The Real Deal New York

Luxury housing sparks retail along Brooklyn’s 4th Avenue

Asking price for ground-level space shooting up as top-drawer tenants move in nearby

July 25, 2014 08:30AM
By Tom DiChristopher

  • Print
From left: 470 4th Avenue, 275 4th Avenue (Credit: ODA) and 365 4th Avenue

From left: 470 Fourth Avenue, 275 Fourth Avenue (Credit: ODA) and 365 Fourth Avenue

As luxury rental and condo buildings continue to sprout along Brooklyn’s Fourth Avenue, demand for ground-level space along the strip is suddenly taking off. So far, the neighborhood is mostly attracting retail and health-care providers, stand-alone big box stores and some restaurants, typically housed in older low-rises.

This eclectic mix is in part the result of a partial rezoning in 2011 that sought to enhance and increase the visibility of street-level retail and community facilities in the growing number of large buildings. But brokers say the heightened demand for ground-level space is being driven by the redevelopment of Gowanus, and the arrival of one retailer: Whole Foods.

“Activity has 100 percent picked up,” said Ryan Condren, managing director of real estate services at CPEX. “There’s tremendous demand now ever since Whole Foods opened and the weather broke.”

Condren and his team are marketing three retail spaces at the Naftali Group’s Landmark rental building at 365 Fourth Avenue on the corner of 6th Street. Asking prices are $65 per square foot, and Condren said CPEX is closing in on leases for two of the units.

James Dario of Kalmon Dolgin is marketing a retail condo for about the same price just a few blocks south at 500 Fourth Avenue between 12th and 13th street. The owner of the space, an operator of day care facilities, originally intended to use the space himself. But with asking prices jumping from about $35 per foot roughly five years ago to $65 today, he’s considering leasing it out.

“Retail has almost doubled since the bottom of the market,” said Dario, adding that the space has attracted interest from parties looking to set up cafés, Pilates and personal training studios, gourmet and health food stores and a wine shop.

In 2008, Dario set the benchmark for rent at about $50 per square foot by signing New York Methodist Hospital at the Novo condo building on a two block lot between 3rd and 5th streets. At that time, he said, the area wasn’t established and retailers were skittish about taking space there.

Such reluctance is no longer the case. The arrival of Whole Foods, along with Brooklyn Boulders, the Royal Palms Shuffleboard Club and Dinosaur Barbecue are giving the Park Slope set a reason to cross the avenue, which has historically been “the mental barrier,” said Condren

Not surprisingly, the influx of retailers is bringing developers to Fourth Avenue — although not all of them are looking for marquee tenants. Slate Property Group, for one, has two developments with 5,000 square feet of retail each underway at 470 and 275 Fourth Avenue, as well as another in the pipeline at 535 4th between 14th and 15th streets. The site has about 10,000 square feet of planned commercial space.

“We’re hopeful that we’ll get some smaller and local-type tenants,” said David Schwartz, principal at Slate. “We think there’s a good need for smaller type uses. We’re not against nationals, but we’re not targeting them.”

Schwartz said Slate is bullish on the corridor, given the access to transportation and the strength of development on 3rd Avenue.

Certainly, the blocks near Landmark are now drawing the type of establishments that have long been the dominion of Fifth and Seventh avenues. A restaurant serving Cantonese food with European flavors called 2 Duck Goose is launching across the street at 400 Fourth Avenue, and Uncle Arthur’s Cafe recently opened a few blocks south at the corner of 9th Street.

The number of new restaurants may be capped, however, as some of the commercial spaces in new multifamily buildings are being built without ventilation systems. Slate would entertain restaurants in its three developments, said Schwartz, but for now, dining is largely concentrated along blocks with rows of low-rises, particularly the stretch between Carroll and President streets.

In contrast, a number of sites along Fourth Avenue offer large floor plates, which Condren says would likely attract larger, big box tenants. These blocks have not been rezoned for dense residential buildings.

CPEX did the deal that put UFC Gym — formerly LA Boxing – in 6,000 square feet at a new freestanding building at 3rd Street. That property will also host a Blinds to Go. Further up the avenue, CPEX is marketing a pair of two-floor sites, a former auto parts shop at Sackett Street and a collision shop at the corner of Carroll Street.

  • 1001citizens

    Sorry, but these are not the types of buildings people come to Brooklyn to live in. So sad, these designers got it so wrong.

MENU

Subscribe to our email newsletters

New York Real Estate News
South Florida Real Estate News