The Real Deal New York

Basements are the new ground floors

As retail rents go up, developers are looking down

September 10, 2015 02:25PM

From left:

From left: 1633 Broadway in Midtown and a rendering of the 28 Liberty Street plaza in the Financial District

“Lower-level spaces,” better know as basements, are the latest formerly-marginal segment to heat up in the booming retail property market.

As rents for retail spaces have risen, underground spaces in office buildings such as 1633 Broadway in Midtown and 28 Liberty Street in the Financial District are attracting investments from major developers.

“All the sophisticated landlords have begun to realize that if they can use their lower level, they can unlock tremendous value,” Brad Mendelson, a retail broker at Cushman & Wakefield, told Crain’s.

Mendelson, who is assisting the Paramount Group with their 40,000 square feet basement lease of 1633 Broadway, said that prime “lower-level” retail space in Manhattan usually rents for between $75 and $125 per square foot

Downtown, at 28 Liberty Street, China-based Fosun Property Holdings is undertaking a $200 million renovation of the building’s five basement floors. [Crain’s]Ariel Stulberg