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MANHATTAN MALL STARTS OVER AS POWER CENTER

BY DONNA MITCHELL

The new owners have converted five of the original nine retail floors to offices.

The owners of New York City’s Manhattan Mall say they hope a recently completed reconfiguration will bring the success that has eluded the center for so long.

In December New York City-based Argent Ventures completed a $50 million reconstruction that has turned the midtown mall into an urban power center.

Manhattan Mall opened in 1989 as A&S Plaza, with eight levels of retail, plus a food court on the ninth story. That was way too high for New Yorkers, though. Happy as they are to ascend 40 floors or more to their offices, they don’t like climbing that far to do their shopping, observers say.

“New Yorkers are used to finding everything they need on the street,” said Robin Abrams, executive vice president of Lansco Corp., a New York City-based brokerage firm. “It’s always a challenge to get people to go out of their way.”

Originally, of course, an A&S department store anchored the mall. Children’s apparel wholesaler Childrenswear Center occupied four floors of office space above the retail.

The mall, which included such stores as KB Toys, Sam Goody and Strawberry, were considered too ordinary and low-end for the mainstream shoppers that passed through the area, says Karen Bellantoni, a senior managing director of retail brokerage at Robert K. Futterman & Associates, a New York City brokerage firm. Shoppers generally saw A&S as the stepchild to Macy’s.

“Why would you go to A&S, when you could go to Macy’s a block away?” asked Bellantoni.

In April 1995 Federated Department Stores renamed the property Manhattan Mall and turned the A&S into a Stern’s. But not even this could overcome a basic and persistent problem: the mall’s vertical layout.

In 1999 Argent bought the mall from majority-owner Japan-based Sumitomo Life Realty by assuming the debt, a reported $130 million, and set about the task of revising it as an urban power center. Now, with that work completed, nothing inside Manhattan Mall is out of the way for shoppers, the owners say.

Shoppers at the midtown mall are greeted with a brighter interior and new national retail tenants.

Argent converted five of the nine retail levels into 440,000 square feet of offices. These are occupied by about 4,000 people each day.

“I think it is a very smart move, because it was tough to support retail on those upper floors,” says Lansco’s Abrams. “But I do not think it is those [office] shoppers that will make or break the success of the retailers below.”

Consumers who want an orderly shopping environment where they can bring families on the weekend, commuters and tourists are among the shoppers that will drive sales at Manhattan Mall, says Argent COO Mark Teitelbaum.

The four retail levels now take up 155,000 square feet of space. The food court has been moved to the concourse level, where it can draw traffic from the subway system and the PATH train network.

Now Manhattan Mall features such national retailers as Bath & Body Works, Brookstone, Express and Victoria’s Secret. Charlotte Russe opened its first Manhattan store in the mall in April 2003. All that is left for Argent to lease now is some 35,000 square feet of retail space, which may go to a big-box tenant, says Teitelbaum.

Argent also gave the mall’s interior a sleeker, more subdued look. Gone are the purple paint and the neon lights that were supposed to give Manhattan Mall a glamorous Hollywood look but just made the place look glitzy instead. The original architecture has stayed, but the walls and columns have been painted white to tone them down, Teitelbaum says.

The food court, decorated with a Miami Beach theme, is far from tame. Music thumps through the dining area, and one wall is dotted with light boxes and video screens streaming sports and other entertainment.

Argent says the revamp is already paying off. Before the work got under way, stores on the lower levels posted sales per square foot of between $1,000 and $1,100 on average, while the upper-level stores took in about half that, says Teitelbaum. Some retailers, such as Express, had their best- or second-best-performing store nationally at the Manhattan Mall. Mothers Work, for one, pulled in about $800 per square foot before the repositioning, industry sources say. Ultimately, Argent would like the stores to post sales per square foot of between $1,000 and $1,400 on average, regardless of where they are located. Anything less than that would be disappointing, Teitelbaum says. The busy midtown business district will provide plenty of customers, and there is little chance the mall will lose out to stores on 34th Street, Abrams says — even the ones that are duplicated, like Express.

“One hundred million people a year pass through the corner of 34th and Sixth Avenue,” said Teitelbaum. “It is a matter of giving people a reason to come in.”

The mall could work, finally, in the opinion of Andrew Mandell, a retail broker at New York City-based Ripco Real Estate Corp., which leases the property for Argent. “The mall,” he said, “looks current and upscale.”

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