A New York state of mind
Glitzy dealership projects help transform Manhattan's gritty Hell's Kitchen
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Carmakers are spending enormous sums on fancy dealerships along 11th Avenue on Manhattan's west side, a part of town that has picked up the moniker "Automobile Row." The aim is to boost their brands in the country's largest and wealthiest metropolis with cutting-edge architecture and experimental customer service.
Several major dealership projects have begun or been completed in the past three years, including glittery retail monoliths for Mercedes-Benz, BMW, Mini, Audi, Volkswagen, Infiniti and Nissan. The projects are between West 57th and West 47th streets, and they are helping transform the area.
"It is the largest market area for vehicle sales in the country -- larger than Los Angeles and Miami," said Mark Schienberg, president of the Greater New York Automobile Dealers Association. "Because of the population density and wealth that is here, manufacturers want to make sure they have a representation."
Since the 1980s, dealerships have been moving from Broadway to an area of west Manhattan called Hell's Kitchen near the Lincoln Tunnel, the New York Passenger Ship Terminal and the CBS Broadcast Center.
For years, the stores sat amid a gritty collection of rundown warehouses and industrial buildings. But that began to change with a real estate boom that started in the late 1990s and the construction of upscale residential housing in the area.
The new dealerships are helping spiff up the neighborhood. All told, carmakers and dealership groups have invested about $1 billion in the projects in the past three years, according to the dealer association.
Some of the stores will be laboratories for new customer services, such as a virtual reality vehicle configurator planned at BMW of Manhattan. Projects piloted at Mercedes-Benz Manhattan include a radio-frequency identification tag system that tracks the whereabouts of service vehicles and a customer concierge service. Both are being rolled out nationwide.
The BMW, Mini, Mercedes, VW and Audi stores are factory-owned dealerships. The Nissan and Infiniti stores are being built by Bay Ridge Automotive Group of New York.
Afraid the new stores would draw business from other new-car dealers, the dealer association successfully lobbied for state legislation banning factory-owned stores in New York state. The law took effect in 2009, but existing stores and projects that were under way were grandfathered in, Schienberg said.
The projects include:
-- A factory-owned, 69,000-square-foot Mini of Manhattan dealership on 11th Avenue at West 57th Street and a renovated BMW of Manhattan store on West 57th Street between 10th and 11th avenues. The Mini store opened in January, but the exterior is not finished. The BMW store will be completed in the first quarter of 2013. The combined cost of the projects is $60 million.
-- Factory-built Audi and VW stores are being built a block away on West 56th and West 55th streets in a renovated 260,000-square-foot, six-story building. The VW showroom opened in January, but the service department and other areas are under construction. The Audi store will be done in August. The cost of the projects is $125 million.
-- The $220 million Mercedes-Benz Manhattan opened in May between West 53rd and West 54th streets. The new 330,000-square-foot, five-story building has 71 service bays.
-- Two stores are being built by Bay Ridge Automotive. A renovated 100,000-square-foot, block-long facility between West 48th and West 47th streets that will house Infiniti and Nissan of Manhattan is expected to open in October.
 | Schienberg: Automakers flock to NYC. |
Mercedes test bed
The same group is planning a 300,000-square-foot store for Lexus and Toyota. The location hasn't been disclosed because the real estate deal is being negotiated. The dealership will be completed by the fall of 2013.
Mercedes-Benz Manhattan, which moved 12 blocks uptown from its aging and smaller store at the commuter-congested foot of the Lincoln Tunnel, is the grandest and most expensive of the new dealerships.
The store combines floor-to-ceiling glass, light colors and modern decor to create the look of a high-end clothing boutique. The 27 floors above the dealership house luxury condominiums and apartments.
The dealership was built from the ground up and is a showcase of the brand's Autohaus design style. It also is a test bed for new customer service and processes. For example, the store has seven concierges wearing headsets to wait on customers. They were trained by the same company that tutors employees of the luxurious Ritz-Carlton hotels.
There are two showrooms for pre-owned vehicles, two high-speed industrial car washes and two cafes. And Mercedes-Benz Manhattan uses an automated parts storage system similar to that used by industrial warehouses.
The dealership also has a business center for customers and will lend them iPads. It offers a pickup and delivery service and has a fleet of 150 loaner cars and a shuttle service.
For service customers who don't need transportation or prefer to wait for the work to be done, Mercedes has launched a program called "My Service" that offers price discounts on the work. The customers get a 20 percent discount on standard maintenance if they don't take a loaner car. The program was piloted at Mercedes-Benz Manhattan and has been rolled out nationally.
"We wanted the dealership to be seamless with the rest of our buyers' lifestyle," said Blair Creed, the store's general manager. "Premium car buyers go to great hotels and restaurants. Sometimes dealerships do not deliver the same kind of experience. We have to make sure it feels right."
Volkswagen of America and Audi of America bought a building in late 2009 that once housed General Motors franchises. The factory is renovating the circa-1930s structure to create side-by-side dealerships.
The new dealerships showcase Volkswagen's "white frame" and Audi's "terminal" facility standards. The Open Road Auto Group of Bridgewater, N.J., runs the stores. The group has 14 other dealerships in New Jersey and New York and ranks No. 15 on the Automotive News list of the top 125 dealership groups in the United States with retail sales of 19,597 new vehicles in 2010.
"VW may not be a luxury brand, but you will not know that walking into that showroom," said Michael Morais, Open Road's executive vice president.
'A rare opportunity'
Steve Klipstein, dealership facilities manager for Volkswagen of America, said VW chose 11th Avenue because "there is a very small circle of places where we really wanted to be."
"A lot of spots would have been boutiques, and this was a rare opportunity," he said. "We bought at the bottom of the real estate market."
Mini of Manhattan opened in January next to a BMW certified used-vehicle store. It features Mini's first "Hub" showroom with iPads for configuring new cars and large video displays streaming Mini footage.
Jeff Falk, president of the Mini store and BMW of Manhattan, said the "Hub" will be an option for all Mini stores.
The BMW store is a test bed for facilities standards that BMW will roll out in the coming years, said Peter Miles, BMW of North America's senior vice president of operations. One such feature is the virtual product presentation -- touch screens that allow customers to configure vehicles and see the colors, features and interiors from every angle using an animation technique that's similar to virtual reality. This is in addition to the iPads that salespeople use to explain vehicle features.
The look of luxury
Bay Ridge Automotive is modernizing its Lexus, Toyota, Infiniti and Nissan stores and adding services to keep up with the competition, said John Iacono, vice president of the 20-store group.
"The other stores are factory-owned and we are taking this on by ourselves," said Iacono, who wouldn't disclose the cost of the two projects.
A block-long building running from West 47th to West 48th streets and facing 11th Avenue is being transformed from stucco to glass. The 100,000-square-foot facility will house Nissan and Infiniti showrooms that are now in separate buildings.
Iacono said Bay Ridge's new Lexus and Toyota store also will combine the franchises now housed in separate stores.
"The core and the finishes will make people feel like they are in the comfort of their own homes," he said. "We'll have quiet spaces, a waterfall for a calming feeling, service drives with granitelike flooring and lots of plants inside."
It isn't the newest, but the Ford Motor Co.-owned Manhattan Automobile Co. is still the biggest. The dealership has operated as a separate entity since 1997 on 11th Avenue. It has Jaguar, Land Rover, Ford, Lincoln, Mazda and Volvo franchises in a 387,000-square-foot, eight-story facility with 125 bays.
The store was renovated in 2007. It boasts the country's first rooftop Land Rover off-road test track, and the Ford showroom has a rock climbing wall, said CEO Gary Flom. "We were the first ones here and when we were engaged in a renovation, every manufacturer visited us to see what we were doing," Flom said. "Everything that we did, they put into their stores."
You can reach Diana T. Kurylko at dkurylko@crain.com. -- Follow Diana on 
