Condo towers poised to change Downtown Brooklyn retail

New York /
Jan.January 04, 2008 09:36 AM

If You Ever Find Yourself On Fulton Street looking
for discount suits or imitation designer jewelry, you’re in luck —
Downtown Brooklyn has both. Just head over to Contessa Jewelers, where
the sign reads, “We keep Fulton Street on ice.”

For decades, the area of Downtown Brooklyn between Willoughby and State
streets has been a bustling center of low-end stores and fast-food
restaurants. Now an influx of residents is anticipated at a handful of
new luxury condo projects: BellTel Lofts at 365 Bridge Street, the
conversion of the Williamsburgh Savings Bank building at One Hanson
Place, the Oro Condos at 306 Gold Street, and a hotel/condominium
project by the same developer set to rise next door. This begs the
question: Where will these upscale residents eat and shop in the area?

Higher-end retail is expected to follow the residential development
eventually — and admittedly, there are already signs of change. More
affordable condo projects in the area, on Livingston and Schermerhorn
streets, are expected to bring an initial wave of retail in their
ground-floor spaces. Meanwhile, the home furnishings chain Gracious
Home and an Apple computer store are said to be considering the
ground-floor space at the Williamsburgh Savings Bank tower. But buyers
in the neighborhood’s luxury developments are warned that if they want
to see a complete turnaround, they need to be patient.

“We can’t promise buyers any retail,” said Andy Gerringer, head of new
development marketing for Prudential Douglas Elliman, which is handling
sales and marketing for the Oro and BellTel Lofts. “But when you come
into an emerging neighborhood, the retail will follow. We can show them
examples of the past: how Chelsea came around; the East Village; and
we’ve done it in Williamsburg and Long Island City. All these markets
came around and started showing a lot of activity.”

And residents are rewarded for buying “on what’s to come,” as Gerringer
calls it. He said units at BellTel are priced around $750 per square
foot, compared to the $850 or $900 one would pay for a similar
apartment in Williamsburg, where quality retail is more established.

A noticeable influx of higher-end restaurants and stores over the last
few years has already had an impact just south of Downtown, on Smith
Street and Atlantic Avenue, on the northern edge of Carroll Gardens.
And some anticipate this wave of change to continue northward.

“There has been dramatic change on Atlantic Avenue recently, between
Third Avenue and Nevins or Bond,” said Millie Perry of Stribling, who
is heading sales at One Hanson Place. “There’s a high-end yoga clothing
shop, and a beautiful new organic ice cream store that opened.”

In a move that may pave the way for similar change in Downtown
Brooklyn, this summer the neighborhood got its fifth business
improvement district. There is hope that the establishment of the new
Court-Livingston-Schermerhorn BID, south of the existing MetroTech and
Fulton Street BIDs, will expedite the spread of more upscale retail
north of Atlantic.

The new BID will provide its district’s retail stores with services
like daily sidewalk cleaning and graffiti washing, which are intended
to improve the shopping environment. Future plans for the organization
include landscaping, additional security, and business attraction
services, such as creating branding and awarding grants to help
merchants renovate their facades and signage.

“You will see thousands of square feet of storefronts coming in the
next five years,” said Michael Burke, executive director of policy and
strategic planning for the Downtown Brooklyn Partnership, an umbrella
organization that encompasses the Court-Livingston-Schermerhorn BID.

The BID is bound to the west by Court Street, to the north by Fulton
Street, to The East By Flatbush Avenue and to the south by Atlantic

Burke said that the retail spaces planned for the area’s new condo
projects are relatively small, and not likely to lease to any big-box
stores or national retailers.

“For the most part, you will see new spaces for neighborhood retail:
grocery store, hardware store, Laundromat, things that support the
local community,” Burke said. “And of course, restaurants and bars too.”

Michele Freeman, a vice president at CB Richard Ellis, thinks that for
Livingston and Schermerhorn, where vacant lots afford the most amount
of flexibility, retail would benefit from “a smart developer who
purchases adjacent lots, and aims for a ‘strip mall’ effect.”

One developer had that idea for State Renaissance Court, a mixed-use
development going up at 200 Schermerhorn. The project will include 158
rental apartments, half of which will be market rate, with around
15,500 square feet of retail space.

“In order to maintain a sense of retail continuity on the street, all
except the corner spaces are only 20 or 25 feet deep,” said Sammy
Brahimi, a partner of IBEC, who is developing the project. The smaller
“street-oriented” spaces, as Brahimi calls them, range in size from 780
to 1,560 square feet, with asking prices of around $60 per square foot.

A gourmet grocer, whom Brahimi would not name, has already taken the
building’s 5,000-square-foot space, for around $50 per square foot.

Near State Renaissance Court, at 230 Livingston Street, sits a parking
lot slated to become a two-tower, mixed-use development, with 15,000
square feet of retail space. “There is a tremendous amount of mixed-use
development on Livingston and Schermerhorn that is mostly upper-level
residential, but all of them require ground-floor retail,” noted Burke.
Dining options on Livingston are currently limited to establishments
like Kennedy Fried Chicken, Popeye’s and Patty Plus, a Jamaican beef
patty joint.

Right now, asking retail rents on Schermerhorn are in the $35 to $40
per-square-foot range. But with the amount of development coming
online, these are expected to approach the $50 per-square-foot range
currently seen one block north, on Livingston. Farther west, across Jay
Street and edging into Brooklyn Heights, Livingston rents are around
$60 to $70 per square foot.

“On Livingston it’s much higher, because there is more stable retail
already, and because it is closer to Downtown,” Burke said. One block
farther north, on Fulton Street, which is largely a pedestrian-only
mall, rents are even higher because of the traffic the street receives
— they can break $100 per square foot.

“The retail rents on Fulton, two blocks away, are more than double what
we are asking,” Brahimi confirmed. “But I’m not saying I want
Schermerhorn to become another Fulton Street.”

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