The Real Deal New York

Retail replacing a strip club tests Rego Park market

New store construction along Queens Blvd. is first nearby since Vornado opened mall
By Adam Pincus | June 06, 2014 08:30AM

A new two-story retail building set to replace a shuttered strip club in Rego Park — in the shadow of Vornado Realty Trust’s four-year-old regional mega-mall — is testing how much retailers will pay for neighborhood street stores on Queens Boulevard.

It is the first new construction retail to be built in the immediate neighborhood since Vornado’s 960,000-square-foot mall Rego Center opened in 2010, an analysis of data from PropertyShark shows.

The property developer, Atlas Projects, is asking as much as $115 per square foot for the 8,095 square feet that remain available at the under-development 92-77 Queens Boulevard. The two-story, 20,000-square-foot structure with six street parking spaces, is slated to be completed in the second quarter of 2015.

The balance of the building is expected to be leased to Starbucks on the ground floor and the gym Retro Fitness on the second floor, sources familiar with the property said.

The heart of the neighborhood retail has long been the giant Queens Center Mall, owned by California-based real estate investment trust Macerich. Then in 2010, Vornado opened Rego Center, where the firm is currently adding a residential tower.

Now, several more retail redevelopment projects are expected for the neighborhood, including the Midway Theater property at 108-22 Queens Boulevard and 71st Road, in Forest Hills, that Lloyd Goldman and partners purchased last year for $20.5 million, and the St. John’s Hospital at 90-02 Queens Boulevard which is expected to be redeveloped with residential as well as retail space.

“This puts you in front of [Vornado’s] mall and new residential tower,” Robert Heicklen, who along with  Jordan Kaplan and company President Steven Baker, is representing Atlas at the property. “Aside from the malls themselves, I feel this is the best retail opportunity south of the [Long Island Expressway] down to Austin Street.”

In July 2013, Atlas, represented by broker Christopher Okada, president of Okada & Co., inked a 49-year lease with an option for another 49 years with the landlord Andon Investment, according to a memorandum of lease filed with the city last year. The ground lease is worth about $10 million, sources said.

Atlas at that point was considering building a 15-story residential building with retail at the base, but decided against that because it would be faster to build the retail building, several sources said. Atlas declined to comment.

Then Massey Knakal’s Stephen Preuss and Sabre Real Estate’s Mark Gallucci brought in Starbucks and Retro Fitness. Starbucks was represented by Schuckman Realty and Retro by Sabre.

“This is really a story about Rego Park and Forest Hills, and about now New York City developers and investors are paying a lot of attention to central Queens,” Okada said.

Preuss, a vice president of sales at Massey Knakal, said the price of land has increased sharply in the area near the malls over the last year, where there have been several transactions, but construction has not started for many of them.

“A lot more development sales are going through, but really shovels have not hit the ground. This is one of the first,” Preuss said.