Manhattan’s Neiman Marcus And Saks Fifth Avenue Stores Belonged On Street Corners, Not In Malls

Just a few years ago, it appeared that department stores might be making a comeback. Neiman Marcus and Saks Fifth Avenue were named as anchor retailers in two separate large-scale projects in New York City. Both retailers received praise and publicity for these new stores. But much has changed over the past few months and years.

At a cost of $25 billion, Hudson Yards is the largest mixed-use private real estate venture in the nation’s history. Its collection of commercial and residential skyscrapers is billed as “the neighborhood of the future.”

It seemed like a real coup when Hudson Yards announced in 2014 that Neiman Marcus would anchor the project’s luxury retail component. Related Companies and Oxford Properties spent $80 million on the construction of the 188,000-square foot store. The high-end retailer was designed as the cornerstone of the upscale indoor shopping mall, along with “Vessel”, a 16-story climbing structure.

As Manhattan’s first Neiman Marcus, its inclusion convinced Cartier, Chanel, Dior and other luxury businesses to locate at Hudson Yards. Many of their leases are contingent on Neiman Marcus’ continued presence.

On March 15, 2019, Neiman Marcus opened its “multi-level retail experience” at Hudson Yards. The new location featured high-end designer merchandise along with four restaurants, a digital styling lounge, fine art installations and arcade games. 

But Neiman Marcus has been drowning in debt for several years. The retailer even explored pulling out of the Hudson Yards complex during its construction phase. And since its opening, the company’s situation has further deteriorated. Neiman Marcus filed for Chapter 11 bankruptcy protection on May 7.

It hasn’t been an easy time for Hudson Yards either. Critics have called the immense complex “antiseptic,” “artificial,” and “devoid of urban design.” It acts as a city within a city but has yet to attract the kind of New Yorker willing to make return visits.

Located on the city’s Far West End, far from Manhattan’s retail and commercial core, it’s a long walk from Herald Square. The city even constructed a special subway line to help connect it with the rest of Manhattan. And once customers finally make their way to Hudson Yards, they have to travel to the fifth floor just to enter the Neiman Marcus store.

“No department store that starts above the first floor of a building has ever succeeded,” says retail consultant Jan Rogers Kniffen. “So, I thought that store was toast from the day it was designed.” Kniffen also cites Neiman’s severe financial troubles, including a debt load much too large for the retailer to maintain a status quo. “Can Neiman’s exist as a much smaller company? Maybe,” says Kniffen.

The Neiman Marcus at Hudson Yards began fulfilling online orders on June 8. Amber Seikaly, Vice President of Corporate Communications for the Neiman Marcus Group, states that none of its stores are slated for closure. “We plan to reopen all 43 locations by July. Nearly 90% of our stores have reopened in some capacity. 38 are providing curbside service; nearly half have reopened to clients via private appointments.”

The company provides an optimistic outlook for its stores, especially the Hudson Yards location. However, rumors circulate that the store may not fully reopen. Earlier this week, Business Insider reported that project developers, Related Companies and Oxford Properties, have been quietly marketing the Neiman Marcus space to potential office tenants.

Neiman Marcus’ experience at Hudson Yards contains some eerie parallels to the short-lived Saks Fifth Avenue at Brookfield Place. Brookfield Place is an office-retail complex located in lower Manhattan and was formerly known as the World Financial Center.

When Brookfield Place planned to upgrade its tenant mix, it turned to Saks Fifth Avenue to join its roster. It was hoped that Saks would lend prestige to Brookfield Place as a shopping destination.

Upon its 2016 opening at Brookfield Place, Saks officials declared, “We could not imagine a better and more fitting location.” The statement proved to be flawed. Even though it was located just a few blocks from New York’s core financial district, it was far away from potential customers who worked and lived in the immediate area.

The addition of a separate men’s store in 2017 did not bolster Saks Fifth Avenue’s performance at Brookfield Place. Both stores were modest in size and awkward in layout. Both had minimal street-level frontage and mostly relied on shopping center pedestrian traffic. 

Within just two years, Saks abandoned its Brookfield Place location. Its parent company, HBC, or the Hudson’s Bay Company, commented that they were only “experimental stores.” HBC stated that data indicated that Lower Manhattan shoppers preferred online shopping or visits to the Fifth Avenue flagship store.

Jan Kniffen is not surprised that the Brookfield Place Saks stores had such a short tenure. “Those stores never made sense. They didn’t have any traffic from day one. Every time I visited, I was the only customer.”

The Brookfield Place Saks Fifth Avenue store was not replaced by another retailer. Convene, a flexible meeting and workspace provider, currently occupies the former department store space.

Last October, Nordstrom opened a new flagship store on Broadway, just south of Columbus Circle. Its opening has drawn considerable attention. Residents and foreign visitors are intrigued by the city’s first Nordstrom which, unlike Neiman Marcus and the Brookfield Place Saks, is located in the heart of Manhattan. And unlike the Neiman’s and Saks, it enjoys high pedestrian traffic flow on its exterior sidewalks. Since its opening, Nordstrom’s seven restaurants and bars have become popular culinary and social destinations.

In spite of this success, there is concern with the new Manhattan Nordstrom. The project, seven years in the making, came with a hefty price tag, upwards of $500 million. Its financial profitability at its Manhattan location is dependent on sales figure that meet or greatly exceed expectations. The recent COVID-19 closures must have only complicated these lofty sales projections.

Department stores are a risky business and New York is one of the world’s priciest markets. Saks’ short tenure at Brookfield Place proved that its customers and visitors wanted to shop at its Fifth Avenue flagship, not at a secondary location in an upscale mall. The Hudson Yards project has failed to capture the excitement of the city. It is not geared toward pedestrians, the lifeblood of Manhattan.