Behind NoMad’s retail surge

A breakdown of the latest trendy shops helping transform the former wholesale area

Sep.September 01, 2014 07:00 AM
From left:

From left: the Ace Hotel, 3 West 29th Street and the Thrifty HoG

Soho, Tribeca, the Meatpacking District … and NoMad? The neighborhood north of Madison Square Park is not the first that comes to mind for chic shopping. But a tide of changing retail in the stretch along Broadway from 23rd to 30th streets is altering that.

At least, that’s the pitch being sold to prospective tenants by the NoMad Center at the Virgin Hotel, a 100,000-square-foot retail block in the Sir Richard Branson–branded 38-story glass tower. Set to open in 2017, the retail portion of the building developed by the Lam Group will occupy the hotel’s entire frontage on Broadway from 29th to 30th street, in the heart of an area long known for wholesale perfume, jewelry and beauty supply stores. The area has been on the upswing since the restoration of Madison Square Park in the early aughts and was boosted by the arrival of Danny Meyer’s trendy Shake Shack burger joint in 2004. But the arrival of the Ace Hotel back in 2009 heralded the beginning of a new retail landscape that is only now coming into its own.

And while the Ace used discounted rents and other rental incentives to attract retailers like Stumptown Coffee and the John Dory Oyster Bar, trendy stores have since migrated to the area without incentives. The Cambodian sandwich joint Num Pang, the salad joint Sweetgreen and the fashion boutique Noir et Blanc are now filling the storefronts along Broadway and its side streets. Aiming to build on that base, the NoMad Center’s leasing team, led by Newmark Grubb Knight Frank executive Mitch Friedel, is testing the market to see just how much the area’s newfound cache is worth.

Friedell said he’s aware of comps on nearby Broadway in the $300-a-square-foot range.

“I think we can easily surpass those numbers,” he said, citing “the prestige of the Virgin name,” and the quality of the new space, along with the two years until the hotel’s debut.

Andrew Zobler, CEO of the Sydell Partners, which developed the Ace hotel in partnership with GFI Capital Partners CEO Allen Gross, said many of the wholesalers in the area have actually been paying premium rents for years.

“If you look back five or six years ago, tenants were paying $200 a square foot on Broadway,” he said.

“It’s not so much that the rents are really going up materially. It’s more of a shifting in the kind of tenant,” he continued. “What’s changed dramatically is the rents above the retail. Once the neighborhood becomes trendy, the rents above go straight up.”

Here’s a look at some of the shops and properties in the area helping to transform Broadway and its side streets:

The Ace Hotel

The property that arguably put NoMad on the map, the Ace has been drawing a young, tech-savvy clientele since it opened in 2009. The partnership between Sydell Partners and Gross transformed the former Hotel Breslin into a destination in a neighborhood that had previously lacked just that. As part of the plan, hotel operator Atelier Ace offered discount rents to retail tenants, who then turned over a portion of their earnings, in an effort to create a buzz-worthy mix across the hotel’s retail space. The eclectic mix of tenants include the Michelin-rated Breslin Restaurant, Portland’s iconic Stumptown Coffee, the Fort Green export No. 7 Sub Shop, the boutique clothing store Opening Ceremony, the Project No. 8 gift store and the John Dory Oyster Bar. Today, the hotel’s retail is completely leased.

The NoMad Hotel

The second of the Sydell’s NYC hotels, the NoMad, opened in 2012 a block south of the Ace at 1170 Broadway, catering to a clientele that could be described as more Continental. The Beaux Arts building’s 168 rooms were restored by French designer Jacques Garcia, who modeled them after Parisian flats. The NoMad’s ground-floor retail space is occupied by the haute Parisian fashion boutique Maison Kitsune, where animal-print sweatshirts sell for hundreds of dollars. Last year, the developer also purchased the building next door, 1164 Broadway, which became home to the Washington, D.C.–based salad chain Sweetgreen.

Eataly

The high-end market/restaurant bazaar was formed out of a partnership between Oscar Farinetti, who founded the first Eataly in 2007 in Italy, and celebrity chefs Mario Batali and Lidia Bastianich. It quickly became a foodie (and tourist) destination when it opened at 200 Fifth Avenue in 2010. With about a dozen restaurants, cafes and other stations spread out over some 50,000 square feet, the trendy spot draws about 100,000 visitors a day to the intersection of Broadway and Fifth Avenue, effectively bridging the Flatiron’s retail corridor north to NoMad. Eataly hit its projected revenue of $85 million last year and recently added a Nutella bar after its wine shop shuttered. The building is also home to the Finnish home-wares store Marimekko and the Lego company, which is planning to open its flagship store toward the end of the month. Asking rents along 23rd Street in the building are $375 per square foot, according to the CoStar Group’s database.

10 Madison Square West

Earlier this year, the private-equity firm Savanna picked up a 20,676-square-foot retail condo at the base of the former International Toy Center at 1107 Broadway, which developer Steve Witkoff is converting into 125 high-end condos. Apartments start with asking prices of $1.46 million and climb to $35 million for the penthouse. Closings at the building, now covered in scaffolding, are expected to begin in January. The development’s website promotes the area’s retail as part of the neighborhood’s appeal, along with its proximity to Madison Square Park. Savanna said it is looking to attract a “global retailer” to the space.

The Porcelanosa Building

Across 25th Street from 10 Madison Square West, the high-end Spanish ceramics-and-tile company is renovating the former Commodore Criterion Building as its new U.S. headquarters. It purchased the property, which is at 202 Fifth Avenue and is being renamed the Porcelanosa Building, for $40 million in 2012. When completed next summer, the 15,000-square-foot, Sir Norman Foster–designed renovation will include a showroom that will serve as a welcome sign of sorts to the lower end of Broadway in NoMad. The space sits just north of the some of the higher-end home furnishing stores found in Flatiron. The six-story, Neoclassical building dates back to 1918 and had been home to the Commodore Manufacturing Corp. The building’s exterior is landmarked.

Hill Country Chicken

This Texas fried chicken enclave, an offshoot of the popular Hill Country Barbecue restaurant on 26th Street, opened in 2010 at 1123 Broadway. The 2,700-square-foot space fronts Broadway and 25th Street at the base of an office building owned by Kew Management, which owns several other properties in the area. Its other tenants include Num Pang sandwich shop, at 1129 Broadway. Kew has a retail vacancy on the ground floor of its office building at 1133 Broadway and says it’s close to signing a lease for a portion of the 9,000-square-foot space. CoStar put Hill Country’s rent at $125 per square foot. Kew declined to comment on rents.

The Thrifty HoG

This upscale 2,100-square-foot thrift shop opened at 11 West 25th Street in 2010 selling used clothing, furnishings and home décor items. Proceeds from the business — whose name is an acronym for “Hearts of Gold” — benefit homeless mothers and children, according to the company’s website. The company’s founder, fashion stylist Deborah Koenigsberger, also started the women’s boutique Noir et Blanc next door at 7 West 25th Street. Both buildings are owned by Kew Management.

Brickman office buildings

Further down 25th Street, work is underway at 24-28 West 25th Street (pictured), a pair of office buildings investor Bruce Brickman and San Francisco–based developer DivcoWest purchased last year. The partners are planning to capitalize on the tech craze in Midtown South and reposition them targeting creative tenants. As part of the deal, Brickman and DivcoWest also purchased a third building at 40 West 25th Street, where earlier this year they signed Reed Krakoff, the former top designer at Coach who left to start his own label, to a 27,000-square-foot office space on the eighth and ninth floors. They also signed a 6,750-square-foot-lease with the magazine ARTnews in the building, according to CoStar. Brickman did not respond to a request for comment.

The Smith restaurant

Set to open either later this year or in early 2015, the fourth location of the casual American brassiere will spread out across 9,000 square feet at 1150 Broadway. The building — otherwise known as 230 Fifth — had previously been home to “three unsightly, unseemly cell phone guys,” according to Newmark broker Jonathan Krivine, who put the deal together with fellow NGKF broker Harvey Richer. The Smith signed at $150 a square foot, according to CoStar.

Broadway Plaza Hotel

Owner Sal-Jon Realty gave a cosmetic make-over last year to its 69-room hotel at 1155 Broadway and is planning to seek city approval in the next year to do a full renovation that will include repositioning the building’s ground-floor retail. The property, which was converted from an office building to a hotel in 2000, hosts several of the neighborhood’s typical wholesale shops, along with Broadway Pizza. The renovation will include an expansion to the lobby, leaving about 6,000 square feet of retail space remaining. Hotel owner Sal Loria told TRD that the company wants to lease the space to a steakhouse/sports bar. In addition, Loria said, the firm would reposition the property from a three-star to a four-star hotel.

SoulCycle

The trendy spinning studio signed a lease earlier this summer for 6,000 square feet at the base of Himmel & Meringoff Properties’ 18-story office tower at 12 West 27th Street. The 10-year lease covers 3,500 square feet on the ground floor and another 2,500 in the basement. SoulCycle, which has nine other locations in Manhattan and Brooklyn, is planning to open in the fall. CoStar put the rent at $125 per square foot.

Boutique hotel

The owners of the boutique Refinery Hotel near Bryant Park are planning a Morris Adjmi–designed hotel at 1162 Broadway. The hotel, which does not yet have a name, will climb 14 stories and have about 50 rooms. There will be a tiny, 800-square-foot retail space on the ground floor and another 1,700 square feet in the cellar. Developer Aini Assets said the company expects to break ground early next year with a target completion date in 2017.

The Centurian Building

To the north of the NoMad at 1170 Broadway, Mocal Enterprises’ repositioning of the 1910 landmark building at 1182 Broadway includes about 7,000 square feet of retail behind the building’s two-story Neoclassical columns. Massey Knakal Realty Services is marketing the space, which has 2,830 square feet on the ground floor and 3,345 square feet on the second floor.

Jung Lee

Event planner Jung Lee opened this luxury housewares store last year at the base of 25 West 29th Street, also known as the Gilsey House. The 38-unit landmarked co-op building sits across from the Ace Hotel and has wholesale retail tenants along Broadway and 29th.

Yeohlee

A few doors down from Jung Lee, this designer women’s wear shop opened at 12 West 29th Street late last year. The store covers 2,000 square feet next to Rudy’s Barbershop, an arm of the Seattle-based shear shop that opened in NoMad in 2012. Yeohlee is paying $45 per square foot, according to CoStar. Designer Yeohlee Teng coined the term “urban nomad” to describe her Fall 1997 collection, according to her website.

HFZ Capital Group development

Work is underway to demolish the historic Bancroft Building, the 10-story office building at 3 West 29th Street that Ziel Feldman’s HFZ Capital Group bought for $26.2 million last year. HFZ plans a 350,000 square-foot, mixed-use tower that will stretch block-through to 30th Street. The firm did not respond to a request for comment.

Correction: An earlier version of this article incorrectly characterized the team that developed and managed the Ace Hotel. The hotel was developed by GFI Development, then a partnership between Sydell Partners and Alan Gross of GFI. The partnership then hired Atelier Ace to manage the hotel and the retail areas. 


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