Bloomberg is creating a buzz where Midtown meets the Upper East Side, but excitement among retailers around Bloomingdale’s has nothing to do with mayoral decisions from City Hall.
As the Bloomberg tower goes up between Lexington and Third Avenue at 58th St., on the former site of Alexander’s department store, commercial real estate brokers aren’t sure if Midtown is moving east or the Upper East Side is moving south.
But it’s clear that something is happening to retail space on Third Avenue in the 50s and 60s. Rents are going up in Bloomingdale’s country, and upscale stores are coming in as the tower that will house Mayor Michael Bloomberg’s eponymous business information company nears completion.
The building, set to open later this year, will have 700,000 square feet of office, retail and residential space, 40,000 square feet of which are already leased by Swedish clothing chain H&M. Big boxes are also arriving nearby, with Home Depot leasing 80,000 square feet on the corner of 59th St. and Third.
The furniture store Select Comfort has leased 2,400 square feet of space at 61st St. and Third Avenue, and a slew of smaller retailers, including the accessory store Alexia Crawford and body care products merchant Bare Escentuals, are moving in nearby.
“There has been a lot of turnover, and the area has changed a lot,” says Garrick-Aug Worldwide vice chairman Faith Hope Consolo, who leased both the Alexia Crawford and Bare Escentuals spaces.
Broker Kim Mogull represented 1030 Third Avenue in the Select Comfort deal, with broker Bill Crisp representing the furniture store.
Consolo says the neighborhood has transformed as old leases expired and spaces went vacant. “The stores used to be more homogenous, more like a mall, without any distinct character,” she says.
More upscale retailers are moving in, and Consolo says it’s no surprise.
“You had a neighborhood that had very strong fundamentals, waiting for new retailers to come in,” she says.
But new stores are also bringing higher retail rents, climbing from about $150 a square foot a year ago to $200 or more a square foot today, according to brokers.
The area’s in-between status is a big reason for the rise of retail, brokers say. It’s desirable because of seven-day-a-week foot traffic coming from the Upper East Side, new residential developments in the area and Midtown office workers.
“It’s Midtown, and yet it’s the bottom of the Upper East Side,” says Scott Edlitz, managing director of Robert K. Futterman & Associates.
“You’ve got office workers heading to the subway stop on 59th St., plus shoppers from all over converging to shop at Bloomingdale’s.”
The recent flurry of activity is also being spurred by the new availability of larger spaces, says Beth Greenwald, a broker with Newmark New Spectrum Retail.
Until recently, Greenwald says the area did not have the large spaces that high-end retailers covet. But many new residential projects have involved knocking down smaller buildings, and putting up new condos with ample retail opportunities on the ground floor.
“It was never a bad situation, but it’s getting better,” Greenwald says.
For example, the Bloomberg tower project involved knocking down a square block as well as a few smaller buildings.
The infectious excitement generated by the nearly completed Bloomberg tower has also inspired landlords to look for a better class of tenants as leases expire, says Edlitz.
“There’s an expectation of better quality retailers, more like on Lexington and Madison Avenues,” he says. “Lexington has always been great, and now it’s spreading to Third.”