In June 2012, Nordstrom (NYSE:JWN) announced plans to build a new 285,000-square-foot flagship store in midtown Manhattan, just a few blocks from Central Park. This store will take up the lower seven floors of a new 1,550-foot-tall skyscraper that is currently under construction.
The Nordstrom Manhattan flagship is still a few years away from opening. However, this week, the company finally provided some more details on the layout of what will likely become its highest-grossing store.
Nordstrom snaps up more real estate
Late last year, the New York Post reported that Nordstrom was interested in a roughly 40,000-square-foot vacant space across the street from its under-construction flagship. Many observers speculated that this might become a Nordstrom Rack off-price store.
Sure enough, Nordstrom signed a lease for 43,000 square feet at 3 Columbus Circle in January. However, the space will become a stand-alone Nordstrom menswear store rather than a Nordstrom Rack, and it will be considered a part of the flagship. This follows the example of fellow upscale retailers Bergdorf Goodman and Saks Fifth Avenue.
In fact, this was the third nearby property for which Nordstrom has signed a lease to expand its Manhattan store footprint. Nordstrom has also leased a total of 28,000 square feet of space in two buildings that are adjacent to the main store building.
Looking to stand out
If there is one weakness to the site of Nordstrom's Manhattan flagship, it's that it is a mid-block location. However, Nordstrom intends to make its store stand out with a distinctive curving glass facade.
Furthermore, it will gain an entrance on Broadway near the corner of 58th Street through one of the smaller adjacent properties it is leasing. This 8,000-square-foot space will be connected to the main store. The other 20,000-square-foot space Nordstrom is leasing -- also attached to the main building -- will extend to the corner of Broadway and 57th Street.
Expecting high sales
When Nordstrom first announced its planned Manhattan flagship in 2012, Peter Nordstrom told Bloomberg, "We fully expect this to be our most successful store." The company hasn't offered any further details of its financial projections for the store. However, based on the performance of other major Manhattan luxury retailers, it's possible to get a sense of Nordstrom's opportunity.
The 646,000-square-foot Saks Fifth Avenue flagship typically produces about $1,000 in sales per square foot. (This compares with less than $400 per square foot for Saks' other full-line stores.) The more than 800,000-square-foot Bloomingdale's flagship appears to be in the same ballpark.
Including all four buildings, Nordstrom will have 363,000 square feet of space for its Manhattan flagship. Thus, the new store could bring in $300 million to $400 million in annual sales if it performs at the same level as the Saks and Bloomingdale's flagships. This could account for up to 2% of Nordstrom's companywide sales, based on its goal of producing annual revenue of $20 billion by 2020.
Nordstrom's highly anticipated Manhattan location is now expected to open in 2019, compared with an original target of opening in 2018. When it does arrive, it should provide a nice boost to Nordstrom's lucrative full-price business.