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What Price Flagship?

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As more and more apparel retailers pursue the high-profile flagship strategy, rents for retail space on New York's most visible thouroughfares are becoming prohibitively expensive.

The Wall Street Journal reports that executives from mid-price women's apparel chain Express had walked away from a 45,000-sq.-ft. deal at 4 Times Square, on 42nd Street, though the company didn't disclose its reasons. The store would cost Express $45 million a year, and created downward pressure on its performance expectations for 2012, according to The Real Deal. Retail space in the Times Square area reportedly goes for about $1,800 per sq. ft.--in keeping with astronomical rates in the city's best retail neighborhoods.

Whether due to price or other reasons, Express opted to lease a 30,000-sq.-ft. space at 1552 Broadway at 46th Street stead. But the retailer's change of heart brings up an interesting question. Everybody knows that flagship stores are about promoting the brand, not raking in money. But at what price point does this marketing play become impractical?

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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