December 12, 2014
Pitching River Oaks Chic on the Streets of Manhattan
NEW YORK - Dene Oliver strides into the cocktail party fashionably late. Elegantly attired in Tom Ford, he greets his guests, a Who's Who of real estate, business and high-fashion.
Oliver, CEO of a Southern California development firm that's built $3 billion worth of high-end commercial real estate, spots the North American president of Bulgari, the Italian luxury jeweler with a store just around the corner on Fifth Avenue. Oliver grabs his company's leasing director.
"I need to borrow you for a second. The head of Bulgari is here," he says. "I want you to meet him."
In two hours on this frosty December evening, the developer will meet with the CEO of another international retail chain to discuss two of his company's mega-mixed-use real estate projects: Buckhead Atlanta, which recently opened, and River Oaks District in Houston, which is set to follow next fall. His company may be based in San Diego, but he and his team at OliverMcMillan know that when it's time to meet with a prospective tenant, this is where they need to be.
"Retail begins for America from New York," Oliver said the morning after the cocktail party, lounging on a sofa on the top floor of a brownstone the company leases in Midtown Manhattan as its local office. "This is the epicenter. This is where the difference makers and the decision makers live and work and play, and they radiate out from here. So you either work to bring them to you or you go to them. That's what we've done. We've come to them on their turf, front and center."
After several years and a tremendous financial outlay, Oliver's strategy has successfully lured some of the world's highest-end retailers in his mission to bring a slice of Fifth Avenue flash to a corner of Houston, a half-mile away from its own iconic luxury retail mecca, the Galleria.
While falling prices of oil - the city's lifeblood - darken the economic mood, Oliver last week announced he'd signed more than two dozen retailers and restaurants for the high-end Houston complex.
Bringing an international flair to the River Oaks District are such renowned fashion houses as Giuseppe Zanotti, Roberto Cavalli and Dolce & Gabbana. Many will be new to the Houston market, including men's apparel brand Bonobos, eyeglass retailer Warby Parker, multi-brand retailer Intermix and Le Colonial, an upscale French-Vietnamese restaurant from Manhattan.
The company's first leasing coup came earlier this year when it announced four high-fashion brands that would open stores in the new project: Cartier, Dior, Tom Ford and Hermes.
Virtually each lease that has been made for the Houston project started with a visit to OliverMcMillan's brownstone.
The company believes its story is heard best in this chic building scented with expensive French candles overlooking the bustling streets of Manhattan, a teeming mix of shops and apartments it is attempting to emulate in its Houston and Atlanta projects.
There's no lobby, no security guard to get past.
The company's executives have a motivational quality as they talk about their projects, explaining not only how the buildings will look but how they will feel.
"It's one thing to see the beautiful blouse but another thing to get it fitted, to start to wear it. ... It's more about what you feel, here in your gut," said Jeff Zeigler, OliverMcMillan's senior managing director of retail services.
They talk about Houston, the booming economy, the culture, the diversity. It's not just an oil and gas town, they say, noting the importance of the medical center, the port, the widening of the Panama Canal and the proximity to Latin America.
They bring their projects to life with expensive props - three-dimensional architectural models lit from within that detail everything from curbside parking, to trees and landscaping, to the storefront canopies. The world they will create, in miniature.
'North of half a billion'
About three years ago, OliverMcMillan signed a five-year lease to occupy the top floor of this 55th Street building so it would have an office, or "showroom" as it calls the space, to pitch its projects in Houston and Atlanta to the retail elite in New York City.
The fourth-floor penthouse feels more like a posh New York residence than a place where high-level business deals are made.
The room in the front is more living room than office. A simple display of calla lilies rests in the center of a coffee table surrounded by a sofa and four plush chairs.
Robert Chavez, the president and CEO of Hermes US, said he was taken with the space when he first visited the brownstone a few years ago.
"I remember thinking, 'Wow, this is different. I'm going into a brownstone to talk about retail and leasing and projects,'" Chavez said. "That should always be one of the first signals that this person is different and has a different outlook on retail and retail centers in general."
On the Monday after the cocktail party, showroom manager Carly Catalana greets guests with espresso and an array of artisan breads, fruits and cheeses. She works the four 60-inch flat screens that line one of the walls not covered in contemporary oil paintings. She plays "sizzle reels" of the Houston and Atlanta projects.
A video of River Oaks District shows a time-lapse display of the construction site - 14 acres of prime Houston real estate along Westheimer just inside the West Loop.
The 650,000-square-foot project is based on a New York-style street grid system where visitors are meant to stroll under storefront canopies along tree-lined streets.
Oliver wouldn't reveal the exact project cost other than saying it will be "substantially north of half a billion."
The company's approach to leasing makes sense based on the luxury brands it is targeting, said Howard Davidowitz, a New York-based retail consultant. And across the retail spectrum, the high end of the industry is seeing much of the growth.
River Oaks District, Davidowitz said, "fits in to where America is. You've got Sears collapsing, Penney's losing a billion dollars a year. But if you look at Neiman's and Saks and the jewelry business, they're hitting the ball out of the park."
One of the challenges for a retail newcomer like River Oaks District is that Houston's premier luxury shopping destination is just a half-mile away in the Galleria. Bulgari, for example, has a store in this longtime establishment of luxury retail.
When asked about the new project, North American president Alberto Festa said he was tempted by it, but the company just renewed its Galleria lease for another 10 years. He said the brand is not quite "a destination" on its own and needs to be near other retailers that will drive traffic there.
"We still need to be close to Neiman Marcus. … Tiffany, these are the brands we feel are more productive for us," he said.
"Selling the dream of something new is hard," Zeigler said. "They can't see it or touch it, so you're really selling the idea. The more tools you can have to sell the idea, the more impactful it is. That's the genesis of this showroom."
The videos, some of which are tailor-produced for specific retailers long before they may even considering signing a lease, are one way the company attempts to capture its audience. Two full-scale architectural models in the back room of the showroom is another.
When he talks to prospective tenants, Oliver has his pitch nailed. His wardrobe is just as thought-out. When he meets with Tom Ford's people, that's whose suits he wears. Same goes for Hermes.
He stands above the model and walks along each side, describing the site plan in great detail - the streets that are being added, how the traffic will flow, the extensive new trees and landscaping, and, of course, where each tenant will go.
The project also will have luxury apartments - with some of the highest rents in Houston - an eight-screen movie theater and office space.
'We're just fine'
When it pitches River Oaks District to potential tenants, the company emphasizes Houston's booming economy, which was one of the first to rebound from the recession.
The developer has had the land since 2006. An earlier project planned for the site never came out of the ground. The economic downturn hit, and building in Houston came to a standstill.
Today, there's again uncertainty about the city's economic future. No one is yet predicting anything dire, but businesses are warily watching as the price of the oil that has brought so much prosperity to Houston continues to fall.
Oliver addressed the issue by pointing to Houston's diversity, the project's strong capitalization, tenant base and location.
"I learned during the last cycle," he said, "when we own strong urban real estate with top tenants and top office space, we're just fine."
Written by Nancy Sarnoff. Link to original article in the Houston Chronicle here.