National retailers at the Fulton Mall
A Gap Factory Store that opened last week became the latest suburban-style addition to Brooklyn’s Fulton Mall, and according to the Brooklyn Paper, the opening is renewing tension among Downtown Brooklyn residents.
The Gap joins Aeropostale, Aldo, a forthcoming H&M and other national retailers on the strip once home to delis, small shoe and apparel stores and jewelry merchants. [more]
There’s a rumor floating in real estate circles that the vacant retail space in 4 Times Square at the corner of 42nd Street and Broadway is accounted for. Last night, the Durst Organization held a party for brokers to show off the space, in part, to prove those rumors false.
“It’s frustrating when you reach out to a respected brokerage and you hear them say, ‘I thought that space was taken,’” John Grotto, senior leasing manager at the Durst Organization, told The Real Deal.
Durst Organization President Douglas Durst and more than 100 brokers were on hand to tour the 42,550-square-foot, three-floor space and enjoy ribs, brisket and mac and cheese from Virgil’s Real Barbecue — so much of it, in fact, that the restaurant was begging lingering brokers to take leftovers home. [more]
Empty storefronts abound along Broadway between 84th and 100th streets, where asking rents range from $195 a foot to $350 a foot — 20 percent below their peaks two years ago — and where retail brokers have been hunting for deals. “There are some major vacancies on [that strip] of Broadway,” said Neal Ohm, a broker who specializes in Upper West Side leasing at CitySites Commercial Realty. Those include 6,000 square feet at 2385 Broadway and 10,000 square feet at 2360 Broadway. At 2373 Broadway, 12,000 square feet is available in the space that the Gap recently vacated. Actual rents in the corridor are nearly 40 percent below peak levels. Interest in the area among national retailers is “not as strong as it used to be,” Ohm said. In February, some Upper West Side retail tenants along Broadway told The Real Deal that landlord Friedland Properties had failed to renegotiate rents, causing some of the vacancies. [Crain’s]
Lower Manhattan’s office market saw declining rents and record-low leasing activity during 2009, but ended the year with activity on the rise and vacancies on a recently-rare downward trend, according to the Alliance for Downtown New York’s Real Estate Market Year in Review for 2009 (click here for the full report). Rising from 7.4 percent in the fourth quarter of 2008 to 9.9 percent in the third quarter of 2009, office vacancies dropped off to 9.6 percent by the close of the year.
Commercial office tenants in the Downtown market tended to sign on for smaller spaces and shorter terms, according to the report. “Downtown may need to adjust further to compete with low-priced sublease space and precipitously falling rents in the Midtown market,” the report noted.
In the residential market, sales volume dropped 52 percent over 2008, largely on a decline in inventory. Meanwhile, rentals held up relatively well: vacancies in Downtown rental units hovered at around 2 percent, which the report attributed to consistent demand for such inventory. TRD [more]
Avon, the beauty giant which had reportedly been angling for nearly 250,000 square feet at the William Kaufman Organization’s 777 Third Avenue, made the deal official last night after less than three months of negotiations, the Post reported. The 15-year lease on floors two through 11 outsizes all leases signed in 2009, with the exception of the Gap’s move to 40 Worth Street. Sources told the Post that Avon will receive one year of free rent, after which the company will initially pay in the low $40s per square foot. Rent will gradually increase from there to the low $50s per square foot. Avon, which is currently located at 1251 Avenue of the Americas, plans to move to 777 Third Avenue in early 2011. It is keeping its smaller offices at 1345 Sixth Avenue for the time being. Avon’s new digs were previously occupied by Grey Group, an advertising firm that relocated to 200 Fifth Avenue. Peter Riguardi and Frank Doyle of Jones Lang LaSalle and Michael Lenchner of Sage Realty represented the Kaufman Organization in the deal. CB Richard Ellis’ Jon Zuckerman and Leonard DiMicelli with Cushman & Wakefield’s Dale Schlather represented Avon. [Post]
40 Worth Street and 345 Park Avenue (Source: PropertyShark.com)A retailer and a law firm recently signed the year’s largest and second-largest new long-term leases. Gap signed a 20-year lease for 265,083 square feet at 40 Worth Street, the largest lease of the year so far. The company plans to put all of its New York offices in the space, moving out of 620 Sixth Avenue and 675 Sixth Avenue over the next two years. The asking rent at 40 Worth Street was $40 per square foot, but the final terms of the deal were not disclosed. Law firm Loeb & Loeb switched from subleasing space from Bristol Meyers at 345 Park Avenue to signing a 20-year direct lease at the same building. The firm added 36,000 square feet when it signed the direct lease, for a total of 155,000 square feet. Instinet also recently signed a massive lease, for 100,000 square feet of office space near Bryant Park.
As retailers continue to struggle amid the recession, chain stores are
turning back to their leases’ fine print to find reason to ask for rent
reductions. Many retail leases include cotenancy clauses, which allow
tenants to ask for rent cuts or even to pull out without penalty if
other key tenants leave a particular shopping center. Gap,
Williams-Sonoma, and Ann Taylor are some of the stores looking to take
advantage of these clauses, the Wall Street Journal reports. Chico’s
has already saved $8.1 million by using cotenancy clauses and
negotiating for other forms of rent relief. [more]
