Robert K. Futterman & Associates’ strong relationships with tenants and landlords have led the company to new areas of the country and new lines of business.
By, Randall Shearin
May 1, 2007
Robert K. Futterman & Associates (RKF) is known by most in the retail business as the largest retail brokerage in New York City. But what most people don’t know is that RKF goes way beyond brokerage. The company is involved in everything from retail consulting to investment sales to the leasing of high-end lifestyle centers and mixed-use projects nationwide.
Shopping Center Business recently met with executives from RKF at the company’s headquarters in New York City. While there, SCB met with Robert Futterman, chairman and CEO; Jeffrey Fishman, senior vice president of RKF Investment Sales & Advisory Services; Mitchell Friedel, executive vice president of RKF Retail Property Advisors; and David Rosenberg, executive vice president of RKF.
Beginning With Brokerage
RKF launched in 1998 as retail brokerage firm serving Manhattan and the other boroughs of New York City. The company quickly gained business and attention from tenants and landlords as it developed a reputation for being a fair player to either party.
Today, if a retailer is looking for space in New York City, most people are going to run across RKF on one or both sides of the table. But in addition to being the largest retail brokerage in New York City, RKF is also the largest retail-only brokerage in the country.
“We say that because there is not another company that does retail leasing as their main, core business, other than us,” says company Founder, Chairman and CEO Futterman. “Having over 115 employees from coast-to-coast dedicated to retail space, we don’t think there is a larger company completely dedicated to the business.”
The company has a large amount of repeat business among landlords in New York City. Generally, the company is one of three choices that a landlord will have in the running to represent them on a new project in the city. The company’s business is split evenly between landlord representation and tenant representation in New York City. Today, you can scarcely walk a block in New York City without seeing the familiar RKF banner advertising a space for lease.
And those signs are on some very high profile projects right now. The company is handling the retail leasing at The Plaza, one of New York City’s most famous hotels, which is undergoing a massive renovation that will include 160,000 square feet of high-end luxury retail. The company is also working on one of the largest retail projects in the city, 270 Greenwich Street (also known as 101 Warren Street), which has 270,000 square feet of retail space. RKF has signed Barnes & Noble, Bed Bath & Beyond, and Whole Foods to leases at the project, which is being developed by Edward J. Minskoff Equities. RKF is also leasing 401 West 14th Street in the Meatpacking District, a project that will contain 50,000 square feet of retail.
Boroughs Bring New Business
In addition to Manhattan, RKF’s signs are a familiar site in the boroughs, too. The firm’s practice in the boroughs is headed by Executive Vice Presidents Barry Fishbach and David Rosenberg, who have a collective 40 years experience in doing retail deals in Upper Manhattan, the Bronx, Brooklyn, Staten Island and Queens. The two lead a team of brokers in those markets.
Historically, the retail centers of the boroughs were the multiple business districts that were scattered throughout the boroughs, clustered around train or subway and bus stops. As residential prices continue to rise in Manhattan, there has been a stronger demand for residential space in the boroughs. As the boroughs have become more populated — and more popular with a younger, more sophisticated demographic — new retail corridors have developed.
One undeniable fact about the boroughs that exists is the population density. Brooklyn and Queens both have about 2.5 million people each. If you took that population and placed it anywhere else in the U.S., you would need roughly five regional malls serving the population. There is one regional mall in each borough, so there is plenty of need for retail. Big box retail continues to evolve in the boroughs. Smaller retail continues to infill. With more residential being developed — in some areas luxury residential — the boroughs are seeing increased density and higher incomes than before.
“With that, you start to see the emergence of new retail corridors. As these new residents move into the boroughs, the demand for more sophisticated retail arises,” says Rosenberg.
Futterman attributes a lot of the company’s New York City growth to the activity that the company is seeing in the four boroughs of New York other than Manhattan.
“The boroughs have grown exponentially over the last few years,” says Futterman. “More national tenants are realizing how incredible the population is in the boroughs and the buying power that exists there, and the aspirational shopping that people do in the boroughs.”
The gentrification of on-street shopping areas, like Red Hook and Williamsburg in Brooklyn, has also fostered RKF’s business in the boroughs. Retailers like Target, IKEA and Whole Foods, who have opened or are slated to open in the boroughs, have shown the way for smaller national and regional tenants who want to expand there. RKF is currently leasing the 35,967-square-foot retail portion of 184 Kent Street, a luxury loft complex in Brooklyn.
“We get involved in a lot of the new projects that are being developed in the boroughs,” says Futterman. “We also get involved in a lot of promotional brokerage — putting retailers in spaces in the central business districts of the boroughs.”
In Queens, the company has leased 90-30 Metropolitan Avenue, a facility that now houses two levels of big box space totaling 66,000 square feet. RKF secured leases with Staples and Michaels, among others for the project. In Flushing, the company is the exclusive leasing agent for Flushing Commons, a joint venture of the Rockefeller Group and TDC. The 1.7 million-square-foot mixed-use development will contain 347,000 square feet of retail and restaurant space.
In the Bronx, RKF has been busy with several projects, including one for Related.
“The Bronx was overlooked for years,” says Rosenberg. “Now, not only is it viable, but it is the fastest growing borough of the four outer boroughs. Developers and national retailers have recognized the spending power of the Bronx resident.”
RKF is currently leasing The Hub in the Bronx. Located at Third Avenue and 154th Street, the 170,000 square-foot mixed-use development will feature a 260-car parking garage and street-front retail including a 16,245-square-foot Rite Aid, a 42,400-square-foot Forman Mills and an 18,000-square-foot Staples Office Supplies Superstore.
RKF is representing plenty of retailers who are interested in the boroughs, among them FedEx Kinko’s, 24 Hour Fitness, Sports Authority, and PetSmart. The company is also representing smaller specialty retailers looking for specific locations in the boroughs.
“You would think 30,000- to 40,000-square-foot boxes are hard to come by in the boroughs,” says Rosenberg. “However, there are a lot of developers with projects in the works, and that is creating a lot of opportunity for retailers new to the market.”
RKF has also grown its business in Westchester County, New York, and in areas like Long Island, Northern New Jersey, and Fairfield County, Connecticut.
With New York City as its headquarters, the company has used its landlord and tenant relationships to parlay business in new markets and new areas of the retail business. For instance, after having success with one landlord in New York, RKF was asked to lease a project for the company in another state. That led to the formation of RKF Retail Property Advisors, a division of the company that represents lifestyle and mixed-use projects that’s headed by Mitchell Friedel. On the tenant rep side, tenants have led the company to open offices in Los Angeles and Las Vegas.
With new lifestyle centers and mixed-use projects in the U.S., RKF Retail Property Advisors is quickly becoming a go-to firm for project developers. The company currently has more than 2.5 million square feet of projects that it is leasing. The firm becomes involved in projects where it will be necessary to have upscale lifestyle retail and restaurants as an attractive feature for the development. RKF Retail Property Advisors works closely with both the developers and the master architects of the projects to create a leasing program and merchandising plans for the centers, then carries those plans out.
Currently RKF Retail Property Advisors has several projects under its belt. The company is handling leasing for the 400,000-square-foot retail portion of The Mercato in Naples, Florida, for The Lutgert Companies. It is also the exclusive consultant for the retail leasing of Bloomfield Park, a mixed-use development that Developers Diversified is building in Bloomfield Hills, Michigan, which will have 500,000 square feet of retail. In Chicago, the company is leasing the 300,000-square-foot retail portion of The New City, a new mixed-use project Structured Development is creating in Lincoln Park. RKF Retail Property Advisors is leasing Town Place at Garden State Park, a 250,000-square-foot lifestyle center that is being developed on the grounds of a former racetrack in the affluent Philadelphia suburb of Cherry Hill, New Jersey. For New England Development, RKF Retail Property Advisors is handling the leasing of two projects. It is leasing the 400,000-square-foot lifestyle component at Westwood Station, a 1.2 million-square-foot mixed-use project in suburban Boston and 400,000 square feet of retail at Nashua Landing in Nashua, New Hampshire.
“Developers find when they hire us that, as a team with their internal leasing professionals, we can accomplish a lot more together,” says Friedel. “Large mixed-use centers from the ground up are our specialty. We know the intricacies of these projects; understanding that the success of the retail translates directly to every other venue within the development is paramount.”
Coast To Coast
As its landlord representation has grown across the country, so too has RKF’s brokerage division. The company has opened offices in Las Vegas and Los Angeles, and plans to open offices in other cities as well.
Since RKF does so many deals on behalf of landlords and tenants in New York City, it has the opportunity to meet with many tenants from either side of the table and establish a reputation with both parties.
“Tenants want a good broker representing them to get the best deals,” says Futterman. “They want the broker to be objective, not just look to make a commission and run. They want long-term relationships.”
A tenant relationship led one of RKF’s most senior brokers, Robert Cohen, to establish an office for the company in Los Angeles in 2003. Cohen later joined forces with another broker to further establish the company’s presence in the region. RKF’s business in Southern California is representing national and regional tenants in the area. RKF has arranged deals for several retailers in popular shopping areas like downtown Beverly Hills, Robertson Boulevard, Third Street Promenade, Santa Barbara and Pasadena, just to name a few. It has also placed tenants in the areas malls, centers and great shopping streets.
“We have a great outlet now to help all the tenants we represent find space in Southern California,” says Futterman.
In its Las Vegas office, which employs 10 people, the company has picked up a number of leasing assignments in that city for hotel and condo landlords with retail space. While the company’s business outside of New York City tends to be driven by tenant representation, 90 percent of its business in Las Vegas is landlord oriented.
RKF’s business in the first quarter of 2007 was up 25 percent over the first quarter of 2006, showing that the company is growing in volume as well as size.
In markets where RKF does not have a presence, the company forms strategic alliances with other brokers to locate tenants. This relationship goes both ways, since some of the reciprocal firms clients will eventually look for space in a market where RKF is active.
Because RKF was so prominent in the retail leasing side, it was a natural for the company to begin handling investment sales and acquisitions for clients as well. RKF Investment Sales & Advisory Services is a firm-within-a-firm that represents buyers and sellers of real estate nationwide.
The firm’s chief business is the sale of buildings with a retail component and retail condominiums in New York City. For the many sellers it represents in such transactions, however, it also becomes the buyer’s agent in many instances especially if their client wants a like-kind exchange. While their sales may be located in New York, the properties they locate for 1031 exchange clients are located across the U.S.
The common element in deals done by RKF Investment Sales & Advisory Services is retail. Since retail is usually only a portion of a building in New York City, the company finds itself selling multifamily deals with retail spaces and small office buildings with retail. Most of the sellers that the company works with are families, individuals and institutions who own real estate in New York. In the boroughs, sellers tend to be more individuals and family controlled entities.
A recent deal for RKF followed the entire lifecycle of a space. RKF investment advisors represented the purchaser of a retail condominium at 1251 Lexington Avenue in Manhattan. The company then represented the landlord, who had acquired the condo for $20.2 million, to lease the vacant retail space. RKF leased the space to Starbucks and Pets on Lex, a high-end pet store. After leasing the space, the client then asked RKF Investment Advisors to sell the condominium. RKF sold the retail condo for $25.2 million.
“Deals like that have a vacant retail component and are natural for us because we know the value of the retail market in the city from a leasing standpoint and an investment standpoint,” says Fishman.
RKF’s business in this area has greatly benefited from the investment climate in New York. Real estate in the city is in demand, and buyers are not afraid to pay the price to attain the assets they want. Especially popular are retail condominiums.
“The market is extraordinary right now for investment properties here,” says Fishman.
The demand for 1031 exchanges by its seller clients has led the company to create a national network to locate properties for its clients. This enables RKF to quickly locate a property for a seller to transition their capital to within the 180-day window provided by the tax code.
The company’s other offices in Los Angeles and Las Vegas also have investment sales brokers in them. The division is growing in those markets as well.
“We have a national reach to buy other properties, which really has been focused around single-tenant retail,” says Fishman.
To help retailers and owners looking to fill a void, RKF launched a consulting services practice, headed by Stacey Leibowitz. On the landlord side, the division helps land owners realize what a property can be used for by doing feasibility studies on a particular piece of property. The same can be said for underutilized buildings that a landlord may own. A landlord may have the opportunity for a lease from a particular tenant, but RKF may recommend finding a tenant with a different use to maximize the building’s potential. For clients considering building retail projects, RKF’s consultants can figure out the holes in a particular market to assist with leasing plans. This can lead to the type of center that the developer ends up creating.
“The consulting group really complements our property advisory and landlord and tenant representation business,” says Futterman.
On the retail side, RKF works with retailers who are entering new markets and want to be strategic about the locations it chooses in a given market. For instance, RKF has worked with retailers from Europe who are locating stores in the U.S. for the first time. It works with them to determine the correct cities, then the correct market within those cities.
“We help retailers identify who their core customers are, and where those customers shop in a given market,” says Futterman.
It then passes the retailer on to the brokerage side of the business to represent them in the market in finding space. The division has also worked with manufacturers looking to open one flagship store. In those cases, location is paramount since the store will be the company’s only retail presence.
The atmosphere — and philosophy — at RKF is to have a team approach toward every business line.
“We have a very democratic way of doing business,” says Futterman. “I defer to my senior managers quite a bit on decisions. We discuss the best solution to certain situations, but sometimes I have to make a gut decision and go with it. A brokerage business is not easy to run. We really have someone minding the store here; we’re not a division of a big company.”
That entrepreneurial edge has given the brokers and advisors at RKF a reason to stay. Fiercely independent and competitive — in the toughest brokerage market in the U.S. — brokers are not known for their loyalty in New York. But at RKF, brokers are loyal because they are rewarded and treated well.
“We get a lot of opportunities to pitch ourselves to owners,” says Futterman. “We win a lot of that business and it has created an enormous amount of wealth for our brokers. They stay busy.”
For many years, Futterman worked for another brokerage firm, as have most of his brokers, and recognized what was the right way of doing things and what was the wrong way, especially when it came to how to treat employees.
“The people who are with me, especially those who came with me to open the doors in 1998, have been instrumental in building this company,” says Futterman. He cites co-workers like CFO Lewis Weinger and Senior Vice President of Marketing Elyse Bandel, who help him run the company day-to-day. Futterman has also kept company with many of New York’s top brokers since the company’s launch, including Barry Fischbach, David Rosenberg, Robert Cohen, Howard Gilbert and Karen Bellantoni. Futterman attributes the company’s retention rate to the way decisions are made.
Futterman believes being independent and retail focused allows the company to better service its clients. The brokers are held accountable for account service, developing a strategy for a property or retailer, accurate reporting of activity on a property or site search. The company supports brokers with intense market research on the tenant side, and advertising and marketing for properties it is leasing. The company has a five-person market research and mapping department who studies location, demographics, sales volumes and traffic patterns of each property. For retailers, the research department can analyze potential locations for similar data.
“On some of the larger projects, I want to be involved in the deals,” says Futterman. “I still enjoy the transactional nature of the business.”