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U.S. Department of State

Diplomacy in Action

U.S. Retailing - Trends in a Changing Industry

Ellen Davis, Vice President, National Retail Federation and Kenneth Himmel, Related Urban Chief Executive Officer
New York, NY
December 15, 2011

1:00 P.M. EST


MS. GRUNDER: Good afternoon, everyone. I’m Alyson Grunder, Director of the Foreign Press Center. I’m very glad that we have you here. I know there are some stragglers still coming.

I really want to thank Time Warner Center and the Related Companies for hosting this panel briefing this afternoon. And I also want to get right to the program because I know this is the busiest season of the year for everyone. We’re going to start with Ellen Davis from the National Retail Federation. She is in Washington, and she is speaking to us even though she has a terrible cold. So I really, really appreciate that she’s able to do that. And then we will follow with Kenneth Himmel, who is president and CEO of Related Urban, the developer of the Time Warner Center.

MS. FEDER: And afterwards -- I am Stacey Feder for Time Warner Center -- and my colleagues and I will be offering a tour of the shops and the restaurants, an inside sneak peek of everything insideTime Warner Center. So please feel free to join us at that time.

MS. GRUNDER: Please go ahead, Ellen.

MS. DAVIS: Thank you, and good afternoon, everyone. Apologies that I – that my voice is a little crackly today. I wanted to take just a couple of minutes to talk about the National Retail Federation’s holiday forecast and our view of what’s going to happen over the holiday season this year. And then, of course, I’m happy to take any questions after the briefings are over. So I’m going to keep my remarks fairly short.

This is actually a fairly good day for us to be having this briefing because, earlier this morning, NRF upgraded our annual holiday forecast from 2.8 percent, which we announced in October, to 3.8 percent. That would bring total holiday sales this year to 469 billion U.S. dollars.

One of the reasons behind our forecast is simply because the momentum seems to be shifting from consumers. We know people are still concerned about what’s happening in Washington, the debt crisis in Europe, and a variety of other economic factors like the stock market, the housing market, and the unemployment rate. But people do seem to be going out and spending just a little bit this holiday season, not only on gifts but on things for themselves. According to our numbers that came out earlier this week, November sales rose 4.5 percent year over year. And because we calculate the holiday season as sales in November and December, the retail industry is well on its way to meeting a 3.8 percent holiday sales increase.

Some of the factors behind the holiday season this year, I mentioned the consumer sentiment, the fact that people are still concerned about the economy but are spending regardless. That said, what we’re seeing – what we’re hearing from retailers and consumers is that today’s holiday shopper is very focused on value. They’re looking for deals and promotions. They are very interested in service. They are also looking at things like merchandise quality and convenience when deciding where to shop.

So while people are spending, they’re not necessarily returning to the impulse buying that we saw in, like, 2007 and 2006, when they would just walk to the mall without a list in hand or a budget and just buy whatever suited their fancy. This year, people have lists, they have budgets, they know who they’re buying for, what they’re planning to spend on each person, and it’s up to the retailer to create an environment that is enticing and brings them into their particular store or website.

There are some differences also this holiday season. Of course, I think I would be remiss not to talk about the impact that mobile retail is having on the retail industry in the U.S. right now. That’s not necessarily only smart phones. It includes things like tablets, the Kindle Fire, the iPad, the Zoom, a lot of the smaller type of laptops that you can really have on your couch. We’ve been calling that “couch commerce” over here for one way to talk about the other ways that people are shopping.

And this is important because we know that people with smart phones and tablets are very much using those devices for holiday shopping. Those tend to be the more affluent shopper with a higher income, and so we’re seeing people use their smart phones like their iPhone and their Droids to look for a retailer’s store hours and a map or driving directions, try to figure out if merchandise is available in a particular store. We’re also seeing people with their iPhones or Droids or Blackberries reading reviews in the store about specific merchandise. From a tablet perspective, like the iPad, we’re seeing a lot of people actually use those devices to make purchases.

So the impact of mobile retail this holiday season really cannot be ignored. And as a result, many retailers on the front end have invested in mobile websites and applications for these specific devices that will help them grow their sales holistically for the rest of the holiday season.

So at this point, there are 10 days before Christmas. The average American shopper still plans to spend about $700 for the holiday season. The good news is a piece of information we released yesterday is that the average person in America has only completed about 45 percent of their holiday shopping, which means there is still plenty left to do. And in fact, 37 million people haven’t even started. I hope you’re not one of them. (Laughter.) But as I said, there are 10 days before Christmas, and it seems that the American shopper still has quite a bit left of that holiday shopping to complete. And as a result, we feel fairly confident in our 3.8 percent holiday sales forecast for this year.

So at that point, that’s really just a big-picture overview of what we’re expecting this year. And I’m happy to take questions when this is over, but I’ll turn it back over to Alyson.

MR. HIMMEL: Okay. Can everybody hear me?

Just to confirm, I’m one of those 37 million. I’m going to be making my first trip into the stores down in Palm Beach, Florida on the 22nd and 23rd, as that is my typical pattern. (Laughter.) But I’m sure I’m going to help boost the numbers, I can tell you that. (Laughter.)


MR. HIMMEL: So I’m going to take you through – you’re in Time Warner Center, of course. And I’m going to take you through a review of kind of how all this project has come together. You’re going to get a tour afterwards.

We are enjoying absolutely the peak, the highlight of our seven years of experience here so far. Fortunately for us, even in the downturn we saw our sales continue to grow. We’re growing at even a faster pace today. And I would say to you, based on our performance in 2011, I think we’re going to move into maybe the very top category in this country in terms of sales per square foot. We’re pushing over 1,500 U.S. dollars a square foot in the sales in this building right now, which is, I can tell you, if it’s not the top, it’s one of the top two or three in the United States. So we’ve had great success, as has New York City. We do work all over the United States, and I can tell you that New York continues to be a great performing city in terms of retail, restaurants, and hotel activity.

So one of the great things about Time Warner Center is the mixed-use nature of it. It’s a product type that I’ve been developing for 35 years, since Water Tower Place in Chicago. And I believe in it as much today as I did when I first started in this business over 30 years ago. And everyone around the world has embraced mixed-use, because of the convenience factor, because of the services people want. And equally if not more important, some of the greatest brands in the world now support mixed use, meaning hotel brands and luxury retail brands and restaurateurs. So we’re seeing a tremendous response to all of these mixed-uses – cultural facilities, hotel, residential.

And I may be – my partner, Ross – Steve Ross and I may be the two best examples. I live in the building here on 67, I work out on Floor 51 every morning, I go back up to my unit and I change, and I go down to the 3rd level and I come over to my offices, and then I go down to lunch in the building here each day, and then I come back up to the offices, and then generally I meet someone for dinner here in the building for another portion of my evening. So our doorman downstairs in my building always chuckles each morning. He says, “Are you going to finally go outside the building and get some air today?” (Laughter.) So I’m definitely a supporter of mixed-use, and this building is a great place to live and work.

Very complex series of uses in the building. You’ll see this as you tour today. But we try to include cultural facilities in many of the projects that we build and develop around the world. This is no exception. And of course, we’ve got the jazz facility which anchors the project. Now ironically enough, people would say to you, “What’s the square footage, the size of the project?” And it’s 330,000 square feet, which isn’t that big. By New York standards, 330,000 square feet is a lot of retail. But the beauty of this project is it’s really not 330; it’s really close to the 500,000 square feet because that jazz facility is part of our programming. It’s an entertainment destination in the project, drawing people up. And that’s the key to the way we put all this together. The restaurants are on Levels 3 and 4, not by accident. It draws people into this building every day and brings you to the most difficult parts of the floor plate to get to, the endcaps. And so it really brings – we will take pretty close to 20 million people through this project.

Whole Foods, which was an anchor in the project, brings about 3.5 million people a year into that store. It’s 50,000 square feet of space and it’ll do 110 million U.S. dollars in sales this year.

Our restaurants in this project, which include Per Se and Bhushan and Landmark and PorterHouse and Masa and A Voce, will do pretty close to 100 million in sales in just the food and beverage side of this business. So those are record-breaking numbers for project – for restaurants anywhere, especially in a mixed-use project.

And we really treat our restaurants in a project like this as anchors, so we put them together in a collection. And we have obviously curated this very carefully so the players here are star power in terms of chefs and a great diversity in terms of the product type, which all helps build an environment here that encourages people to spend time in the building and be attracted to it.

Every one of these interior spaces is done by an award-winning architect, and we participated not only in selecting the operator; we actually own most of these operations with the chef operators. So we are partners with them in assuring ourselves the quality and success of what we’re doing.

In terms of something new, on this floor, if you go back into the public space, you’ll see some landscaping out there. That’s about to transform in the next six months. Michael Lomonaco, our chef partner here at PorterHouse, and we are developing what I’ll call almost a great lobby bar and a lobby food and beverage operation in the public space overlooking the circle. So it would be like going into the lobby lounge of a great hotel with great views, and there’ll be light food service and a wine-champagne bar and liquor service here. That should open around June 1st, and that should be a great addition to the public space here.

Here’s our list of tenants. Unfortunately for us, we lost Borders. Fortunately for us, we lost Borders. Because what happened, of course, is we now have a chance to replace Borders with additional retailers who had wanted to come into the project for quite some time. And the economics to us are astronomical. It’s unbelievable, the increase in our economics. Borders was paying a very low rent. And the success of the project and the traffic coming through here allow us to get very exciting tenants, and the rents are almost tripling over what they were. So it’s great for all of us.

We also are announcing here that Samsung will be leaving right after the first of the year, and we will be replacing that with a couple of other great tenants. One of them actually is going to go on two levels. And that execution should make this equally as exciting for the project as a whole.

And the idea in this project is that there’s a great mix of retailing here. This isn’t – everyone asks all the time, where’s the super luxury in the project? And the fact is we’re on the West Side of New York. We’ve got tremendous families living here, tremendous activity in terms of family activity on weekends and evenings, and there’s a very young population here on the West Side as well. The restaurants draw a lot of people.

So what you’re seeing is a mix of tenants that is in demand. So J. Crew opened its new men’s store. J. Crew’s performance in this project is the very top. I think Mickey Drexler would tell you that the J. Crew store here is probably the highest sales per square foot store they have in the country, and that’s not by accident. He’s on the second and third floor. He opened his men’s store; it’s off the charts so far in terms of sales, doing great.

So anyway, we are rearranging some of the players in the project. It’s getting better and better. We’ve had a great list of tenants trying to come into the project with us. We will be bringing in some very exciting apparel and accessory tenants that will be very pleasing, we think, for the population and visitors around us. New York, as you know, draws 46 to 48 million tourists a year. This is one of the handful of big draw locations today. People, when they come to New York, this is one of the places they absolutely want to come and visit. So that means it’s going to get even better.

And we’re taking this model, as many of you may know, of doing this kind of vertical mixed-use, and we’re bringing it to Hudson Yards, which is our new project here on the West Side, between 30th and 33rd. We are in the process of putting together a development there that’s 13.5 million square feet of development next to Javits. And it will be over a million square feet of vertical retailing and about 5 million square feet of office space, a new cultural facility, a Mandarin Oriental hotel. So we have quite a beautiful mixed-use project going on there, and this is the model. Time Warner Center has established our credibility here in New York to be able to demonstrate how we’re going to do that at Hudson Yards.

We’re also finding some great success in these specialty – we call them remote merchandising units, not kiosks. And the idea of taking design in this area and doing something more interesting, more exciting, higher quality, translates into higher sales and gives us a chance to even bring a higher quality clientele – or a higher quality tenant mix to this. We’ll be announcing that here after the first of the year as well. We’re going to bring in four or five new merchants in that category.

So it’s ever evolving. We are also, I will tell you – we have right now a list, a waiting list of about six luxury brands who would like to come onto the first level of the project. And arguably, these are tenants who traditionally go to the street, so they want to be a street level. And as our leases expire on the first level, we will be replacing tenants downstairs with more luxury tenants. We’ve got about six on our list right now that are fantastic tenants that will add another slant to the project.

So that’s kind of an overview. You’re going to get a tour of the project, and I know I’m very happy to – I hope I’ve continued to reinforce our retail report coming nationally here. We certainly do nothing but support the results going on nationally here. We’re seeing a great uptick in sales. I can tell you our sales growth in this project is closer to 8 percent ahead of last year, so it’s even exceeding anything close to the national kind of standard.

I’m happy to take any questions. And thanks very much for joining us.


QUESTION: Hi. Joanna Ozdobinska, Polish press correspondent. Oh. Hi. Is it working? Oh. Sorry. Joanna Ozdobinska, Polish press correspondent. Two questions: You mentioned that there is going to be some new stores. Can you talk a little bit – like give couple of names maybe – next year?

And then the second question, because you had, I think – I remember a UniQlo pop-up store this year. Are you planning to have these kind of more spontaneous ideas and more (inaudible) companies?

MR. HIMMEL: Yes, that’s a good point. Stacey actually heads up – I’ll answer the second one first. Stacey heads up and does a spectacular job with all of our marketing, our merchandising, our sponsorship events in this whole project. And this has become an events center for all of New York. That window on Columbus Circle and the number of eyeballs and people that pass by here is extraordinary. And so we get an incredible clientele. And so you’ll see First Republic Bank and MasterCard as an example of sponsors in this project holding events all the time. And so we’re going to continue doing that, and that means more pop-up retailing and more events around retailers and around food and beverage concepts and things that are exciting to New York and people visiting New York.

I can’t announce the tenants because we don’t announce tenants until we’ve signed leases, but I can tell you that I would say by the 15th of January, we will announce six moves in this building – probably by the 15th of January. And some of the tenants are doubling in size, moving to different locations. And there are four new tenants coming into the project, but I can’t announce it until mid-January.

MS. FEDER: Well, if you want to call me, I will --


MS. FEDER: -- or, yeah, I – we’ll make sure that you are the first – you all are the first to know. (Laughter.)

MR. HIMMEL: Any other questions? Yes.

QUESTION: I have a question for Ellen, actually. So – we know that the Christmas holiday season is extending right now. I saw first Christmas decorations in stores even before Halloween this year. So my question is: What do you consider shopping – holiday shopping season, one? And second question: How much of sales is taking place after Christmas because of gift cards, post-holiday sales, and all kind of --

MS. DAVIS: That’s a great question. Both are great questions. That’s a great question because the holiday season – we define the holiday season as retail industry sales in the months of November and December. However, to your point, the holiday season really has shifted in both directions over the last five years or so. Specifically on the front end, we did see retailers starting to promote the holidays very early this year. Some of them were promoting Christmas right after Labor Day, which is, of course, the beginning of September. So we saw retailers promoting decorations and Christmas cards in early September, sending out a lot of their holiday catalogues, getting people to think ahead it’s the holiday season.

And to be honest, that push seemed to work, because October sales -- even though we don’t cap it in the holiday season, October sales were up four and a half percent year over year. October was actually an extremely strong month all things considered. And as a result, if you look at November compared to October, November looks just okay (inaudible) 1 percent. So yes, we are seeing holiday sales frontloaded into October.

We’re also seeing holiday sales extended into January with the amount of gift card purchasing that’s happening in the U.S. Gift card spending was expected to reach almost $28 billion this year just for the holiday season in the United States. And as a result, you see a lot of people going out and redeeming those gift cards at the end of December, so in that week between Christmas Day and News Years, so that would count toward the holiday season. But of course, you see other people that aren’t able to make it into the stores until January or February to redeem those gift cards.

So what you’re seeing is the holiday season really stretching over time and that it can be really challenging, of course, for those of us who are trying to get a sense of what purchases are holiday and which aren’t because, of course, you can’t count all October and all January sales as holiday. But on the other hand, (inaudible) explain a great October and a great January when November and December are marginal. So it’s very much a challenge, but that’s a long answer to your question, but hopefully it was helpful.

QUESTION: A question to Mr. Himmel. I’m from La Libre Belgique in Belgium. You said that more luxury brands are coming to the store next year. Some critics say that New York is becoming a city for millionaires and billionaires. What’s your point on that?

MR. HIMMEL: The beauty of this city is the diversity of the city. And yes, I feel the best way to answer that question is you move up and down Madison and 5th Avenue, and you see luxury, you see bridge, and you see value-driven retail. I mean, it’s all there. I mean, you can see Cartier, you can see H&M and UNIQLO. And if you go down the street, you see just a tremendous diversity, because that is the population and the visitor profile that’s here. It’s a very diverse population. Now, undeniably, a lot of the brands, you get these collections, these concentrations of super luxury brands, and you come away from block by block by block, and you say, "Well, this is all just pure luxury." But if you really look, to a serious shopper and you move down 5th and you move up and down Madison, you’ll see a tremendous diversity. It’s not just for the super-super wealthy.

You go down to the Lower Manhattan, you go down the Meatpacking District in SoHo and Chelsea and you’ll see huge diversity and you’ll see a reverse. I think, in Midtown and the East Side, you’ll see a higher concentration of luxury, and you’ll see a lower concentration of some of the value and bridge. When you go downtown into Chelsea, SoHo, and Meatpacking District, you see the reverse. You see a much higher concentration of the value and bridge, but you’ll still see a smattering of luxury. So I think anyone who lives or visits the city is in awe of the choices, the breadth of choices that are available to you here in New York from a retail point of view and a food and beverage point of view. It’s not just for the super wealthy.

QUESTION: I’m Louise With. I’m with a daily newspaper in Denmark. Hello. I have a question for both of you about next year, your forecast, your expectations for next year. This sounds really good for this season. So are we all out of the woods now? Is it all going to be smooth sailing from here? And what do you base your forecasts on? Thank you.

MR. HIMMEL: I’ll defer nationally first. We’ve lost your audio.

MS. DAVIS: Sorry. I was coughing and didn’t want you to hear that. (Laughter.) Thank you. So we will not announce a 2012 forecast until the middle of January actually at our annual convention in New York. And of course, you are all welcome to attend as members of the press that event at the Javits Center on the 15th through the 18th of January. We will announce our 2012 forecast at that time, because we’re really waiting to see how this holiday season turns out. Earlier this year, we were expecting that annual sales for the U.S. would increase 4 percent. I think when all is said and done, they might -- they’ll likely increase more than that. As a result, next year will be more challenging. All of us who follow these numbers understand that when one year is very good, the next year it becomes harder to grow on that. And so retailers are very -- are looking very closely at 2012.

You also asked about the momentum and if we’ve completely recovered. And that’s an excellent question. I think that that’s the question that a lot of us are trying to determine the answer to right now. What it seems from our standpoint nationally, it seems that the U.S. economy is continuing to grow almost painfully slowly. We’re seeing growth of .1 percent, .2 percent month over month or year over year. But that’s okay. As long as we’re not receding back into the negative territory, we think that moderate monthly growth is a good thing, it’s encouraging for our economy.

To be honest, we don’t really like the idea of retail sales for the holidays increasing substantially. That would mean one of two things. One, it would mean that consumers are relying more on credit for their holiday purchases instead of spending with money they already have. And that is going to put them in a worse position to spend in the future, like it did when they spent too much on credit in 2006 and 2007. When 2008 and 2009 came around, they had no savings and they had no way to spend, so we really saw a pull-back at that time.

The other issue when it comes to looking at what’s happening from a consumer perspective, long term is that it’s good for us to see moderate, sustainable, average increases because it will be easier to grow off of that next year. If we saw a holiday season -- and we won’t -- but if we saw holiday sales increase 10 percent this year, it would mean that 2012 was going to be much more difficult for retailers. So we need to -- we like the idea of a balanced, moderate, average growing holiday season right now, because as the U.S. economy starts to slowly recover, we think that that’s the best way for this sustainable growth to continue. So that’s the national perspective.

MR. HIMMEL: I would add this to it. A couple of things that I always remark on -- and I'm not only a retail, food, and beverage developer; I'm also in the operating business. We own four restaurants in Boston, and we own the five restaurants here. And we're investors in a number of, let's call them retail operating businesses. So an inside perspective as well -- and I say as we look at growth, I always tell my people to go back and look at where we were in 2007. 2006 and 7, we reached all of us, I think, almost unsustainable peaks in growth and sales in a lot of categories. And those are very hard numbers to duplicate, and we've watched ourselves drop significantly from 2007. So even though we're watching a -- finally, we're watching things level off and uptick, in many cases, we're still not even back close to where we were in 2007. So there's still a lot of ground to make up in many, many categories when you talk retailing.

But the thing to understand about the United States is there's absolutely no way to lump us in as one generalized country. I mean, the United States is made up of 20 different mini countries and regions. And so it really comes to employment. I mean, everything that’s driven from consumer spending is all driven by employment. When the employment picture is stable or positive, you will see growth. When the employment picture is threatened, it’s moving negative, or it’s holding at very treacherous, high unemployment rates, you’re going to be very challenged when you start looking at sales, retail sales. And that is the story of America.

So if you look at the southeast U.S., if you look Florida and you look at Georgia and you look at Alabama and Mississippi, you look at our southern states, you’re going to see some very negative numbers. I mean, there’s a significant unemployment issue, with the exception being Miami. Why is Miami the exception? Because of the South American travel, because of the dynamic on retail sales and import fees in South American countries and the huge value of buying in Miami. And so there are millions of people coming into Miami to shop, and so that helps Miami’s numbers.

When you look at Washington, D.C. you find a great pop in retail sales because we’re all underwriting that. Our government is making sure that we have as full an employment picture as possible going on in Washington. So you see Washington performing pretty well – the lobbyists, the lawyers, the consultants, and our government, just as an industry and job creator and job holder.

New York City is off the chart still because it’s a place people want to visit and young people want to live here. The employment picture in New York, I think, is going to continue to be very bright, and in large part I give enormous credit to the Bloomberg administration because they have made this a place people want to grow. I mean, people want to invest here; businesses want to grow here; young people want to live here. And it’s an incredibly exciting city to live in, and that means employment’s going to continue to grow here, and that’s great.

But then you fall off from there. San Francisco today is also a pretty good story. Silicon Valley – young, very dynamic market. San Francisco is going to continue to grow. Seattle continues to hold pretty well, but not as much as San Francisco even. And then Los Angeles, you’re driven by entertainment. Entertainment, in this country, is a growth industry, and so the entertainment industry and everything that goes with it continues unemployment. The direct relationship between employment and retail sales is undeniable.

QUESTION: This is Qimei from Sina Finance, the Chinese website. I have a question for Mr. Himmel, that – two question actually. First is: What’s your – the Time Warner Center strategy of targeting foreign tourists or foreign consumers? With that in mind, also could you please mention something about the real estate? Because as we can see from the chart that we do have the residence section for the usage of the building. So that might be one of the attracting part of the – of business sector for the foreign investors.


QUESTION: Second question is that do you see this model, this mix-usage model, expanding or reusing in other country? Do you have other international models that being expanded in some sense? Thank you.

MR. HIMMEL: Yes. So the first question is yes, we are definitely making an effort to increase our international tourism, but it parallels New York City. So the effort – we are (inaudible) – we are a part of New York City, undeniably, and want to be. So we’re linked in that regard and we both are trying to attract as much international tourism as possible. And I think we will continue to see that increase, both from – I would say from South America, from India, from China.

I think we’re all seeing a much – we’ve seen real growth come in the Chinese sector as well. As more money is made – by the way, we have an office in Shanghai. We have a senior partner of the company that’s lived there for almost five years. We have an office there with a number of people that are looking to secure a lot of business, so we’re plugged in there. And we see that as a great resource for us in terms of business here at Time Warner Center going forward, that whole international sector.

The residential story here is kind of interesting. This building and the building directly across the street called 15 Central Park West, which sits just to the north of Trump International, these two buildings are the highest resale pricing of any residential buildings in the United States. And for instance, in this building, the resale pricing is between 5- and 7,000 U.S. dollars a square foot. So a 3,000 square foot apartment in this building or condominium in this building today would sell for between 15 and 20 million U.S. dollars. Across the street at 15 Central Park West, the numbers are between 5- and 10,000 a foot. And there had been sales – resale of units there that have gone for as much as 10,000 a foot. So a 3,000 square foot unit there has gone for as much as 30 million U.S. dollars.

Huge interest from the international markets in this – Russia, India, South America, China. And it’s really a flight to quality. I mean, it’s people who are looking to place money in what they believe to be a secure place over the next five to ten years. There’s no place, in my view, safer or more secure than property in New York City. If I were going to put my money anyplace in the United States, it definitely would be in New York. It’s very expensive to get in, but your chances of enhancing your investment are dramatically higher here than almost anyplace else.

MODERATOR: Any other questions? Great. Oh, sorry. Yeah.

QUESTION: May I know what’s the positioning of the Time Warner Center? Because you’re obviously aiming at these high-end retailers, but comparatively speaking, it seems those places like 5th Avenue, where they have the diversified retailers, draw more of the people flow. So what’s your –

MR. HIMMEL: Yes. I think the pattern I see here is a similar pattern to what I see in London, Paris, Milan, Florence, Rome. These are cities where, if you check the hype – if you check the luxury categories for Vuitton and Gucci and Prada and Hermes and all of the luxury brands, you’ll find that they have maybe a flagship, but then they have five or six other stores throughout the city because people like convenience.

And so that’s what’s going to happen here at Time Warner Center. We are not taking to take the place of a flagship luxury store on 5th or Madison. No one’s going to take the place of Cartier and Vuitton. I mean, you’re not going to replace those flagship stores. But there are many people who are here, they’re shopping, they want comparative broad shopping, and they will definitely make purchases – selected purchases in smaller retail presentations from luxury brands. And that’s exactly what’s going to happen here, whether it’s watches, handbags, accessories – less apparel, it’s going to be more the watch and accessories categories that we attract.


QUESTION: Do you think you are part of a development of actually this stretch from 59 to the Apple store and that you – I mean, you’re part of development here? And actually, if you can make a comparison –

MR. HIMMEL: Yeah. That’s interesting.

QUESTION: -- with the East Side, because usually luxury brand are more, as you said, on Madison and 5th.

MR. HIMMEL: Before opening Time Warner Center, I lived on the East Side, and so we lived, ate, and shopped on the East Side most of the time before we opened here. Now we live on the West Side. And you still go back and forth a lot, because when you really want to comparatively shop, you’re going to the East Side, to the department stores or to – again – the flagships for choice.

But you’ll find there’s an interesting pattern. When you move off of that serious comparative luxury shopping experience and you sort of just move down to the day to day, there’s a huge traffic pattern on the West Side that doesn’t necessarily go east. It goes south. And that’s where Hudson Yards becomes interesting, because it’s the bridge between Chelsea, SoHo, Meatpacking District, and Columbus Circle. And so you’re going to find – and Broadway. If you move north of here and you move all the way north for the next 25 blocks, there’s tremendous shopping, great variety, tremendous density, a lot of great brands – most of the great brands but not the super luxury brands.

So the beauty of New York is it’s got zones of opportunity. And I mean, if you want to comparative shop for luxury, there’s no place in the world that has more choices than getting on the 5th and Madison. And then if you want the pockets of specialty shopping, there are so many opportunities. It’s great, you can pick your choice. We are part now of a zone here at Columbus Circle that’s grown over the last five, six years since we’ve been opened.


QUESTION: My question is to Ellen. Ellen, do you see any change in the shopping trends over the past few years, like people may tend to buy less luxury goods but pay just by some – maybe (inaudible) goods instead? Thank you.

MS. DAVIS: (Inaudible.)

MR. HIMMEL: We can’t hear you.

MODERATOR: I’m afraid we lost it.

MR. HIMMEL: We seem to have lost it. Sorry. No? Sorry. I’m sorry, I have a run a whole group at 2 o'clock. Thank you, everybody.

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