UPDATE, Monday, Oct. 28, 2019, 2:45 p.m.: Soho has been one of Manhattan’s more troubled retail corridors in recent years. But, anticipating a rebound, Acadia Realty Trust has been scooping up storefronts in the neighborhood, particularly along Greene Street.
In its third-quarter filing Thursday, the real estate investment trust said it had closed on another $25.1 million of its previously announced plans to acquire some $122 million worth of retail assets along Greene Street. The new acquisitions cover seven properties with an average remaining lease term of six years, one executive said on an earnings call this summer. Newmark Knight Frank’s Brian Segall and George Martinecz were the sole brokers on the transactions.
Earlier in the year, Rye, N.Y.-based Acadia said it planned to buy $97 million worth of retail assets in Soho. Acadia upped that commitment in July when it announced having picked up 47 Greene Street, a 7,200-square-foot property leased to fashion brand Theory, for $24.8 million in an off-market deal from seller EMP Capital Group. That comes out to nearly $3,450 per square foot.
In April, Premier Equities and Thor Equities sold the retail space at 51 Greene Street to Acadia for $14.6 million.
As of the end of the third quarter, $74.4 million of its under-contract deals — four contiguous buildings on Greene Street — have closed. Acadia said it expects the rest to close next year.
Acadia’s plan is to aggregate clusters of buildings “to curate these streets with the right mix of tenants. This creates a powerful portfolio,” president and CEO Kenneth Bernstein said during the company’s earnings call. “Additionally, we have found that when vacancies dry up, when scarcity and the rules of supply and demand kick in, well, rents grow.”
The retail play comes as New York’s retail market remains bifurcated, with some neighborhoods faring better than others as retailers grapple with waves of tenant bankruptcies and store closures.
An August report issued by the city found that the retail vacancy rate for Soho/Noho was higher than the city’s average of 11.6 percent. The city did not include Greene Street in its analysis of the neighborhood — it looked at Broadway, West Broadway and Broome, Lafayette, Mulberry, Prince, Houston and Spring streets — but found the vacancy along those streets to be 13.8 percent.
That’s not as bad as Canal Street’s 25.9 percent, though far from the top-performing neighborhood of Jackson Heights, where the rate was just 5.1 percent.
Another measure of retail real estate in Manhattan, brokerage firm CBRE’s third-quarter market report, also found that Soho was a challenged area for retail. Though CBRE, too, did not focus on Greene Street, the firm found that Broadway in Soho saw a 14.9 percent drop in asking rents in the third quarter from the quarter before, to $486 per square foot. That was the first time that rents had dipped below $500 per square foot since 2011.
Acadia reported net income of $31.7 million for the first nine months of the year. That’s up about 30 percent year over year. The occupancy rate for its portfolio was 93.5 percent, and the firm also reported inking leases at 154 Spring Street and 135 Prince Street, also in Soho.
A representative for Acadia did not immediately return a request for comment.
Correction: A previous version of this story spelled the name of the seller of 47 Greene Street incorrectly. The story has since been updated.