* Kohl’s looking for space in Manhattan
* J.C. Penney and Macy’s already have stores nearby
By Ilaina Jonas
NEW YORK, Aug 19 (Reuters) - Department store operator Kohl’s Corp (KSS.N) has been scouting for space in Manhattan, including Union Square, the Ladies Mile and West 57th Street, according to a top U.S. retail real estate broker.
If Kohl’s finds its way into Manhattan, it will be the second large department store chain after J.C. Penney Co Inc (JCP.N) to take advantage of affordable rents that were once too high and shut them out of a spot in the core of the Big Apple.
“Rents are down 50 percent in parts of town,” said Robert K. Futterman, chairman and chief executive of New York-based Robert K. Futterman & Associates.
Futterman first met with Kohl’s in May at the International Council of Shopping Centers annual convention in Las Vegas, and the firm has since shown the retailer several available locations.
J.C. Penney in late July opened its first Manhattan store just steps from Macy’s Inc’s (M.N) flagship store in Herald Square. Penney expects it to be its highest volume store.
High-end department store operator Nordstrom Inc (JWN.N) plans to enter Manhattan next year with an off-price Nordstrom Rack store in Union Square.
Moving to Manhattan is “natural,” said BMO Capital Markets analyst Wayne Hood, though he said Kohl’s could end up with an unusual store layout.
“Entering this late in the game, you don’t get an ideal format,” Hood said. “In many cases you may have to take a multilevel unit.”
Vicki Shamion, a Kohl’s spokeswoman, said in an email that the company does not comment on real estate speculation.
“At this time, we’ve not announced any plans to open a new store in New York City,” Shamion said, adding that at any given time, Kohl’s reviews multiple U.S. sites.
Kohl’s needs about 80,000 square feet of retail space, Futterman said. That would have been a high hurdle to clear in recent years, when large blocks of available retail space were nearly nonexistent and rents were exorbitant.
Today, even some office landlords would be more than willing to convert blocks of empty office space into stores for a well-credited tenant such as Kohl’s, Futterman said.
Still, other factors will naturally limit available places suited for the discount department store owner.
“You’re limited in where you’re going to get the big enough footprint and you also can’t be on an island,” Futterman said.
“You need bodies. You need foot traffic, mass transportation,” Futterman said. A good area would be the Ladies Mile — Avenue of the Americas in the 20s — where Bed Bath & Beyond Inc (BBBY.O), Best Buy (BBY.N) and The Container Store are located.
“That would be an alternative,” he said. “Union Square would obviously be great, but Union Square space is hard to come by.”
West 57th Street would offer more available space, he added.
Kohl’s said last week that it plans to open 20 to 25 new stores in 2010. But “should other opportunities emerge, we have the flexibility to adjust up accordingly,” Chief Executive Kevin Mansell said.
Faith Hope Consolo, chairman of the retail leasing and sales division for Prudential Douglas Elliman Real Estate, told Reuters that she showed Kohl’s a former Barnes & Noble BKS.N store site in Manhattan about a year ago. (Additional reporting by Aarthi Sivaraman; Editing by Steve Orlofsky)