Retailers seeking space in Manhattan are used to scanning avenues and side streets for vacant storefronts. Yet in the next several months, four examples of a rarer type of retail property — multi-level vertical space — are making debuts on Manhattan’s Upper West Side.
While vertical retail spaces are common in other large North American cities, outside of department stores here like Bloomingdale’s and Filene’s Basement, as well as large bookstores, such space is rarer in Manhattan.
Yet now, because of sharp increases in Manhattan rents, brokers say that more tenants are looking for spaces that allow them to lease smaller ground-floor areas while also spreading onto other levels — above or below ground — where rents are less expensive. These spaces are particularly popular with “big box” tenants who operate warehouse-style stores in suburban malls that blend over two or three floors.
Landlords and brokers of these new vertical spaces are quick to distinguish them from their urban shopping center cousins, including Manhattan Mall, Time Warner Center and Trump Tower, by the fact that they do not feature any common area that is not leased by a specific tenant, like food courts or hallways.
One of the new vertical spaces is located in the back of 15 Central Park West, the new ultra-luxury condo that straddles a block
between Central Park West and Broadway along 62nd Street. Part of the vertical retail space available there has been leased by Best Buy, the consumer electronics chain. Best Buy occupies 45,000 square feet over three floors, two of them below ground, with access along Broadway.
There is 40,000 square feet of retail space remaining at the building, which could hold up to three more tenants, according to Cushman & Wakefield, which is the leasing agent for the project.
A second example of new vertical space is Columbus Village, a massive new mixed-use project going up along Columbus Avenue between West 97th and West 100th Street. The Chetrit Group, the developer, is putting up 320,000 square feet of retail space spread over three floors.
Tenants who have already signed on include Whole Foods, Duane Reade, Chase, Modell’s and Bank of America. The Winick Group, which is handling leasing at the project, declined to say what tenants were paying in rent.
Yet according to Joanne Podell, a senior director at Cushman & Wakefield, which leases retail spaces throughout Manhattan, ground-floor retail rents on the Upper West Side, on the avenue, tend to run between $275 and $375 per square foot. Conversely, Podell said that space below grade usually goes for between $100 to $125 per square foot.
Big-box retailers aren’t the only group excited by the possibilities of vertical retail in Manhattan. Brokers say a growing number of landlords are getting excited too.
“I think if second-floor [retail] rents were still $25 to $50 per square foot, that more developers would still be thinking, ‘I’m just going to put apartments on the second floor,'” said Robin Abrams, executive vice president of Lansco, a real estate consultant company. “But at $100 per square foot or more, which is what they’re getting, it makes more sense for them to make it retail.”
Those are the types of prices a new vertical retail development at Broadway and 72nd are asking. The project, created by the Gotham Organization, the real estate development and construction firm, affords each tenant some ground-floor space, mostly for entrances, and escalators leading up or down to the principal sales floor.
The project’s ground-floor space has an asking rent of $550 per square foot. Prices for the mezzanine are $125 per square foot, and space on the second floor goes for $200 per square foot. Negotiations will start at $75 per square foot for the first floor below grade and $65 per square foot for the lowest level.
Although Robert K. Futterman & Associates, the project’s exclusive leasing agent, said it could not reveal the prospective tenants, the firm indicated that deals could be finalized as early as next month.
The fourth vertical retail space, on the border of the Upper West Side, is happening at the Argonaut building at 57th and Broadway. The project is being undertaken by M1 Real Estate, a Monaco-based development firm. As part of a $45 million revamp, the Argonaut, a landmarked prewar office building, is getting a new three-story retail component.
The addition of escalators is expected to increase the value of its retail space above and below the ground level.
“The more you go vertical, the more important the layout of your vertical transportation becomes,” said Alan Napack, a senior director at Cushman & Wakefield.
Altogether, the ground level will include 10,400 square feet of space. Another 14,000 square feet of retail space will open on the second floor, with 5,000 to 10,000 square feet below grade, according to Ed Brock, managing director of GVA Williams, the firm managing the building and handling leasing.
M1, which has a 99-year lease for the 10-story Argonaut, said it’s targeting high-end retailers for the space, which could accommodate between one and five stores. According to Moustapha El-Solh, CEO of M1, there is interest from several international luxury brands, at least one of which might take the whole space for its flagship U.S. location.
“I think that retail definitely used to be the stepchild [on the Upper West Side], and when somebody developed a building, the retail was an afterthought,” said Abrams of Lansco. “Now, with retail rents so aggressive, developers are rethinking how they want to allocate their space.”