As Times Turn Tough, New York's Wealthy Economize


Plastic Surgeons, Jewelers, Yacht Builders
Brace for Leaner Times; Saying No to Caviar

By ELLEN GAMERMAN, CHERYL LU-LIEN TAN and FRANCINE SCHWADEL

The financial crisis on Wall Street has New York's well-to-do reeling. The people who fuel the area's economy with their spending on art, fashion, cars, restaurants, plastic surgery and other luxe goods and services are starting to cut back once-lavish budgets. As a result, those who cater to their every whim -- from nanny agencies to jewelers to yacht builders -- are seeing clients tighten their belts on expenses from the millions to the thousands.

At luxury boat builder Northrop & Johnson Yacht and Ship, headquartered in the British Virgin Islands, director Kathleen Mullen says a New York investor called this week trying to put off the purchase of a more than $25 million megayacht. The client's debating whether to back out of the deal completely. He'll still have to pay 10%, Ms. Mullen says, since he'd already signed the contract. 'He's undecided about what he wants to do,' she says. 'People have been very shaken.'

On Thursday, a New York mother of two young children asked Carol Solomon, the owner of New York Nanny Center Inc., whether she could find a good nanny willing to work for less than the $1,200 a week sought by a candidate she had found elsewhere.

'Based on everything that's been going on with the market,' the mother told Ms. Solomon, 'I'm concerned about committing to that kind of salary.' Ms. Solomon suggested another nanny seeking a more modest salary of $750 a week.

Disappointing Birthday

Plastic surgeon Z. Paul Lorenc says one patient recently asked him to inject half a syringe of Restylane and save the rest for later to save money. He refused. 'Every single patient that I have seen today so far has mentioned that there's uncertainty on Wall Street,' Dr. Lorenc said this week. 'Everybody's waiting for the other shoe to drop.'

Bright Spot Dims

Expensive jewelry -- one of the few bright spots in the luxury-goods industry until now -- appears to be a new victim of the financial crisis. Patricia G. Hambrecht, who helps private clients buy and sell high-end jewelry, this week watched a client in the financial-services industry slash his budget for his wife's wedding anniversary present to $20,000 to $25,000 from $50,000.

Jewelry designer Tina Tang said August sales were down 50% year over year and foot traffic was off 75% at her Gold Label by Tina Tang store in Greenwich Village, where she caters to professional women with items that go for as much as $16,000. She expects sales to fall more this month. To clear merchandise and generate cash flow, Ms. Tang is holding her first ever storewide sale, slashing prices on all items by 25%. 'We're feeling it,' she said.

Art and Money

Despite Sotheby's record-breaking auction of Damien Hirst's artworks in London this week, many galleries fear fallout from the crisis on Wall Street. Chelsea art gallery owner Nick Robinson says he expects the work of popular artists who command prices of more than $250,000 in his gallery will still sell well, because people will consider the art an investment. But mid-career artists with lower-priced pieces may suffer because the value of their work is less certain, he says.

The full impact of the financial crisis on those who sell to the wealthy won't be known for months since much of the big spending by folks on Wall Street is fueled by the bonuses they receive between December and February. The prospect of smaller bonuses this year has realtors, retailers and renters of villas in the Caribbean on edge.
Glenn Ormiston, a reservations agent at Wimco Luxury Villa Vacations and Hotels, in Newport, R.I., says her company's villas on the island of St. Barts are all booked for Christmas but notes that clients have until mid-October to pay in full, cancel or trade down to a smaller property.

At Roundabout New and Resale Couture, a consignment shop on the Upper East Side, manager Kristjansen Villanueva says a woman came into the store for the first time on Wednesday saying the 'resale' sign in the window caught her eye.

Mr. Villanueva says the customer told him she's watching her spending because her husband works at Lehman Brothers and their finances were 'a little bit shaky.' He says she bought an Armani pinstripe suit for $499 -- when buying it at a boutique would have cost her $2,500.

Ellen Gamerman / Cheryl Lu-Lien Tan / Francine Schwadel