Caroline Pardo of Two Trees Management
Barneys Co-op — set to open at 194 Atlantic Avenue in Downtown
Brooklyn Sept. 1 — is the first of several new big-box retailers
coming to the neighborhood, and a prime indicator of the borough’s
shifting demographics and ongoing expansion, experts say.
“The corridor is changing, as national stores are looking now in places
where before they didn’t think they could support businesses,” said
Caroline Pardo, the director of leasing for Two Trees Management at
Wednesday’s annual NYC Business Improvement District Conference
covering the future of retail in New York City.
In the past five years, Pardo has helped bring over 50 businesses to the Downtown Brooklyn and Dumbo areas. Trader Joe’s
on Court Street, and Urban Outfitters on Atlantic Avenue, were two of
the more recent additions to the area, with Pier 1 Imports and
furniture retailer Crate and Barrel 2 also looking to set up shop on
the avenue, she told The Real Deal.
H&M and Sephora are seeking space on Fulton Street in Downtown
Brooklyn, she said, and the Paper Source stationery store is hunting
for a location on Smith Street. Swarovski Crystal is also looking at a
spot on Court Street, off Atlantic Avenue, Pardo added.
“These stores are now coming to the outer boroughs because the
retailers realize that the people who shop in Manhattan actually live
in Brooklyn,” Pardo said. “The demographics are changing and they
realize there is a lot of money in Brooklyn, so now it makes 100
percent sense that they want to expand there.”
Brooklyn in particular has been underserved, according to Steven
Spinola, president of the Real Estate Board of New York, who was the
keynote speaker at the conference. He noted that Brooklyn has one mall
for every 2.5 million people, while Long Island — a suburban enclave
of roughly the same population — has one for every 386,000.
Costco and Walmart have opened in the city in recent years and are doing well, despite initial skepticism regarding their chances for survival, Benjamin Fox, vice president of Winick Realty Group, told The Real Deal. He also dismissed the notion that New York City would get taken over by big-box retailers.
“It’s unfounded,” he said. “There is a place for everything. The
big-box retailers help the local city by retaining money that would
otherwise be in the suburbs.”
Even while the city recovers from the economic recession, retail sales
have been steadily improving, Spinola said, though consumers remain
cautious. But the market is slowly adjusting, he said.
Spinola pointed to the Times Square leases of Aeropostale and the Walt
Disney store as signs of a return to large leases in New York City.
There is less space available for leasing, he said, and the space that
is, comes at a premium, averaging $1,400 per square foot. But even with
all this growth, “we are dramatically under-retailed in New York,”
Spinola noted. “New York City can support more retail stores if we
lower operating costs and stop mandating wages and benefits.”
Fox highlighted other neighborhoods that he says have a dearth of
retail — the Lower East Side, Chinatown and Harlem. Similar to
Brooklyn, he attributes the limited number of retailers to the changing
demographics that have outpaced the retail cycle. “In those
neighborhoods, there is a changing population base, which bodes well
for retailers,” he told The Real Deal. “There is now more spending
power, but in the past, retail hadn’t kept up with the change in the
neighborhoods.”
Fox said consumer confidence is tied to the unemployment rate, which
was at 9.5 percent in June. “There will be more consumer confidence
when unemployment starts to shrink,” he noted after the conference.
He also emphasized the value of having a neighborhood entrepreneur
opening up in his or her hometown, as the catalyst to help attract
retailers who hail from outside the area.
“Harlem is a classic example of how low-income neighborhoods can change
and retailers can open up to affordable rates,” Fox said.
The future of retail looks bright, Fox said.
He predicts that in the next 10 years there will be a strengthened
middle class with more disposable income, and more retailers in
Downtown Brooklyn as well as in Washington Heights, Inwood, Harlem and
neighborhoods in the South Bronx. Pardo agreed, saying that she expects
to see more malls opening outside Manhattan, similar to Downtown
Brooklyn’s Fulton Mall and the Queens Center Mall in Elmhurst.