Urban makeover artist
When Joseph Sitt turned 12, his grandmother promised to buy him the two things he wished for most: a video game and a parrot. Sitt was raised in what he calls the "tougher neighborhood" of Bensonhurst in Brooklyn, N.Y., the setting of The Honeymooners and Welcome Back, Kotter. After the pair cased all of Brooklyn and came up empty-handed, they had to trek into Manhattan to find retailers selling what the boy wanted.
And so a retail developer was born. Now 40, Sitt is the founder and CEO of Thor Equities, a real-estate developer focused on bringing retailers to blighted, urban areas of primarily low-income residents. He started the company in 1986 when he was just 21, with the purchase of a plot of land in the Bronx. He built a one-story retail building that eventually attracted Rite Aid Pharmacy and Payless ShoeSource. Today, the company owns more than 4 million square feet of real estate in cities nationwide, including Detroit, Chicago, and Atlanta. Thor Equities buys and develops primarily retail properties and consults with stores on their urban expansion strategies.
No sale. While Sitt knew firsthand of the opportunities for brand-name retailers in New York's inner-city neighborhoods, selling that pitch to them wasn't always so easy. For years, he endured rejection after rejection of his attempts to entice retailers to his shopping centers in some of the more crime-ridden areas of New York. The neighborhoods were too rough, there were no data on the market, and the suburbs had more money. Frustrated by the rebuffs, he started his own chain of stores to prove that inner-city retail prospects existed. It worked.
"Everybody said I was nuts," says Sitt. "They said, 'This kid's gonna get his ass handed to him.' But the day has arrived. The white urban market is saturated. There is no place else to grow. Joe Sitt proved it." Indeed, the company Sitt founded in 1991, called Ashley Stewart, now counts 170 stores. He sold the clothing chain, which caters to the African-American professional woman, in 1998.
Speaking with a thick Brooklyn accent, Sitt is easily excitable. Ask him about inner-city economics, and you're likely to get an earful of colorful anecdotes about urban prospects, places that have "gold in our own backyards." His observations are now backed up by hard data, which have helped to win retailers like Forever 21, Foot Locker, and Old Navy to some of the toughest neighborhoods in the country. According to the nonprofit group Initiative for a Competitive Inner City, urban cores hold more than $85 billion in annual retail spending power. Moreover, the predominantly black and Hispanic populations in many of these neighborhoods are among the fastest growing.
Sitt credits these figures as just one of the reasons for the change of heart of some major retailers. His company's improvements to malls are another attraction. In 2001, Thor Equities bought a run-down strip mall in the Gentilly Woods area of New Orleans. Residents told him they needed a linens store. Thor Equities remodeled the building, upgraded the parking lot, improved the lighting, and brought in Anna's Linens as a mall anchor. "It was an ugly space, and it took a lot of work on his part," says Pat Barber, Anna's vice president of real estate. "He did a beautiful job with it. The store is doing great." At the start of the project, Sitt says, only one in 40 lenders responded to his request to fund the project. After its completion, he was able to refinance with J.P. Morgan Chase. "They all thought it was an unfinanceable ugly duckling," he says. "I had to prove I was able to do it."
Thor Equities is doing similar renovations in Philadelphia, Chicago, and Puerto Rico. But Sitt still focuses much of his effort on his hometown of Brooklyn. Many firms cite high prices and space constraints as reasons to open in New Jersey instead of Manhattan. "I think Brooklyn should be the weapon New York City uses," he says. Sitt is now weighing offers from three of the largest chains, including Wal-Mart, to anchor his Gallery at Fulton Street in downtown Brooklyn. With a big-box retailer like that, there will be no shortage of video games for all the 12-year-olds in Bensonhurst.
This story appears in the August 16, 2004 print edition of U.S. News & World Report.
advertisement
