Swedish Retailer H&M Plans Big Store on Elite Boston Retail Street

Oct. 26--Cheap chic retailer H&M signed a 10-year, 20,000-square-foot lease to move into the Newbry building next spring, making it one of the biggest stores to open on Boston's Newbury Street.

The store will be the Swedish retailer's second location in Boston, joining Guess and Victoria's Secret in the 10-story mixed-use building that occupies nearly a full block on Boylston, Newbury, and Clarendon streets.

"We were somewhat skeptical at first. In New England, H&M became just another discount retailer in suburban malls," said Andy LaGrega, a principal at the Wilder Cos., which oversees retail leases for the building's owners. "But H&M has a much better image -- they are a high-fashion European nameplate -- and H&M convinced us that they belong on Newbury."

H&M is the largest retail deal for Newbry, the former New England Life building that still has about 30,000 of its 150,000 square feet of shopping space available. LaGrega said several other leases are expected to be signed by the end of the year. He said that Zara, another popular European fashion chain, has expressed interest in the Newbry site; a Zara spokesman has said the company is looking to open its first store in Boston. Newbry has already leased out all of its office space.

Opened in 1941, the 620,000-square-foot Art Deco building served for much of its history as the headquarters for the New England Mutual Life Insurance Co., which was acquired by Metropolitan Life Insurance Co. in 1996. A unit of Beacon Capital Partners, founded by Boston developer and real estate investor Alan M. Leventhal, purchased the building in 2002 from MetLife.

Although the $60 million renovation initially was slated almost entirely for office space, Beacon Capital Partners last year received approval from the Boston Redevelopment Authority to expand the retail component and meet the strong demand for shopping space in the Back Bay. The only other major available retail space in the Back Bay is about 30,000 square feet in the Prudential Center, the site of the former Marche Movenpick restaurant.

Local real estate officials estimate that the retail vacancy rate is only about 2 percent in the Back Bay, while the office vacancy is about 13 percent, according to a recent industry report. The office market has been soft in recent years because of a weak economy and job losses, but the retail market has been buoyed by strong consumer spending.

While H&M isn't the first value chain to open on Newbury Street -- Payless ShoeSource operated there for about five years -- the Swedish retailer is the largest in terms of space.

H&M's strategy to have a presence on Newbury Street is identical to the company's New York City launch on Fifth Avenue, across the street from Cartier, Brooks Brothers, and Saks Fifth Avenue, said retail analyst Candace Corlett, a principal at New York consulting firm WSL Strategic Retail.

"The success of H&M in these locations is due to high tourist traffic . . . and willingness of women to combine high-end fashion with cheap chic," Corlett said. "The impact on other retailers in the area is that they begin to offer 'cheaper chic' of their own that allows women to mix it up a bit."

H&M has more than 1,100 stores in 22 countries and the company's designers and buyers create the clothing collections. H&M's other Boston store, in Downtown Crossing on Washington Street next to discounters T.J. Maxx and Marshalls, has about 28,000 square feet, a company spokeswoman said.

Despite the Back Bay's upscale image, the shopping district can support value retailers, said Annette Born, a principal of the consulting firm Urban/Born Associates, noting the successful Marshalls store on Boylston Street, just a block from Newbury Street.

"Everybody stuck their noses up at Marshalls, which was far more pedestrian than H&M," Born said. "And the first people at Marshalls' door were the people who didn't want it."

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