Retail rents have been facing a reality check as brands stepped back and took a breather when the stock market seesawed earlier this year. Nevertheless, retailers continue to eye the best locations and are swooping in when square feet and economics align.
Many stores expanded their footprints and locations. Now, Joan Siegel of Siegel Consultants believes some tenants want to digest what they have. “All expanding has not stopped,” Siegel says. “But the wild frenzy that went on for the last five years has slowed.”
In general, while wellness, food and tech tenants are expanding, traditional retail is consolidating with a focus on smaller stores, according to John Brod, a partner with ABS Partners.
This spring’s thaw still brought deals with two brands that know winter is always coming. Canada Goose, known for its puffy jackets and fluffy coyote hoods, took 4,000 square feet in Soho at 101 Wooster St. The North Face, which already has stores in Soho and on the Upper West Side, signed at 510 Fifth Ave. — where Joe Fresh had previously withered.
Ermenegildo Zegna signed at the Crown Building at 730 Fifth Ave. for $4,000 per foot.
Although Soho has struggled, Jeffrey Roseman, executive vice president of Newmark Grubb Knight Frank, says retailers do great down there and long-term owners can make “smart responsible deals.”
Owners will also give lower rents to tenants with better credit explains Robert Freedman, co-chairman of Colliers International.
The new 529 Broadway will become Nike’s SoHo outpost in May. In Midtown, Nike is among the retailers eyeing 60,000 square feet left by FAO Schwarz at 767 Fifth Ave. Meanwhile, its flagship Niketown lease at the Trump Organization’s 6 E. 57 St. was extended.
As trendy office tenants seek out the Meatpacking District’s new boutique buildings, Nike’s broker, Joanne Podell, vice chairman at Cushman & Wakefield, which represents 860 Washington St., believes the added workers will change the dynamics there. “Both more offices and retail will follow,” she says, declining to discuss her client’s plans.
The Whitney Museum’s Meatpacking opening also provided more buzz and visitors to the area.
Uptown, the takeover and opening of the Whitney’s old Upper East Side location by the Met Breuer has perked up area retail. “It was a positive generator for the area,” says Matthew Bauer, president of the BID.
“Tenants have a real seriousness of purpose,” says Colliers’ Freedman, who repped Georg Jensen in a lease to 698 Madison.
Underground, the Columbus Circle subway station is getting groovier as the TurnStyle shopping zone opens April 19. EVO Real Estate Group will manage the complex created by Susan Fine, which will eventually include 25 shops and 10 restaurants.
Connected to Grand Central Station, the upcoming One Vanderbilt will have retailers, including one “unbelievable” restaurant operator that will also run the top floors of the 1,500-foot-tall skyscraper. “It is truly focused on a world-class hospitality restaurant,” says Brett Herschenfeld, managing director of SL Green Realty Corp. One Vandy’s developer.
At Penn Station, Vornado Realty Trust is upgrading its side of an underground concourse with Magnolia Bakery and Shake Shack. Upstairs, the outdoor base of its One Penn Plaza is getting more upscale food tenants similar to its Pennsy food hall.
Over by Union Square, Roseman is representing the former Tammany Hall building, which is being redeveloped by Reading International and has 50,000 square feet of retail.
Downtown, 28 Liberty is gaining 200,000 square feet of stores. “The plaza will be reenergized,” says Roseman.
A big trend is the focus on health. “Between the regular gyms and boot camps and spinning and Pilates, it’s a huge industry,” Roseman says.
The CEO of Olshan Properties, Andrea Olshan, believes “personalization” is the key word. At her shopping centers, large anchors are out and smaller shops or food markets in. Targeted fitness outposts are taking the place of mega gyms.
The fitness craze has also boosted the athleisure stores like Lululemon. Brod of ABS Partners says gym clothes are replacing jeans for everyday casualwear. “Athletic wear has transcended the fitness studio,” Brod says.
ABS recently completed a deal at 10 E. 8th St. for MNDFL, a meditation studio. “We will start to see a lot of mediation studios,” predicts Jennifer Bernstein, director at ABS Partners. “A year ago we would have laughed, but the truth is meditation is becoming more mainstream.”
In New York, Podell adds, retailers are overcoming the online shopping challenge and continuing to lease real-life storefronts. “This is the most important city in the world,” Podell says. “The density is great, and it has healthy economics with brick-and-mortar stores not affected by e-tail.”
