It’s the great white whale of Manhattan retail.
Aside from Walmart, Nordstrom is the store every retail broker in the city dreams of harpooning and reeling into a new home. One prominent broker familiar with the store, the amount of space it needs and the rents it would probably be willing to pay estimates that the commission for handling its lease would be around $10 million.
But like a leviathan lurking beneath the waves, the department store has offered only fleeting glimpses around the city, most notably at several development sites and a few existing assets with the capacity to accommodate its sprawling footprint.
The scuttlebutt nowadays: Nordstrom is contemplating one of two leases, one at the West Side rail yards with the Related Companies or another at the base of Extell Development’s soaring new residential tower now rising at 157 West 57th Street.
According to brokers familiar with Nordstrom’s search, the options are emblematic of the dilemma that has kept the retailer bouncing around Manhattan for years. The department store is ideally searching for a roughly 250,000-square-foot box, a commodity so rare in the city that the only major department stores that have it—Macy’s and Saks among a short list of others—are ones that have been established in the city for decades and hence had a chance to address their real estate needs before the market became as expensive and supply-starved as it is now.
The solution, of course, has been for Nordstrom to accept a smaller space with a layout that is atypical for a traditional department store. Many brokers say the template for this configuration is the Bloomingdale’s on Broadway in Soho, where the retailer had to greatly reduce the size of its store and tailor its clothing line and layout to appeal to the type of shoppers in that neighborhood.
A similar reshuffling of the Nordstrom concept would likely be necessary to bring the chain to Extell’s project, brokers told The Commercial Observer. The attractiveness of the rail yards stems from an assumption that the company could design a building from the ground up to meet all of its specifications.
But the rail yards are considered a new frontier in the city with little retail connecting the site to Midtown, making a deal there a gamble if the neighborhood takes longer than expected to develop into a popular destination for shoppers.
Extell’s development, though perhaps ill fitting for Nordstrom, would place it at the center of Midtown and near the Time Warner Center, a successful high-end retail mall in Columbus Circle that has helped designate the neighborhood as a retail hub.
Nordstrom has been linked to that area before. Last year, developer Stephen Ross bought the mortgage on the office building 3 Columbus Circle with the intent to foreclose on the property, raze it and erect a new tower with Nordstrom in the base. The deal fizzled when Joe Moinian, 3 Columbus’s landlord, held onto the property by recapitalizing the building with SL Green.
The trade-off between location and compatibility has been a conflict for the company for more than five years. Nordstrom almost had a deal to move into an office tower that was to be built by Stephen Ross and Harry Macklowe on the former site of the Drake Hotel at 57th Street and Park Avenue. A person directly involved in those talks said that lease eventually crumbled because Nordstrom pushed the physical limits of the project, insisting on towering ceiling heights and other amenities.
“They wanted 18-foot ceilings,” the person said. “You could literally do two office floors for every floor that they wanted. They placed themselves out of the game by needing too much.”
The office building at 650 Madison Avenue, not far from the Drake site, has also been a location that Nordstrom has considered. According to brokers, the issues plaguing that property centered around the likelihood that nearby department stores like Saks, Bloomingdale’s, Barneys and Bergdorf Goodman would balk at or even bar its vendors from supplying Nordstrom with the brands that they sell, which would essentially prevent Nordstrom from being competitive.
“None of the existing department stores are going to roll over and give into Nordstrom without a fight,” the broker said, adding that he wasn’t “100 percent certain that they have given up on 650 Madison.”
Perhaps out of necessity, the company has poked around downtown, reportedly checking out an anchor tenancy at the World Financial Center office complex as well as the retail being built at the World Trade Center. Here again, brokers said, Nordstrom has expressed a preference to be in Midtown.