Hudson Yards is now offering curbside pickup from select retail tenants, but the fledgling luxury shopping mecca is said to be courting fresh prospects to take over some of the square footage currently occupied by bankrupt Neiman Marcus.
Related Companies, a co-developer and landlord of the 18-million-square-foot property, seems to be keeping its options open and is reportedly in talks with Facebook, which is said to be interested in assuming the department store’s lease and expanding its current footprint in the development, WWD reported.
Before securing Neiman as an anchor tenant, Related had previously wooed other prospects, including Nordstrom, whose leadership team passed on the Hudson Yards opportunity over concerns that the site would take more than five years to turn a profit.
Neiman has secured $675 million in debtor-in-possession financing to fuel operations at its 67 stores through the bankruptcy. Earlier this month, CEO Geoffroy van Raemdonck said the funding offers sufficient liquidity for the chain to restart store operations, invest in inventory for the fall season and bolster its digital presence.
According to Hilldun Corp. CEO Gary Wassner, “Neiman was moving in the right direction [before the filing] and it’s moving in the right direction now.”
However, like Nordstrom and J. C. Penney, both of which are whittling down their fleets, Neiman will “probably come out from bankruptcy as a scaled down version with some store closures,” added Wassner, whose factoring firm provides inventory financing to many high-end designers who sell to luxury retailers like Neiman Marcus and Saks.
The Hudson Yards flagship—a sprawling 188,000-square-foot, three-floor affair—seems the most ripe for closure. Believed to have been enticed to commit with the promise of low rent, Neiman was just one year into the space when the coronavirus pandemic put discretionary retail on ice.
Still, a spokesperson said Neiman remains “confident in the performance of our overall store footprint,” noting the company’s bankruptcy is designed to offload $4 billion in debt. Plus, the spokesperson pointed out, “stores that have been open for more than a year prior to COVID-19 are 4-wall EBITDA positive.
“That said, we always assess our stores based on our footprint to ensure it is optimal to enhance revenues and overall profitability, as well as how each store can best support our omnichannel strategy,” the spokesperson said, adding that “any related discussions with landlords are confidential.” Neiman has more than 90 percent of its stores servicing customers to some degree, whether by private appointment, curbside fulfillment or regular (though socially distant) shopping.
“All of our stores are scheduled to reopen in the coming weeks as local and state mandates allow and as we feel it is safe to do so,” the spokesperson said.
Currently, over 90 percent of the store fleet is open to some degree—either curbside pickup, private appointment, or full shopping, or some combination of those, the spokesperson said.
The Bergdorf Goodman brand is providing same-day Hamptons and Manhattan delivery service, as well as an option for customers to schedule private in-store appointments. Customers can also opt for curbside pick-up at its two Manhattan store locations.
Though talk of Neiman Marcus potentially pulling up stakes from a risky mall venture like Hudson Yards might spook some tenants, Naadam isn’t concerned about the anchor’s possible departure. What really matters, said CEO Matt Scanlan, is the kind of company that would take Neiman’s place.
Unlike some retailers that stipulated co-tenancy clauses in their rental contracts, “we didn’t put that in there because that’s not our customer anyway,” said Scanlan, who co-founded the affordable cashmere clothing company in 2013. A new office tenant, which would bring steady occupancy—and thus footfall—to the space would better serve Naadam’s demographic, he added.
Whether Neiman Marcus pulls out of Hudson Yards “is not really a concern of ours,” Scanlan said.
Hudson Yards launches curbside pickup
Meanwhile, Hudson Yards has reopened for curbside delivery as permitted by Phase Two of New York City’s reopening plan, it said Friday. So far 25 restaurants and shops are participating in the program—and Neiman Marcus is not on the list.
Shoppers are able to purchase and pick up from Athleta, B8ta, Banana Republic, Cartier, Coach, Dior, Fendi, Kate Spade, Rhone, Stuart Weitzman, Theory, Tod’s and Uniqlo. Hudson Yards instructs customers to call the stores directly to place orders, and have the store associate confirm the time and color-coded location for pickup. Customers then alert the associate upon arrival. Hudson Yards’ three color-coded zones include the yellow zone by the taxi stand on Hudson Blvd., the green zone adjacent to the 10th Ave. taxi stand, and the blue zone slightly further north on 10th Ave.
Many of the mall’s tenants are opting for a wait-and-see approach before rushing out curbside service. Naadam, for one, sees moving into this kind of omnichannel operation as a heavy lift it wasn’t quite ready for, according to Scanlan, who said the digitally native brand has yet to invest in the back-end technology to connect the click-to-brick dots—largely because customers haven’t pushed for it.
“We didn’t know if anybody was going to do that so we said, ‘if it works, and other people are doing it, then we’ll do it,’” Scanlan told Sourcing Journal of why Naadam is sitting out on the curbside craze for now. “But we’re not going to be the first one to sign up without knowing what the return on investment in time was going to end up looking like.”