The last time investors and retailers spent millions of dollars on Knox Street, Gary Friedman was there.
Friedman was the head of Pottery Barn in 1995, and the chain’s expansion to Texas began on Knox Street that year. Crate & Barrel, the Apple Store and others came later.
Friedman was back on Knox Street a week ago, launching another round of building blocks.
Now president and CEO of HR, formerly known as Restoration Hardware, Friedman opened a 70,000 square foot three-level HR furniture gallery and rooftop restaurant in Knox that cost nearly $ 40 million. “We will be staying here for a long time,” he said.
RH used its own capital to build the store on a 40-year ground lease. The company can come back and put an underground parking lot and use the garage behind for something else.
It could be anything.
Friedman’s stated plan is to transform HR from a $ 3 billion a year company into a $ 20 billion global brand. It went public as a furniture retailer at $ 24 a share in 2012 and is now trading at over $ 620.
It moves the business in unexpected directions.
In New York this fall, RH is opening what Friedman calls a “redesigned hotel” with privacy at its heart and “no lobby, no meetings or conventions”.
The company now leases Gulfstream jets and has named them RH1 and RH2. And it’s almost done with RH3, a luxury yacht that will be available for charter in the Caribbean in the summer and in the Mediterranean in the winter.
The pandemic has delayed HR’s expansion in Europe, but it now plans to open furniture galleries in Paris and London next year.
Earlier this year in Aspen, RH made an initial investment of $ 105 million to build what Friedman calls an “ecosystem.” It will include shops, a guest house, a bathhouse and spa, restaurants and residences including fully furnished four bedroom houses.
Real estate is an integral part of Friedman’s vision. Aspen’s real estate portfolio will make HR a developer and an owner, he said.
“If we could have bought a property on Knox Street we would have done it, but Michael Dell and others beat us,” Friedman said.
Dell’s family-owned investment firm, MSD Capital of New York, and Dallas-based real estate firms The Retail Connection and Trammell Crow Co., have together bought about 70% of the Knox Street neighborhood in the past two years, including buildings on Cole and McKinney avenues and Travis Street. Separately, Weir’s 12-story tower with retail on the first two levels is expected to be completed by the end of the year.
‘You want to go inside’
Friedman says he “loves” Knox Street for its “sense of identity, architecture and humanity.” He compares the shopping experience to “windowless department stores and malls.”
He made the Knox RH store smaller to create outdoor spaces on either side instead of building at the lot line. He still believes in physical retail, adding that “everyone’s store is the same size online.”
“You drive through Knox Street, and you look at how big and beautiful our store is, and you want to go inside,” he said.
He thinks Dallas will be one of the top five HR galleries up there along with New York, Los Angeles, Chicago and Houston.
Friedman said no decision has yet been made regarding the 12,000 square foot store at Plano Stores in Willow Bend, which opened in 2012. For the most part, RH has closed the legacy galleries, has t he says, but Plano’s location is “a bit bigger and newer.”
Houston has a new store, but Friedman said he couldn’t disclose the location yet. RH opened in Houston’s Highland Village in 2011. That 17,000 square foot store will be replaced by another four times the size, he said.
“Dallas is an ultra sophisticated social city. I would live here if I wasn’t entrenched in California, ”he said. “If I were a young beginner in my career, I would be in Dallas.” Her twin daughters have just completed their first year at Southern Methodist University, and her favorite local restaurant is Toulouse sur Knox.
Friedman’s connection to Dallas extends beyond its history with one of Dallas’ best-known streets for shopping and entertainment. There are people here who were involved in a turning point in his career.
By the mid-1990s, Friedman was known nationwide for leading a turnaround at Pottery Barn. He was losing money on his catalog until he started opening larger stores to house the full breadth of the retailer’s brand. He was also known to have created another Williams Sonoma brand, West Elm.
But in 2001, he was sacked as CEO of parent company Williams Sonoma and left.
“Howard Lester [founder of Williams Sonoma] broke my heart, ”Friedman said.
It was the Dallas investors who caught Friedman, who began his retail career in 1977 as a stock boy at a Gap store in Santa Rosa, Calif., to succeed Restoration Hardware founder Stephen Gordon as CEO.
Dallas investor Ray Hemmig was an original member of the Restoration Hardware board in 1994 when he and Dallas investors Edward “Rusty” Rose III and Marshall Payne funded the expansion of the hardware, accessories store. and premium furniture based in California.
Mark Masinter, managing member of Dallas-based Open Realty Advisors, was helping Gordon find locations for new stores, including the original restoration hardware that opened on Knox in 1996. Masinter had introduced Restoration Hardware as a prospect. investment in Payne and others at Cardinal Investments Co. and advised HR on their new stores from the start.
Gordon had an eye for decorative accessories, weird knickknacks, toys and hardware, but the brand had stalled and its stock collapsed. Friedman was 43 when he joined Restoration Hardware in 2001. He says he put all the money he had at the time, $ 5 million, into it and got to work.
Hemmig was a member of the board of directors of Restoration Hardware until 2008 and was instrumental in hiring Friedman. The company was privatized in 2008 by private equity firm L Catterton. Hemming headed a special committee of the board that negotiated the sale, which included a clause that Friedman would remain CEO. (The company went public again in 2012.)
“It was absolutely amazing to be a part of Gary’s vision for SR. There is no one like him, ”Masinter said. “He is the visionary of visionaries.”
Hemmig, founder of Dallas-based Retail & Restaurant Growth Capital, said he remains a fan. He was at the RH Grand Opening this month, and the two friends had lunch at the RH Rooftop Restaurant.
“Gary was on an island somewhere, maybe Mykonos, when we were negotiating with him,” Hemmig said. “In Gary, we found a visionary, not a category buyer, which was the strength of the founder.
“What’s ironic is that the guy hired at William Sonoma when Gary passed away didn’t last long,” Hemmig said, “and Gary, he turned 20 fabulous.”
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