An old acquaintance in marketing for a national rental-car chain once explained to me that locations in NYC are huge loss-leaders and only kept open for full network coverage and sometimes for prestige.
The company had to have rental locations at LaGuardia and JFK, even though it cost them an arm and a leg. It was simply a cost of doing business.
The Nordstrom family originally had been prudent in their approach to Manhattan. There was the Jeffrey store (OK, maybe that was stupid), the Rack in Union Square, and a few experiments in high-end retail to get a feel for the market. Traditionally, Nordstrom had been in Long Island and mall locations in NJ, where they could sell couture to suburbanites. Their approach seemed measured and prudent – very Swedish.
At some point they said "screw it" and decided to shoot the moon.
They spent $400 million on a block of Midtown, partnered with Extell, and put up a supertower. We need to learn more about the potential liability to Nordstrom in this deal, because the condo units are coming online precisely at the end of the cycle. They may be in serious trouble, beyond the scope of the success or failure of the full-line store itself. We will watch this carefully.
So who stepped up and convinced the brothers to go all-in on this NYC effort? Or did they get too far out over their own skis?
Drink glögg, smell own farts, repeat.