Watch this space for live updates from the International Council of Shopping Centers New York National Conference.
Industry shift signals more attention on retail
Retail brokers are being thrust into the spotlight as the value of retail has become more of a driving factor in major office building acquisitions, said Michael O’Neill, a retail broker with Cushman & Wakefield.
“Five years ago, retail was an after-thought,” he said. “It was where you put the services for the office tenants. Now, retail has become the asset of choice for major institutional investors.”
Indeed, structured transactions for major office towers such as 650 Madison Avenue have hinged on the buyer’s ability to increase the value of the retail component, said Matt Winn, COO of retail at Cushman.
The impact on the brokerage business? For the first time ever, a retail broker from Cushman took home the company’s top award, Winn noted. Robert Gibson, vice chairman at the company, won the Top Overall Producer award in 2012.
As a result of the shift toward retail, Cushman is investing in the arena more than ever, Winn said. Last week, the brokerage announced a global partnership with ICSC to work together to host worldwide events and improve access to and promotion of retail research. — Katherine Clarke
Brookfield Place retail leasing to be completed Q1
The retail component at Brookfield Place in the Financial District will be fully leased by the first quarter of 2014, said Ed Hogan, national director of retail leasing at Brookfield Office Properties.
Tenants already announced for the space include fashion retailers Eileen Fisher, Burberry, Michael Kors, Scoop and Calypso St. Barth, as well as food purveyors Chop’t, Dig Inn Seasonal Market, cheese shop Little Muenster, Num Pang and Umami Burger.
That leaves Brookfield free to focus on the leasing program for the retail component of Manhattan West, a new 5.4 million-square-foot mixed-use project on the Far West Side, which is still in the planning stages.
While Brookfield may bring some of the same food tenants on board who have signed on for Brookfield Place, Manhattan West will likely not have a large fashion component, Hogan said. — Katherine Clarke
Bedford leases signed at triple Williamsburg median price
Blockbuster retail leases signed in Williamsburg recently are more than triple the median asking rent in the area, JP Sutro, a broker with Lee & Associates who was not involved in the deals, told The Real Deal.
The much-maligned (but heavily patronized) Dunkin Donuts, at 182 Bedford Avenue, signed at a whopping 285 dollars per square foot in August, for their 1,600-square-foot space, Sutro said. Meanwhile, Manhattan-based juice purveyor Juice Generation took space down the road in September at 280 dollars per square foot. They inked a deal for the 800-square foot space at 210 Bedford Avenue for ten years, according to previous reports.
Those rents are considerably higher than the 83 dollars per-square-foot median ask in the area, according to stats from retail data site Retail MLS.
Neither Newmark Grubb Knight Frank, which handled the Juice Generation deal, nor Dunkin, which did their deal directly, were immediately available to comment.
And some of that is spreading across the river to the Lower East Side and East Village — an area many brokers have recently noted has rising rents. At 14th and Avenue B, one landlord “is quoting rents down there that are lunacy,” said Richard Kave, also with Lee. – Guelda Voien
Upper West Side rezone limits mom and pops too
The controversial rezoning of the Upper West Side is having the unintended effect of keeping mom-and-pop shops from expanding, Massey Knakal Realty Services’ retail specialist in the area, David Chkheidze, told The Real Deal.
The restrictions, approved last June by the City Council, prohibit stores taking more than 45 feet of frontage along major commercial streets on the Upper West Side. Specifically, they apply from 72nd to 110th Street on Broadway and Amsterdam Avenue, and from 72nd to 87th Street on Columbus Avenue. The Department of City Planning hoped the initiative (which passed the City Council 49 to 2) would constrain larger tenants like banks that were eating up space and squelching the neighborhood’s character.
But now the very types of retail the rezone was intended to protect find themselves unable to expand. For example, Zabar’s, the popular family-owned grocery store with an outpost at 2245 Broadway, has been unable to expand, Chkheidze said, and may have to take a separate storefront so that it doesn’t fill more than the 45 feet of contiguous retail frontage permitted on Broadway. Zabar’s did not immediately respond to a request for comment. – Guelda Voien
Correction: A previous version of this post said that Laytner’s Linen & Home had sought to expand in the area as well. Laytner’s owner said that was not the case any time recently.
Essex Crossing retail makes a splash
One of the hottest projects at the show this year is the retail at Essex Crossing on the Lower East Side, also known as the Seward Park Urban Renewal Area, being shopped around by Rohan Mehra and Andrew Katz, both principals with Prusik, an affiliate of Taconic Investment Partners.
Brokers from firms as varied as CBRE Group, SCG Retail and RKF told The Real Deal that it was one of the most compelling new retail plans being marketed at the show.
TRD spoke briefly with Mehra and Katz, but they declined to reveal any new details about the massive project.
Insiders said it included about 450,000 square feet of retail over several parcels. The retail is expected to include a bowling alley, a movie theater and a large multi-tenant market similar to those found in Europe, broker sources said.
The overall plan also calls for an Andy Warhol museum and 1,000 apartments, half of which will be affordable. Other partners involved in the project are L&M Development Partners, BFC Partners and Grand Street Settlement. – Adam Pincus
Savills set to bring UK retailers to NYC
Sixty days into its newly-formed partnership with SRS Real Estate Partners, international real estate advisor Savills is close to bringing several new U.K.-based retailers to the New York City market, Sean Gillies, head of U.K. retail for Savills, told The Real Deal today.
More and more British retailers who have saturated the local market, and seeing the success of pioneers like Topshop, are beginning to consider growing stateside, he explained.
For instance, U.K. retailer River Island, who had previously eschewed the U.S. market in favor of countries with more of a British ex-pat population such as Australia, is mulling a New York store, Gillies said. That move was made more likely, he said, by the fact that the retailer just made a deal with songstress Rihanna, who will now serve as the face of the brand. Rihanna’s popularity in the U.S. may allow them to cause waves here, he noted.
However, the company has not yet officially begun seeking out locations in the city. — Katherine Clarke
British designer Karen Millen signs on for NYC flagship
British women’s designer Karen Millen has inked a deal for a 5,500-square-foot flagship store at 587 Fifth Avenue, between 47th and 48th streets, The Real Deal has learned.
The retailer will open up the retail space next spring, replacing the previous retailer, surf gear shop Quiksilver, said Paul Berkman of commercial brokerage Jones Lang LaSalle, who brokered the deal alongside colleague David Berke.
JLL represented the landlord, while Scott Schuster of the Schuster Group represented the tenant.
The move to open a flagship on Fifth comes as the Karen Millen brand has made strides into the affordable luxury market. The company has plans to open 400 stores in 2014, including some in South East Asia, Central America and as far afield as Outer Mongolia, according to the Financial Times.
“Fifth Avenue as a whole was historically 49th to 57th streets for a high-end brand,” Berkman said. “In the last 18 months, we’ve seen a big push south on Fifth Avenue. It’s a value play for them, great bang for their buck.”
The space has 3,300 square feet on the ground floor and 2,300 square feet on the lower level, Berkman said. In addition, Karen Millen will get signage on the first and second levels of the building. Asking rents were twelve hundred dollars per square foot.
Berkman declined to identify the landlord, but public records reveal the ground lease is owned by Zamir Equities.
Millen already has a location in Soho, at 114 Prince Street. — Katherine Clarke
Retailers flock to Fifth Avenue submarkets
A few emerging New York City submarkets are increasingly catching the eye of European brands and domestic retailers struggling to find spaces on prime retail corridors, according to a report from commercial brokerage Jones Lang LaSalle, provided exclusively to The Real Deal this morning.
Those areas include the blocks surrounding Italian specialty foods retailer Eataly near Madison Square Park, where retail rents have jumped north of 200 dollars per square foot in recent months, according to JLL. (New tenants in the area include restaurants like 5 Napkin Burger, Num Pang and Hill Country Fried Chicken.) Other areas targeted by retailers include Fifth Avenue between 42nd and 48th streets, where fashion brands Joe Fresh, Urban Outfitters, Oakley, and H&M have secured stores recently.
“Institutional landlords are buying up all the real estate [on Fifth Avenue] after retailers have learned that they can pay a third of the rent and still have heavy pedestrian foot traffic,” the report says.
Meanwhile, inventory of new retail space remains low on traditionally high-rent retail corridors like Madison Avenue, further driving tenants to emerging pockets of the city. New York City contains nearly 57 million square feet of retail space, the slimmest inventory of any major market in the United States, the report says, and, currently, there is only 670,000 square feet of new supply under construction.
Interest from foreign retailers in having storefronts in New York is not letting up, said Paul Berkman, a senior vice president at JLL.
“So far this year we’ve conducted several tours with European luxury and boutique retailers looking to land space in New York,” he said. “Retailers will continue to use New York to test and understand the receptivity of their offerings across borders.” — Katherine Clarke
Bronx leaders cry out for more retail
Bronx boosterism was the overriding theme at the Women’s Special Industry Group forum, which focused on the outer boroughs.
Marlene Cintron, president of the Bronx Overall Economic Development Corporation, bemoaned the lack of retail in her home borough, noting the fact that she goes to Yonkers to shop at healthy grocer Trader Joe’s.
Cintron joined Seth Bornstein, executive director of the Queens Economic Development Corporation; Caroline Pardo, director of leasing at Jamestown Properties; Donald Cappocia of Brooklyn-based BFC Partners; Patricia Dunphy, senior vice president at Rockrose; and Melissa Burch, Forest City Enterprises’ executive vice president at the panel, hosted by Douglas Elliman retail star Faith Hope Consolo. The group discussed what might enliven parts of the outer boroughs that have yet to see retail rents and tourism explode as they have in Manhattan.
While the Bronx has the highest grossing J.C. Penney in the nation, as well as the third highest-grossing big box grocer BJ’s and third highest-grossing Target, other up-market retailers still scorn the region, Cintron said. “We have no Fairway, no Whole Foods and no Trader Joe’s,” she told the crowd.
While incentives from her office are available – and the borough offers plenty of space – Trader Joe’s has declined to open because the borough does not meet certain “educational requirements,” she said. But neighborhoods like Riverdale have high incomes and rates of college graduation, she said.
“It’s a perception issue. Why are they still not coming? It’s a lack of being open-minded,” Cintron said. The borough cannot even track tourism at the moment, she added, because the Bronx still lacks a single full-service hotel.
The retail industry needs to hear the complaints of local leaders such as Cintron more often, Consolo said, and find new ways to address communities’ needs, including with alternative retail.
“People have a certain perception, but then there is a certain reality,” which is that large pools of untapped consumers lie in outer boroughs away from many brokers’ minds, Consolo said. “I hear Brooklyn, Brooklyn, Brooklyn,” she said. “These days I feel like I have to defend Manhattan.”
But even in Manhattan, the Seward Park and Delancey Street areas can support additional retail, and have been skipped over in favor of Williamsburg to the east, said Cappocia.
Other areas need their cheerleaders a la Marty Markowitz, Consolo said. Markowitz has famously repeatedly entreated Apple (which is finally seeking space in Brooklyn, as The Real Deal first reported) to lease in his home borough.
Consolo suggested additional pop-up shops, as well as support for “clicks-to-bricks” businesses, to spur retail development in the outer boroughs. She also suggested landlords consider below grade retail, a setup much more common in the United Kingdom and Canada.
“Pop-ups carried us through the downturn,” she said. “It’s really helped a lot of neighborhoods.” — Guelda Voien
Brokers get ready for ICSC parties
It’s party time. ICSC brokers and landlords are heading out now to a handful of parties tonight hosted by brokerage firms such as Newmark Grubb Knight Frank and landlords such as the Howard Hughes Corporation, which owns South Street Seaport.
Newmark is hosting the most widely anticipated party, according to an anecdotal sample of ICSC attendees, at Tao, at 92 Ninth Avenue in the Meatpacking District.
Another large event is Cushman & Wakeman’s fete at Oceana, at 120 West 49th Street in Midtown, closer to the New York Hilton Midtown, the location of most of the ICSC activity. Other parties include SRS Real Estate Partners party at 48 Lounge at 1221 Sixth Avenue in Midtown and Ripco Real Estate partnering with Kimco Realty to host an event at Lavo Nightclub at 39 East 58th Street.
Howard Hughes, in partnership with the brokerage RKF, is hosting an event at the Back Room at Nobu Fifty Seven at 40 West 57th Street.
A few firms have opted for smaller events. Forest City Ratner is bringing about 30 people to watch pop singer Pink perform at Barclays Center in Brooklyn. – Adam Pincus
Forest City Ratner to recapture MetroTech space for retail
Forest City Ratner has engaged a branding firm update the public space and some retail areas in the sprawling commercial complex Metrotech in Downtown Brooklyn. The building, constructed about 20 years ago as a back-end office site, now finds itself in the middle of a resurgent neighborhood.
Metrotech pioneered the Downtown market with the large development of office buildings. Now, Forest City Ratner is responding to the increased interest in the area, Katherine Welch, company executive vice president, told The Real Deal at an interview at her booth at the New York Hilton & Towers.
The firm currently has about eight retail locations in its Metrotech properties, Welch said. It expects to add another approximately 10,000 square feet of retail on the ground floor and second levels through recaptured space that is currently used as lobby or service space in “one or two” of the buildings. She declined to identify which buildings.
“We started talking about it about six months ago, and we put pen to paper and [engaged] someone in the last three weeks,” Welch said.
The future space is not being marketed yet. The company expects to recapture the space in the next 12 months, and will then put it on the market, she said. – Adam Pincus
ICSC New York gets started
The International Council of Shopping Centers New York National Conference kicks off this morning for the two-day event taking place officially at the New York Hilton & Towers and the Sheraton New York & Tower. However, the conference includes additional unofficial locations for mall giants such as Westfield Group and developer Related Companies, which are taking meetings at the nearby Warwick Hotel. And of course the parties, where brokers and owners hobnob in their quest to track down leads and firm up relationships.
While this conference, which attracts about 7,000 attendees each year, is just a fraction of ICSC’s annual RECon event held each year in Las Vegas, which pulled in more than 32,700 professionals in May, much of New York’s retail community will stop by the show.
Most of the parties are Monday night, but a few firms got a jump on the action. SCG Retail and its parent company Shopping Center Group hosted a party last night at the Hell’s Kitchen nightclub Providence. Attendees included Newmark Grubb Knight Frank’s Jeffrey Roseman and Vornado Realty Trust’s Sherri White. Other firms such as Ackman-Ziff Real Estate Group hosted dinners. — Adam Pincus