Jones Lang LaSalle


APPLE OPENS BIG APPLE CORE STORE
NYC 05 18 06
Peter Slatin

From the time the General Motors Building opened in 1968, at Fifth Avenue and 59th Street, its sunken retail plaza has been a failure. Retail experts in Manhattan's real estate community called it "the Well" when trying to entice a tenant or just talk it up; in private, though, they referred to it as 'the Pit."

But when Apple Computer's 147th retail store there opens to the public on May 19, the company hopes that dank image will be jettisoned like a well-tongued apple seed. They hope the Pit becomes instead a fleshy, juicy fruit drawing hordes of consumers into the transparent, 32-foot-square cube jutting up from the GM Building's beautifully transformed plaza (now brought up just above the street and graced by two small pools), and down the glass-enclosed circular elevator or the broad floating, curving staircase to the 10,000-square-foot store below.
If the Apple fans that were already beginning to line up on Thursday morning for Friday's 6 p.m. opening are any indication, they should feel optimistic.

From the Steve Jobs-designed cube, the point of entry on the GM plaza, which faces the Plaza Hotel and Grand Army Plaza, to the bright, column-free shopping expanse below, with its i-Pod and Genius bars and its tables of supercool Macs and MacBooks, Apple appears to have met the challenge of creating a flagship store worthy of the distinction. It's the largest store in Apple's portfolio to date, and it will be the first Apple store to be open 24 hours a day, seven days a week (a fact unknown until a week ago by most of the 300 workers, including 250 new employees, who'd volunteered to work there). According to an Apple sneior vice president for retail Ron Johnson, 96 of those 300 will be so-called Genius workers who can handle a full barrage of technical questions from consumers.

Johnson says Apple's stores generate about $4,000 a square foot in sales for an average of $22.2 million a year; its first store, opened four years ago, brought in $11 million. This store, flooded at its core by natural light from the plaza cube, has a cool but bright lighting scheme that manages to fully illuminate the store without casting the harsh lighting characteristic of far too many retail environments. Designed by Apple and the Philadelphia architecture firm Bohlen Cywinski Jackson, the space is laid out for easy navigation, and manages to be both cutting-edge high-tech and unintimidating, a rare confluence.

The store's location is clearly key: it's hard to find hyperbole in thinking of this corner, as Apple's real estate bloodhounds did, as sitting at the gateway to "the world's best shopping street" and Manhattan's flush Upper East Side.

This is Apple's second store in Manhattan; the company also operates a store on Prince Street in SoHo. And although a company spokesman declined to say where in New York City Apple's next shop will open, retail specialists are convinced that the computer maker has decided on 34th Street, between Fifth and Sixth avenues, directly opposite from the Empire State Building and less than a block from Herald Square, home of Macy's.

There, a joint venture between SL Green Realty Trust (nyse: SLG) and investor Jeff Sutton has acquired control of three buildings totaling more than 50,000 square feet. Unlike the off-street, offbeat frontage on 59th Street, this location will offer at least 75 feet of frontage. SLG also declined to comment.

The new store and the renovated GM Plaza are good for Apple, but they are also a clear vindication for the building's owner, New York's Macklowe Organization, led by vetern New York developer Harry Maklowe and his son Billy. By creating life in a public plaza that has historically been a black hole, dreary but for the activity of the CBS "Morning Show" broadcast, Macklowe has brought even more value to what most observers thought was his wildly overvalued acquisition of the building in 2003 for $1.4 billion from a partnership between bankrupt Conseco Insurance and Donald Trump, who had been feuding over their investment both as Conseco sank and real estate suffered after September 11. Macklowe bet its entire office portfolio as collateral to obtain financing to make that deal, leaving Manhattan wise men shaking their heads. But those heads shook in the other direction when Macklowe refinanced the building for $1.7 billion within 18 months, helping to set new price levels for the soaring market in trophy office buildings.

Many also saw Macklowe's first action on taking over management of the property as an act of civic improvement: the removal of the gold-colored Trump name from the facade of the building. But the Macklowe name did not replace it. Perhaps founder Macklowe preferred the private satisfaction that comes with owning a historic building where he had arranged many deals as a young leasing broker with Julien J. Studley. And perhaps to ice that cake, as we reported recently, Macklowe purchased condominium units in the former Plaza Hotel, now being renovated, from which he will be able to peer down at the Apple shoppers descending into the depths of the General Motors plaza.

Steve Jobs had a big hand in designing the 32-foot-square cubed entrance to the new Apple store, below the GM Plaza.

The 10,000-square-foot store, open 24/7, is Apple's largest to date. Its other 146 stores bring in an average of $22 million a year, at $4,000 per square foot.
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