Teens take over Times Square

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On a recent weeknight, teens packed Aéropostale Inc.'s new Times Square flagship. Decked out in skinny jeans and Ugg boots, they scooped up graphic New York tees and plaid flannel shirts, and twirled for the video camera that projected their dancing silhouettes onto a 120-foot-long billboard outside.
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Across the street, young pedestrians smiled and waved on competitor Forever 21's billboard, while a block away, shots of tweens at American Eagle Outfitters appeared on that retailer's 15,000-square-foot screen.
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Welcome to Teens Square. In the past 12 months, the neighborhood has been transformed into a shopping mecca as Aéropostale, American Eagle Outfitters Inc.
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and Forever 21 Inc. opened massive flagships within steps of one another. Their launches follow those of pioneers Billabong and Quiksilver, two youth brands that leased outposts in the mid-2000s.

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Retailers have reason to storm the revived 'hood. More visitors than ever are crowding the streets: 365,000 people come to Times Square daily, an 8% increase over year-ago levels, according to the Times Square Alliance. The throngs provide the stores with access to a flood of international teen tourists and their local counterparts, who hang out at the new pedestrian plazas so they can people- and billboard-watch.


UGG boots Big Kids“You get the sales and the branding—what better place than Times Square for this type of retailer?” says Jason Pruger, a senior managing director at Newmark Knight Frank Retail. “It's a youth-oriented and international-type place.”


UGG boots Little KidsToday's Times Square contrasts sharply with the seedy district of yore, when hookers and heroin dealers roamed the streets and triple-X-rated peep shows abounded. Disney's arrival in the 1990s fueled the entrance of similar family-themed retailers. Now fashion is taking over as chains that are typically mall-based, such as Forever 21, move in. Even Disney is opening a new store this month, following an absence of several years.

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The neighborhood's new popularity translates into hefty rents. Times Square retailing has not experienced the declines seen in other districts during the recession, brokers say.
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Forever 21 and American Eagle are reportedly paying nearly $20 million a year each for their 90,000-square-foot and 25,000-square-foot multifloor stores; Aéropostale's annual rent package is estimated to be around $10 million. Average ground-floor asking rents rose to $691 a square foot in the first half of 2010, a 15% rise over the figure for the same period last year, according to Cushman & Wakefield's midyear report. Some choice properties are renting for almost $1,400 a square foot.

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Benefits outweigh costs
Experts believe that the benefits outweigh the costs for retailers.

“Times Square is not a bargain in terms of rent, but it's a highly desirable place to be,” says Maggie Gilliam, who runs retail consultancy Gilliam & Co. “In the summertime and on holidays, the [foot] traffic is unbelievable; you can't walk down the street.”
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Indeed, retail chains' Times Square flagships tend to ring up the most “ka-chings” at the cash register. Aéropostale's 1515 Broadway location—which, at 19,000 square feet, is more than five times the size of the brand's other stores—is expected to far surpass the company's average sales of $624 a square foot. The expected success of the outpost could help the chain gain traction internationally.


ugg & jimmy choo discount“This store is going to be the brand's foundation for global reach,” says an Aéropostale spokesman.

Experts say big-name retailers in the “bowtie”—where Seventh Avenue and Broadway cross, between West 42nd and West 47th streets—can generate as much as $3,000 a year in sales per square foot.

v“Just about every company I know that has a store there says it's among their highest-volume stores,” notes Ms. Gilliam.
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To take advantage of the neighborhood's 24/7 appeal and help rack up sales, the new stores are offering extended hours. While American Eagle's mall stores close at around 9 p.m., its 1551 Broadway outpost is often open till 2 a.m. Aéropostale keeps a 300-square-foot area open until 3 a.m. on weekends. An expected resumption of live broadcasts at the MTV studio space, also at 1515 Broadway, will further strengthen the late-night teen fever.
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“If you're a kid coming into Manhattan via Port Authority, it's a lot easier to go to Times Square than SoHo,” says Ariel Schuster, an executive vice president at Robert K. Futterman & Associates.

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Experts envision more teen fashion in Times Square's future. Mr. Schuster's firm was just hired to market the 45,000-square-foot retail space at 1619 Broadway, at West 49th Street.
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The former ESPN Zone, a 55,000-square-foot space at West 42nd Street and Broadway, is also rumored to be on the market.

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