Retailers from around the world are exploring and learning about New York City’s micro markets — small sub-sections of neighborhoods that can serve more people than most suburban towns.
Take Times Square. Its designation as the center of the tourist universe means it is still coveted by theme retailers such as Gulliver’s Gate, a 49,000-square-foot miniature world opening there in 2017, as well as restaurants and fashion outposts that keep it a vibrant marketplace with long shopping hours.
“Though there is general weakness, there is always activity,” says Jason Pruger, executive managing director at Newmark Grubb Knight Frank.
Average asking rents for ground-floor spaces along Broadway and Seventh Avenue between West 42nd and 47th streets were down slightly to $2,636 per foot from $2,413 per foot a year ago, according to the new spring 2016 retail report from the Real Estate Board of New York (REBNY).
Farther north along Broadway, Pruger says, “Nordstrom is really making a bigger bet on 57th Street and at 3 Columbus Circle with its menswear. It will become an extension of Times Square.”
Meanwhile, many retailers want to open in Harlem, says Jared Epstein, vice president of Aurora Capital Associates. At 5 W. 125th St. Aurora has built a structure with T.J. Maxx, Bed Bath & Beyond, WeWork co-working spaces and 30 rental pads.
There is interest in the building’s remaining 18,000 square feet on the ground floor, which is asking $135 per foot.
Asking rents along 125th Street from river to river range from $70 to $390 per foot, according to REBNY.
Epstein, whose company is partnering with Vornado Realty Trust at 61 Ninth Ave. in the Meatpacking District, says that area “is on fire.” Starbucks just leased 20,000 square feet in the upcoming project next to the Apple store for a flagship roastery. “We had several backups and a high level of interest from regular to luxury retailers,” Epstein says.
At the same time, Aurora Capital and William Gottlieb Real Estate are working on the redevelopment of an almost full block on nearby Gansevoort Street that will add galleries, restaurants and retail.
Meatpacking retail asking rents range from $275 to $450 per foot. The development of the West Side from the new Whitney museum to the Hudson Yards was spurred by the 2009 opening of the High Line, which runs from Gansevoort to 30th streets, and the newly opened No. 7 subway line, explains Pruger.
The Hudson Yards area has many retail deals in the works, he adds, as the onslaught of residents and workers is poised to kick off this year. Related’s megaproject will be anchored by Neiman Marcus.
Over in the Flatiron District, the Rosen family owns a mid-block building at 45 E. 20th St. between Broadway and Park Avenue South. It has a space asking $140 a foot in an area where avenue buildings garner $300 per foot.
John Goodkind, director of leasing for Koeppel Rosen, which manages and leases the Rosen family’s New York City portfolio, says the block is bustling with restaurants. “We hope to capture the excitement on that street,” he says.
Another restaurant opportunity lies in Greenwich Village, where David Rabizadeh of Homeside Development, has a 1,300-square-foot spot at 145 Bleecker St. with an asking rent of $140 per foot.
In a more luxurious retail stretch along Bleecker Street between Seventh Avenue South and Hudson Street, asking rents range from $500 to $1,583 per foot.
“The market is sufficiently sluggish that we have six or seven pop-up opportunities on Bleecker, as they are asking aspirational numbers,” says Robert Freedman, co-chairman of Colliers International.
“Lower Manhattan is pretty hot,” says Peter Braus, managing principal at Lee & Associates NYC. Brookfield Place is open and when the World Trade Center’s Westfield mall opens this summer, it will spur more activity, Braus says. To the east, the South Street Seaport has Jean-Georges Vongerichten overseeing the food, and vegan eatery By Chloe was just added to the lineup.
Investors also want to buy retail-occupied condominiums as they are easily traded, virtually management-free and typically appreciate. “Why buy that $20 million condo in the new tower?” asks Adelaide Polsinelli, a principal and managing director of Eastern Consolidated. “Put a nice tenant in there. When the lease is done the rent usually goes up.”
Polsinelli is also seeing a stores flock to quality spaces. That’s why the luxury retail hot spots along Fifth Avenue from 49th to 59th streets still have asking rents that REBNY says range from $2,700 to $4,450 per foot.
In this area, Longchamp just leased the former Jimmy Choo space in Olympic Tower at 645 Fifth Ave., near its current shop at 610 Fifth in the Channel Gardens at Rockefeller Center.
At the end of 2017, American Girl will open a new concept across 40,000 square feet at 75 Rockefeller Center, but will close its existing outpost at 609 Fifth.
Then there’s an appetite for food halls. “Food in general is super hot,” says Karen Bellantoni, vice chairman at RKF. “Even the malls are bringing in [new] operators and calling them ‘dining concourses.’ ”
She pointed to Le District at Brookfield Place, Pennsy at 2 Penn Plaza and Urban-space Vanderbilt at the rear of 230 Park near Grand Central as booming.
On the other hand, brokers agree Soho is weak. REBNY notes rents are currently down 16 percent since the spring of 2015, although they still run from $500 to $1,583 per foot. Most stores along Broadway can be sublet, brokers say, even if they are formally off the market.
“Some are raising concerns and questions, but what I am seeing is a lot of deal flow,” says attorney Nina Roket, co-administrative partner at Olshan Frome Wolosky, who represents both retailers and owners. “It is definitely a market with retailers that are very educated and very informed.”