NYC’s Herald Square: A Global Retail Hot Spot
Despite online sales growth, shoppers and retailers are flocking to Herald Square, helping push rents higher and ensuring the stores become their retailers’ number one sales location.
For the first time ever, more U.S. shoppers visited online retailers over the Black Friday weekend than visited physical stores, according to the National Retail Federation.
It’s a trend that is playing out across the globe when it comes to online and bricks and mortar shopping, with online markets providing intense competition for consumer spending that might previously have taken place in stores, says Susan Persin, senior director of research at Trepp.
Yet, the growing move online isn’t denting the prospects of Herald Square in New York City – which is proving itself as one of the hottest spots in global retailing.
Transformed to iconic status by the classic holiday movie Miracle on 34th Street, Herald Square has lately been experiencing a 21st Century miracle. A who’s who of global retailing has embraced a new concept, building huge stores in Herald Square to serve as global brand anchor sites.
That’s attracted tech-oriented employers to the area, boosting the office market, and sent retail rents skyrocketing. Average ground-floor asking rents have nearly doubled since 2010, rounding out at $890 per sq. ft. in the second quarter of 2015 up from $515 per sq. ft. five years ago, according to research from commercial real estate brokers CBRE.
Herald Square comprises the area around the original flagship store of the empire of retailing magnate R.H. Macy, at 34th Street and Broadway, Penn Station, which sees around 600,000 people travel through its corridors daily, Madison Square Garden, which draws more than five million visitors annually to sporting and entertainment events, and the Empire State Building – which anchors the area as a tourist destination.
“I view the 34th Street-Herald Square marketplace as a true shopping destination,” says Susan Kurland, executive vice president, CBRE Retail group. “When you look at Herald Square, it’s a much more upscale environment than it was in years gone by,” she says.
The district now hosts nationally renowned retailers such American Eagle Outfitters, Old Navy, Gap, Uniqlo, Levi’s and Fossil, according to CBRE research. The primary reason is sales. “You have some of the number one stores in several chains,” says Kurland. “On one corner you have Victoria’s Secret, and it’s the number one store in the chain. Then you have The GAP, and I believe that’s their number one store.”
This past spring, H&M opened its latest flagship store in Herald Square – the brand’s largest store in the world. That transaction “spoke to the strength of the market,” Kurland says. H&M already had two stores across the street from the new location on 34th Street. “It was proven ground for them,” Kurland says. “I assume that this will ultimately be, once they’re open for a period of time, the number one H&M store.”
The area’s roots as a transportation hub – which vaulted R.H. Macy to the top ranks of retailing – ensure a steady supply of shoppers. H&M’s new store sits on corner that typically ranks as one of the three or four busiest mass-transit stops in New York City, Kurland says. “You have a tremendous amount of mass transportation, so people can travel from all over to get to that location.”
Strategic location and transportation make 34th Street a miracle location for top global brands.
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