The enthusiasm for city retail continues unabated.
“Every retailer outside of New York has a desire to be in New York but it’s a process and it takes time,” said Jedd Nero, director of retail at Avison Young.
“But there is always an interest from foreign tenants to open stores here.”
Still brokers complain it takes a long time for deals to close. “Everything is getting negotiated and renegotiated,” said Faith Hope Consolo, head of retail at Douglas Elliman who says she has one lease out nine months.
There is one bright spot, however, as food tenants bringing many different concepts are especially plentiful.
“To compete in this city you have to be on top of your game,” Nero said, noting that today’s restaurateurs are sophisticated and well-funded restaurant groups.
Among those also running with well-funded restaurants is Kim Mogull, CEO of Mogull Realty, who now represents Zuma, Iron Chef Geoffrey Zarkarian and others, all seeking the perfect spots.
To help tenants find locations, brokers must understand the products, price points, demographic profiles and whether the store is for branding or real sales.
“We extend ourselves to understand their business and then to educate them as to where they should be and why they should be there,” said Nero. “There are so many pockets and markets so you can have multiple stores and not cannibalize your business.”
Pockets that are filling in include parts of Fifth Ave. where Victoria’s Secret will open a 63,780-foot flagship at 640 Fifth Ave. Below 42nd Street, Lee Block of Winick Realty Group and colleagues brought Redken Fifth Ave. from 565 Fifth at E. 46th Street to 404 Fifth, between 36th and 37th Streets. “Retailers are seeing the same traffic south of 42nd Street but the locations are much more of a value,” said Block.
On the West Sde, Kim Mogull, CEO of Mogull Realty, sees new opportunities. “The stars are aligning on this corridor and at the Seaport,” Mogull said of the Downtown project.
At Hudson Yards, Karen Bellantoni, vice chairman of RKF, said there are many tenants negotiating for space. “People will really embrace Neiman Marcus and will love the hotels,” Bellantoni said. Tenth Ave. will also fill in as new apartment buildings continue to open, she predicted.
As for Soho, Bellantoni recalled a previous cycle that had retailers hanging back due to high prices before the space was all absorbed. “Tenants are still circling but … it is a pricing issue,” said Bellantoni. “I would like to see more momentum as it’s such a great shopping district.”
Gene Spiegelman, head of North American retail for Cushman & Wakefield, agreed that while lot of stores are available in Soho, they are not vacant while owners target higher end and higher paying retailers.
But retailers that already have city locations must calculate their costs in terms of their profit and losses for the whole area. “If you have 20 stores in a region and they generate $50 million in sales and another $50 million in E-commerce, what does it mean to open a store at the higher end of the rent position?” Spiegelman said.
In the Meatpacking District, the Whitney museum opening, new office buildings on Washington St. and the redevelopment of a large swath of Gansevoort St. by TF Cornerstone and another block by Aurora Capital and William Gottlieb Real Estate where Pastis will reopen, are triggering retailer activity. “The Whitney exceeded everyone’s expectations,” said Bellantoni.
In Lower Manhattan, Broadway is filling in with the large retailers Zara, H&M, Urban Outfitters and Anthropologie beginning to open. “Tenants that have never looked in the Financial District before are actively looking for space,” said Block.
Along with new retail like Hermes at Brookfield Place where Saks is yet to open, and the World Trade Center where none of the retailers are open, there are upcoming redevelopments at One Wall Street with 350,000 feet of new retail and 28 Liberty with 200,000 square feet of new retail.
The Seaport is also starting to fill in with plans in place for Jean Georges restaurants and bookseller McNally Jackson, with many more to come.
“The Seaport has the potential for Big Boxes and can cater to different tenant categories,” said Spiegelman.
On the Upper West Side, Lowes is open at W. 68th and Broadway as is J.Jill at 160 Columbus.
Manhattan’s Upper East Side, is also filling in. “We bought two buildings on Third Ave. and have been successful in re-leasing them,” said Chris Conlon, executive vice president and COO of Acadia Realty Trust. Acadia also has Landmarks’ approvals to redevelop 801 Madison Ave. for new retailers.
Skip over to Brooklyn and Conlon says, “Domestic and international retailers have a mandate from managers to figure it out, and they get off the subway and wander around.”
Retailers like Williamsburg, Conlon says, as “it is safe and what they imagine Brooklyn to be,” but doesn’t get the enormous foot traffic of the Downtown Brooklyn area. It is here that Acadia and Washington Square Partners are building the mixed-use 1.9 million-square-foot City Point project that has 675,000 feet of retail with Century 21 Department Store, Target, Alamo Drafthouse Cinema, Trader Joe’s and local food purveyors already signed through Peter Ripka and Jason Pennington of Ripco Real Estate Corp.
Conlon predicts Steinway St. in Astoria, Queens will see a resurgence of retailers as it has a good feel and is what he calls, “a great downtown shopping street.”
Nero says of the city, “There is always activity as someone is looking to get in or out or reducing or expanding their footprint.”
