Sutton’s Place: Finding the King of New York Retail

Mr. Dolce makes time for him, American Girls love him, Herald Square owes him—and you can bet Jeff Sutton has no comment

Mr. Sutton’s was simple enough, if risky: he would get the lease first and the space second, using the money from the lease to buy the space. (Normally, in retail, a broker shows vacant space and the tenant takes what’s available, the equivalent of your last apartment hunt. Mr. Sutton created a universe where retailers could take spaces whether they were vacant or not.) He tried the idea out first on Payless Shoes in the early 1990s, when the retailer wanted to break into the New York market.

He would drive Payless executives around Brooklyn, Queens, the Bronx and Upper Manhattan, and he would ask them where they wanted stores. They would point to a storefront; and Mr. Sutton would then go to the storefront’s tenant and offer to buy him out. If that didn’t work, he would offer to buy out the landlord, and in some cases made the tenant he was representing his own subtenant. It worked.

Mr. Sutton took his idea to choicer Manhattan in the late 1990s, starting with CVS, and grew from there, eventually connecting with Mr. Mathias at SL Green. For a time he partnered with other Syrian Jews from his neighborhood, but that seems to have tappered off (perhaps the dollar amounts got too large to be comfortably transacted with the neighbors?). On the other hand, SL Green, which today owns roughly 5 percent of New York City’s commercial space, had phenomenal capital at its disposable, as did Mr. Sutton’s Wharton Properties. The spree was on, though it would take some time for the rest of the industry to notice. “What can you say?,” Ms. Consolo said. “He went from Queens Boulevard to Fifth Avenue.”

His countenance changed as the deals got bigger (the American Girl acquisition at 609 Fifth in 2002 really put him on the map). According to those who know him well, Mr. Sutton went from rather brash and somewhat bombastic, a bit tactless even—the classic New York comer—to more refined and quiet, a confidence in his abilities calming him a bit, as one person put it. People universally say he’s a nice guy, a genuine article in an industry that can seem oleaginous to the extreme.

There was not a need to hustle so much. He was scoring over and over, commanding some of the highest retail rents in the nation, even through the Great Recession. The rent of the American Eagle store at 1551 Broadway averages $20 million for the life of the lease; for Aeropostale, it’s north of $11 million; for American Girl, it’s about $7 million; for the new Dolce & Gabbana, it will be $16 million for the first year alone, according to a source with knowledge of that and other deals.

 

ALL THE WHILE, Mr. Sutton has lived a quiet, private life in Gravesend, where he grew up (his grandparents were all immigrants). The neighborhood, at least an hour’s commute from midtown, is perhaps best known as the boyhood home of playwright Arthur Miller and as the site of the bank robbery that inspired the Pacino classic Dog Day Afternoon (“Attica! Attica! Attica!”).

And while it may be quiet, it is far from quaint—the borough’s reigning record home sale was $11 million in 2003 for a 3,600-square-foot spread that was immediately torn down to build a mansion nearly three times the size. The neighborhood also claimed 2009’s biggest deal: $10.26 million for an 8,206-square-foot house. The Observer noted this past spring that the Sephardic Jewish community to which Mr. Sutton belongs fuels much of the demand for this top-end real estate. They want to raise large-for-New York City families in a neighborhood centered around Shabbat. (“If your mandate is be fruitful and multiply, and you’ve got eight or 10 kids, you run into a supply-and-demand issue very quickly,” one top Brooklyn real estate executive said, speaking anonymously for fear of running afoul of fair-housing laws.)

Nevertheless, Mr. Sutton could afford Central Park—less of a commute to his 54th-floor office at 500 Fifth Avenue, which, according to a source who has been there, features baronial views and a wet bar stocked with 30-year-old scotch (which is probably more ceremonial than anything as Mr. Sutton, by all accounts, is nearly a teetotaler). It’s his second office. He had the first, at 46th Street and Madison Avenue, for about 15 years; it was much smaller and more cramped, while the current one unfolds graciously for Wharton’s 10 or so employees. But, according to people who know him, he wants to raise his five kids in the Gravesend community.

We tried to ask him about that in another phone call this week—about the big deals (particularly about the Dolce & Gabbana one, which closed in July) and the million-dollar rents, the commutes from bellicose midtown to far-flung Brooklyn, the early days in the boroughs with the discount shoes.

But Jeff Sutton, again, would not comment.
tacitelli@observer.com

 

Comments

  1. Bill says:

    Nice work Jeff!