STRAUSS CASSEL GROUP / SC5W.com
buying as a retailer - retail operation
WE ESTIMATED THE HIGHEST AND BEST USE FOR THIS LOCATION
I CALCULATED SEVERAL OPTIONS FOR RETAILING, THE END RESULT WAS THAT IN THE MODEL I LOOKED FOR $700 TRANSACTION AT POINT OF SALE (POS). Point of sale transaction in this definition alludes to the money paid at the register on average, by a purchasing consumer.
Other retailers in this area sell:
Shoes from $776 to $1,000 plus - Bergdorff & Goodman, Barney's, Armany and others.
Dresses from $900 to $15,000 plus - Dolce & Gabbana, Hermes, Armani, and others.
Purses from $4,000 to $50,000 plus - Hermes, Luis Vuitton, and others
Jeweler from $1,089,000 for a 2 karat engagement ring and up - Chopard, Van Cleef & Arpels, Bulgari
all these retailers are in this area, just one block away, and less that 500 feet. Many of these retailers, rent barely one floor of space, with retail rents now going over $3,550 per square foot.
The area is replete, but I mean replete with high net worth patrons, that should spend on average of $700 per visit to this building.
Recommended Orientation of Merchandise:
•Bridge • Designer • Haute Couture (as well as electronics, gourmet foods, high-end home improvement areas I will not elaborate as the numbers are much more complex).
The ideal entity in my model would be a retailer, department store, in the style of Harrods, or hybrid multi-label designer entity, combining more than just fashion, but a lifestyle as well to include, labels from upcoming designers priced slightly below the Madison Avenue Shops.
The foot traffic for this area is truly outsizes and as heavy as Fifth Avenue on a Sunday afternoon or better, but with a much more affluent foot traffic, and the traffic is constant all day long, including weekends, which is not the case for Fifth Avenue that south of 50th Street has a traffic with much less acquisitive power, than Park Avenue in the 60's.
There is a space called bridged, in retailing, that alludes to better than mass, but less than super-luxury. We think that a retailer with emphasis in the better segment of bridge retailing can seriously make money here.
Projected Annual Sales: I calculated gross retail sales of $224,226,800 USD.
With the following statistics:
(Note about foot traffic entering the building: This number can be seriously increased if a well designed retail strategy is implemented, with the aim at turning this building into a retail destination. 16% is a low number that reflects a careless non-strategical approach. We can help design a very good strategy, that can get that number higher. Remember the street is the thoroughfare between two large department stores Bloomingdale's and Barney;s, foot traffic here is armed with wallets and credit cards and it is going shopping).
I don't have all the answers, however, here are some ideas, a combination of Designer, Couture, Under Armor/Lully Lemon, Harrods, Apple, "Davide Cenci", but younger/sportier. We did not look at food retailing, nor spirits, and we skipped some restaurants,(except theme restaurants that could very well succeed here. One model that comes to mind is Jeckil and Hide) as well as Dilon's Candy and lastly toy retailers, such as American Doll would have much better reception here as well. The of suitable buyers is large, some high-end designers may want to consider buying the building to prevent vulnerability form a copycat retailing model at lower prices, others may want to extend their brand into high-bridge/new-designers. Steven Madden for example is one company that is coming up, and our building would provide them with a solid foot step through the side doors to Madison Avenue. I am not forgetting "Fairway Grocer, nor Gracious Homes in this mix, nor Michael C. Fina, and mass jewelers such as Blue Nile, that could use the location as a stepping stone to the market Chopard is in.
DOWNLOAD THE ENTIRE BROCHURE
FOR THIS SUPER PROPERTY.
The Brochure Contains:
Building renderings, floor plans, excel calculations, the retail analysis for the area, the financing terms under which we have sourced for financing for this purchase, and a confidentiality agreement that you can sign and fax us when your are ready to make an appointment.
the landlord model - buying to rent
This is the simplest model, buy and rent to the local retailers.
Things you can do to increase profits
Make your lease with the following: Inflation escalation, tax escalations, electric escalations, insurance escalations, rates of obsolescence escalations, and lastly the ominous retail sales revenue shearing.This model assumes a buyer finances 70% of the purchase price, pays real estate taxes, totals the expenses, and subtracts the expenses from the the rental proceeds as follows:
The calculations are simple and straight forward:
Numbers | 1st. CALCULATE COSTS
Purchase Price: $35,000,000 (Thirty-Five Million UDS)
Down Payment: $10,500,000 (Ten Millions 1/2 USD)
Mortgage: $24,500,000 (Twenty-Four Million 1/2 USD)
Interest Rate: 4% (Four per cent)
INITIAL INVESTMENT: $10,500,000 (Ten Millions 1/2 USD)
Mortgage Payment: $81,666 (Eighty-One Thousand, Six Hundred and Sixty Six USD)
Real Estate Taxes: $12,500 (Twelve-Thousand, Five Hundred USD)
TOTAL COSTS: $94,166 (Ninety-Four Thousand and One Hundred and Sixty-Six USD)
Numbers | 2nd. CALCULATE INCOME and 3rd. CALCULATE RETURN
The building has 13,870 gross SQFT, approx.
The market rents for this area are $3,550 to $2,200 on average.
The calculation therefore is simple:
SPACE * RENT = MONEY DIVIDED BY THE DOWN PAYMENT = RETURN
13,870 sqft Multiplied by $3,550 Equals $49,238,500 USD (49,238,500 - 94,166 ) / 10,500,000 = 496%
13,870 sqft Multiplied by $2,200 Equals $30,514,000 USD (30,514,000 - 94,166 ) / 10,500,000 = 289.71%
13,870 sqft Multiplied by $1,500 Equals $20,805,000 USD (20,805,000 - 94,166 ) / 10,500,000 = 194.81%
13,870 sqft Multiplied by $1,000 Equals $13,870,000 USD (13,870,000 - 94,166 ) / 10,500,000 = 132.09%
13,870 sqft Multiplied by $ 800 Equals $11,096,000 USD (11,096,000 - 94,166 ) / 10,500,000 = 105.56%
IN ADDITION YOU HAVE TO COMPUTE DEPRECIATION BY OBSOLESCENCE, EROSSION OF THE MORTGAGE PAYMENT DUE TO INFLATION, AND LASTLY APPRECIATION THAT SHOULD CONTINUE TO MAKE OWNING THIS BUILDING A GEM OF AN INVESTMENT.
PLEASE DOWNLOAD THE EXCEL FILE OR THE PDF FILE
FOR THIS SCENARIO
These document contain a much more detailed calculation of the above subject.
VISIBILITY & BRANDING an intrinsic value to recognise
VISIBILITY FOR YOUR BRAND AND YOUR OWN BUILDING