, or you might come back on the weekend to come by with your nephews to go to a movie or go to the toy store.
Glendale certainly isn’t exactly known as a shopping mecca. Has it been hard to convince retailers to open here?
Yep. But beyond Glendale, Queens has an image, it’s very kind of specific—you know, Fran Drescher, Archie Bunker and the King of Queens all pushed together. Maybe it was once true, or maybe even it’s still true for some people, but it doesn’t describe all of the two and a half million people that live here. And trying to explain to Coldwater Creek that their customer lives here is hard. Even now, we speak to national retail brokers or retailers’ in-house real estate people, and they’ll say, ‘I’m not interested in Queens.’ It’s hard to know what that means. It’s the entire population of San Diego county!
It’s more than the entire population of the state of West Virginia.
Right. It’s bigger than 19 states. To dismiss it before you even look still doesn’t make sense to me. But it happens all the time.
Is it a good deal, rent-wise, for retailers to come out to Glendale?
It is. We’re sort of still proving the location. And so the tenants are pushing some of the risk onto us. The deals are structured in a way that we’re bearing more of the risk of it not working. So, when it does work, we get a larger piece of the upside than otherwise. And the rents differ wildly depending on your location within the project, the kind of product you sell, your power as a brand and as a tenant.
Still proving the location, yet you’re already thinking of expansion?
This part is 400,000 square feet on 12 acres. Phase two is six more acres, probably as much square footage as this, and there will be more development later on. We’ll basically double the size.
Handing out cash can’t hurt the cause. All these giveaways have brought the project some considerable publicity. Why did you decide to dole out $20,000 of your own savings?
I know a number of people in retail—not in Atlas Park, but other places around the country—who had separately said to me that in the third week of October, their customers stopped showing up, virtually overnight. Those people just weren’t going out. Then, I started to hear, in late January, early February, lots of people saying, ‘Gee, this is going to be bad until the election.’ I think that’s self-fulfilling. So much of our economy is based on perception and confidence. If everybody believes that it won’t be better till November, then it really won’t be better till November.
The impact of that at Atlas Park was no worse than anywhere else. But it was dramatic. Because some of the businesses here are locally owned and people put themselves on the line. I really wanted to do something to show those people, our tenants, our customers, that we can all actually do something. The only way that it will get better is if we all decide to believe that it will.
There’s this Gandhi quote, ‘Be the change you want.’ While Gandhi and I have almost nothing in common, I wanted to do something. I wanted to make the point in a way that people will hear.
I thought that using dollar bills as the message to ask people to get back out and either invest or save or spend but do something might strike a chord and might therefore be heard by people. Or at the very least make some happy people in Queens. So we’ve been giving away $20,000, which came out of my savings account.
How did you arrive at that figure?
There’s no good answer to that. We gave away $200 a day around Queens in all kinds of locations for 25 days. Then 60 days of giveaways at Atlas Park as well.
Why spread it around and not just do it here?
Atlas Park is obviously part of a much bigger economy, and it’s not as big a part of the economy as it might be someday. So we went around the borough to all kinds of locations. As we handed dollar bills out, we asked people to spend it or invest it that day.
That’s the caveat.
Yeah. We didn’t ask people to actually promise. But we asked them to spend it that day. One woman bought a hamster with it.
What’s the most striking reaction you’ve witnessed?
It doesn’t surprise me that some people were skeptical, but I’d say most of the people that I tried to give dollar bills to wouldn’t take them. Only in New York! They just keep walking. They avoid eye contact at all costs. Which is what New Yorkers do to crazy people in the street.
There’s actually some great video of some of the people’s reactions, if you want to see—it’s on YouTube.
Follow Chris Shott via RSS.