Against the odds, Union Square retail businesses have been thriving in the recession, even as some of New York City’s most venerated shopping areas struggle. Fifth Avenue, Times Square and Soho, all long-time shopping havens, have all seen retail vacancies hit 10 percent or higher this year. But even as Circuit City and the Virgin Megastore vacated the Union Square neighborhood after the chain went bankrupt earlier this year, two new chains, Nordstrom Rack and Best Buy, announced they’d be moving in. Rachel Meltzer, a researcher with the NYU Furman Center for Real Estate and Urban Policy, said that foot traffic in the area has risen 59 percent in the last five years, a key component to the neighborhood’s success. “I don’t think it’s considered a transportation corridor anymore so much as a destination,” Meltzer said.

If you are a national or international retailer, it is your objective to operate a retail store in New York City, with Manhattan remaining the prize location. And in the down market, more national chains are capitalizing on lower rents. On July 31, Texas-based J.C. Penney opened its first Manhattan location at the Manhattan Mall. Later this year, residents of Manhattan will no longer have to travel to Astoria or Brooklyn to shop at Costco Warehouse Club. Costco is scheduled to open its long-awaited store in East Harlem at 116th Street at East River Plaza. [more]

Nordstrom Rack, a discount unit of retailer Nordstrom, will open at One Union Square South, occupying 32,136 square feet on the lower level of the former Virgin Megastore space, according to a press release from Nordstrom. The store, the first Nordstrom Rack in Manhattan, is slated to open in spring 2010. The terms of Nordstrom’s lease were not disclosed, but The Real Deal reported in March that retail space facing Union Square Park usually commands $400 per square foot and the Virgin Megastore space could rent for even more. Best Buy is also coming to One Union Square South and is expected to open a 46,000-square-foot store in the former Circuit City space during the fourth quarter of this year. TRD [more]

Tommy Hilfiger and Virgin Megastore in Union Square

Clothing retailer Tommy Hilfiger is rumored to be shopping for retail
space in Union Square and may be considering a “concept store” in the
area. He is said to have looked at the former Circuit City space and at
the Virgin Megastore’s soon-to-be-vacant space on Union Square South.
Wal-Mart, Best Buy and Nordstrom have also reportedly looked at the
storefronts, which are controlled by the Related Companies and are
being marketed by Winick Realty Group. Filene’s Basement’s bankruptcy
filing could leave another vacant store in the area. [more]