A nearly 15,000-square-foot retail space, with 100 feet of frontage on Madison Avenue and 74th Street, has hit the market with asking rents of up to $1,200 a foot, The Real Deal has learned.
The space at 935 Madison Avenue, which is under construction, will occupy the ground-floor and lower level of a new condominium project spearheaded by healthcare entrepreneur and real estate investor Daniel E. Straus.
The condominium is a conversion of six historic brownstones and two townhouses formerly owned by the Whitney Museum and is situated adjacent to the main Whitney building, which is set to be taken over by the Metropolitan Museum of Art in 2015. (The Whitney is relocating to a site in the Meatpacking District.)
Joel Isaacs and Joshua Lewin of Isaacs & Company are marketing the retail space, which will have an historic façade and ceiling heights of 18 feet on the ground floor. The property will be available for possession in July 2014, Isaacs projected.
Straus is hoping that the arrival of the Met in two years’ time will increase foot traffic and drive uber-luxury retailers to consider spaces, such as his, which are north of 72nd Street on Madison Avenue. Traditionally, the blocks north of 72nd Street have appealed primarily to contemporary brands geared towards younger buyers, like Intermix, Coach and J.Crew, while the most exclusive luxury labels like Ralph Lauren and Dolce & Gabbana have clustered slightly south.
“We’ve seen Madison Avenue rents increase dramatically in the last six to 12 months,” Isaacs told The Real Deal. “We don’t see much of a distinction between 70th Street and 74th Street these days.”
Isaacs said the developer is asking $1,000 a foot for the ground-floor, mid-block space and up to $1,200 a foot for the corner space.
Some industry experts, such as Alan Victor, an executive vice president at Lansco, deemed the asking rents “aggressive.”
“The question is whether [the location] bears the same traffic that the 60s provide,” Victor said.
Demand for such locations is typically from designers and pricey luxury goods companies searching for stores with small footprints, of as little as 1,000 square feet, said Eric Le Goff, a retail broker with Cushman & Wakefield who recently completed a retail deal on Madison in the upper 70s for $1,000 a foot. As such, Straus may opt to divide the space.
Straus has previously owned and managed residential and commercial buildings in the city but has never developed. He declined to comment.
While the location is desirable to luxury goods purveyors for its proximity to high-end hotels like the Mark Hotel and the Carlyle Hotel, Le Goff said he was unconvinced that the arrival of the Met would boost foot traffic significantly enough to seriously impact rents.
“I don’t foresee dramatic changes,” he said, noting that the market has already significantly recovered from several years ago, when rents on the upper stretch of the avenue fell as low as $600 a foot.
However, retailers who might have traditionally gone for prime Madison locations may become more willing to look slightly further north as rents continue to grow “exponentially” in the most sought after locations, said retail maven Faith Hope Consolo of Douglas Elliman’s retail arm, who said she thought $1,000 a foot rents were reasonable for 74th Street.
In some cases, retail rents on prime Madison have rocketed as high as $1,800 a foot, Consolo noted. Such is the case with a retail property at the Carlton House condominium at 680 Madison Avenue, which is being marketed by owner Thor Equities. (Extell Development is handling the condos.) Joseph Sitt, Thor’s CEO, was previously quoted as saying that he would be seeking an average of $1,800 per foot for the space.
Straus’ space has 7,200 feet on the ground floor and 7,100 feet on the lower level. Prices at the 10-residence condominium above will start at $13 million, The Real Deal previously reported.