The city’s fastest-growing retailers

<i>In addition to banks and drugstores, Starbucks still on tear; healthful eateries grow</i>

Starbucks seems to have staked out space on every Manhattan corner by now, but 13 years after its caffeine-charged arrival, the Seattle coffee company remains amped up about its expansion plans in the city.

Starbucks added another 15 stores from August 2006 to August 2007, closing just one, for a total of 178 stores in Manhattan. That’s a 29 percent jump from the 138 locations across Manhattan in 2004, according to data tabulated by Newmark Knight Frank. Starbucks operates 358 stores in the New York metro area and now faces sharp increases in rent as leases come up for renewal.

Though it is hard to quantify exactly which chain of stores is growing the fastest in Manhattan, Starbucks’ rapid expansion clearly makes it a contender — nearly a decade after the satirical weekly newspaper The Onion spoofed Starbucks’ gangbusters growth by reporting that a Starbucks had opened inside the men’s room of an
existing store.

“Globally, we open an average of six stores per day,” says Starbucks regional spokesperson Hope Tannenbaum. “Starbucks has and will continue to open stores where our customers want and expect us to be, both here in Manhattan and nationwide.”

Starbucks is one of many retailers with a nearly ubiquitous presence in Manhattan, but still has a big appetite for more. Banks including Chase, Citibank and Bank of America continue to gobble up space. Chase alone now has 119 Manhattan branches, having added 23 since 2004, according to a spokesman. In addition to the banks and drugstore titans, other trends continue, including a focus on healthful eateries. Chipotle and Le Pain Quotidien fit this bill.

Fashion chains including Juicy Couture, Kate Spade and Lucky Brand Jeans, all of which are owned by Liz Claiborne Inc., continue to scout locations, too. Richard Hodos, a principal at Madison Retail Group, says these three brands plan to add a total of five to 10 stores in the next year.

Yet chains that want to expand rapidly in Manhattan face increasingly difficult conditions. Retail rents have jumped to unprecedented levels, with asking rents in the $300-to-$400-a-square foot range in once-affordable areas such as East 86th Street.

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In addition to the high rent, converting a space to a specific chain’s retail needs is a long and increasingly complex process. Jeffrey Roseman, executive vice president of Newmark Knight Frank, points out that Manhattan deals used to move more quickly when only a few people were involved. Now they drag on for many months, with everyone from the regional site manager to the architect weighing in.

And as credit and equity markets went through mortgage-related gyrations last month, broker concerns that a severe economic slowdown could ripple through retail
leasing grew.

“If things stabilize after Labor Day, everything will be fine, but if things continue to zig and zag, it’s going to hurt consumer spending,” says Hodos. “I wouldn’t be surprised if some of these retailers pulled back on these plans just because of the uncertainty.”

For now, however, Manhattan shoppers have plenty of new bank branches to run to for cash before they hit a new drugstore, healthful eatery or designer boutique. Faith Hope Consolo, chairman of the retail leasing and sales division at Prudential Douglas Elliman, notes that the cyclical nature of retail is playing out as bank branches replace once-hot apparel stores in locations that had previously been banks. She cites the example of 900 Third Avenue. Once home to Chemical Bank, the location at 54th Street became a Gap location and is now leased to Bank of America.

Manhattanites are also reflecting a national dining trend that’s embraced healthful eating, and the demand is increasingly evident at street level. Chipotle, which debuted in Manhattan in 2004 with seven leases, now has about 17 locations in the borough. Known for serving hormone-free meats, the burrito and taco chain, spun off from parent McDonald’s, is reportedly set for five new locations in Manhattan this year. Company officials did not respond to requests for comment.

In a similar vein, Belgian import Le Pain Quotidien and two California-based firms, Jamba Juice and frozen yogurt chain Pinkberry, have been growing. Jamba Juice has opened a total of 18 Manhattan locations since its 2004 debut. Pinkberry entered Manhattan in 2006 with three stores and now has four locations, including one on Spring Street. New sites are set for 177 Bleecker Street, 2041 Broadway at 70th Street, and 2873 Broadway at 112th Street later this year.

Le Pain Quotidien focuses on fresh bread and organic ingredients for its open-faced sandwiches. The chain has been here for more than a decade, but has recently ramped up growth. Amira Yunis, executive vice president with Newmark Knight Frank’s national retail group, which represents Le Pain Quotidien, says the expansion accelerated after her firm conducted in-depth market research for the eatery two years ago. The company has recently inked five new deals, including outposts at Bryant Park, 801 Broadway at 11th Street, and 92nd Street and Broadway.

“We realized we could support locations closer to each other,” Yunis says.