TRD’s updates from ICSC: Live blog
Watch this space for live updates from the 2013 International Council of Shopping Centers’ RECon event in Las Vegas, on now through Wednesday.[liveblog]
8:03 p.m. You’d expect retail brokers at RECon in Las Vegas to have gambling on the brain. But some are thinking less of roulette tables and slot machines and more about leasing space at under-construction developments, such as Westfield’s 350,000-square-foot World Trade Center site, set to open in 2015.
Indeed, several brokers compared doing deals in new construction to negotiating futures contracts: it’s uncertain how high rents will rise.
“People are starting to trade futures,” Chase Welles, partner of SCG Retail said. “If you do a deal with Westfield, you will not be there for three years.”
“It’s like [a] futures [contract]. You are trying to lock it in,” added Faith Hope Consolo, chair of retail leasing and sales at Douglas Elliman, referring to rental rates, which have been rising in the Lower Manhattan submarket.
Asking rents at the World Trade Center site are about $400 to $500 per square foot as a base rent, and may also include percentage rents, several insiders said. Westfield did not immediately respond to a request for comment.
While there is an overall low vacancy in existing Manhattan buildings, there is a great deal of new retail product coming to the market in the next few years in new developments, where the developer often has a higher basis, Welles said.
“We’ll see if rents support newer construction,” he said.
But Jeffrey Roseman, executive vice president at Newmark Grubb Knight Frank Retail, took a different approach.
Negotiating a deal at the World Trade Center site involves the most basic element of leasing, he said, which is always making some kind of prediction about the future, and being on target or not.
Retailers often plan three or four years in advance, so “24 to 36 months is not really that unusual,” he said. — Adam Pincus
11:30 a.m. Cushman & Wakefield CEO Glenn Rufrano said that last year for the first time ever, a retail broker was a top revenue producer for the firm in the Americas, underscoring the heightened impact of retail leasing on brokerage firms.
Bob Gibson, a vice chairman at Cushman, tied with office leasing broker Dale Schlather, vice chairman, for bringing in the most in gross commissions in the Americas to the firm in 2012, Rufrano said.
Gibson achieved that by representing (along with Cushman’s Thomas Citron) apparel retailer H&M in two large deals last year, one at 589 Fifth Avenue and another at 4 Times Square.
“A tenant paying that much rent for such a large space in Manhattan for the term [H&M] took, created revenues for Cushman that were never made before [from retail],” Rufrano said.
Rufrano, who serves as a board trustee for ICSC, sat down yesterday with The Real Deal at the Cushman booth at the ICSC show at the Las Vegas Convention Center.
Attendance for the conference, which started on Sunday and runs through tomorrow, was expected to surpass 35,000, an increase of about 10 percent over last year, he said. Attendance has risen by about 10 percent per year for three years, after falling dramatically from the peak of about 50,000 in 2007, he noted. — Adam Pincus
8:00 p.m. Following a recent record-breaking deal for the retail space at Thor Equities’ Takashimaya Building at 693 Fifth Avenue, company chief Joe Sitt is focused primarily on leasing a mammoth retail space at 680 Madison Avenue, which it bought from Extell Development late last year for $277 million.
Thor executive vice president Melissa Gliatta told TRD at ICSC that the company expects to lease the 38,500-square-foot full-block space to several luxury retailers and will split the square footage accordingly. She declined to comment on which retailers the company has been talking to.
“This is the 680 Madison show for us,” Gliatta said.
Another Thor property making its marketing debut at the show is the 28,000-square-foot retail space slated for 837 Washington Street in the Meatpacking District.
Thor is working on developing the building with Taconic Investment Partners. Taconic will head the office portion of the under construction building, which will total 55,000 square feet, while Thor focuses on the retail.
While the primary retail portion of the building constitutes the ground-level and first and second floors of the property, the third floor could also serve as a space for a retailer, a restaurant or as an office space, Gliatta said. — Katherine Clarke
6:20 p.m. Ripco Real Estate has taken over the marketing of 19,000 square feet of retail space at a new rental development slated for 555 Sixth Avenue, Andrew Mandell, a managing partner at the firm told The Real Deal today.
The space is on the lower levels of a new residential project spearheaded by Stonehenge Partners, which acquired the property, located between 15th and 16th streets, for $67.34 million in 2010. It was previously marketed by Winick Realty Group and is comprised of 13,000 square feet of space on the ground floor and 6,000 on the lower level.
The listing, which has 200 feet of frontage on Sixth Avenue, is one of the only retail locations in the neighborhood without landmarking restrictions, meaning that prospective retailers could have floor-to-ceiling glass windows, Mandell said.
Meanwhile, Stonehenge is planning to turn the property into a 160-unit rental building. Winick declined to comment on losing the assignment. — Katherine Clarke
5:02 p.m. Drug store chain CVS inked a lease yesterday for 10,365 square feet in Noho, staking another flag in the quiet battle for customers it’s waging with the city’s leading drug store chain, Duane Reade.
CVS, represented by Jason Pruger, executive managing director at brokerage Newmark Grubb Knight Frank Retail, signed the lease at 42-56 East Houston Street, between Mulberry and Mott streets. The building is three blocks east of Duane Reade’s store at 598 Broadway, just south of Houston. The space, now vacant, was previously occupied by Soho Billiards.
CVS was attracted to the site as a strategic move to attract customers, Pruger said.
“We are grabbing market share, and we are trying to cut [Duane Reade] off from the east,” he said, in an interview at the Newmark booth at ICSC.
The landlord was represented by CBRE Group’s Jed Nero, an executive vice president, and Michael Kadosh, a vice president. The brokerage did not immediately respond to a request for comment.
Bowery Boogie, which first spotted the deal, said the rent was $1.55 million per year. — Adam Pincus
3:10 p.m. Jamestown Properties is set to bring a new retail space to the market at the Milk Building in the Meatpacking District following its purchase of the property last year, Jamestown CEO Michael Phillips told The Real Deal today from the company’s tent-like booth at the Las Vegas Convention Center.
The 7,200-square-foot store includes ground-floor, basement and mezzanine level space. It will be asking $375 a foot and is being marketed in house, he said, adding that the space might be a good fit for a “soft goods” retailer such as a fashion brand.
The “Tenth Avenue retail zone has really emerged as a vibrant kind of retail and restaurant corridor,” in recent years, Phillips said. Following the first wave of high-end retailers like Diane Von Furstenberg moving into the neighborhood in the 1990s and early 2000s, more mid-range retailers like Levi’s, Patagonia and Anthropology have followed suit, he said.
“The first wave was micro couture brands and was more about adopting an area,” he said. “Now, we’re seeing some dimension. There’s a critical mass occurring.”
Jamestown is also forging ahead with plans to add close to 300,000 square feet of office space to the Chelsea Market building, but the company many not have to look too far for tenants. Phillips said he’s confident that Jamestown can fill the entire space with existing tenants at the building who have been eagerly looking to expand.
Tenants at the building include Google, the Food Network, Oxygen Media, TimeWarner, EMI Music Publishing and Major League Baseball. While Phillips declined to comment on which existing tenants are looking to snap up the new space, Google looks like one of the most likely candidates. The tech giant is rumored to be increasingly space-hungry in New York following its 2010 acquisition of 111 Eighth Avenue.
Phillips also spoke briefly about the Atlanta-based investment group abandoning a reported deal at 90 Fifth Avenue late last year following news that magazine publisher Forbes had defaulted on its lease at the building. While Jamestown might have considered continuing with the purchase, the investment fund it was working with wanted a more stable asset with in-place income, he said. –-Katherine Clarke
2:05 p.m. Winick Realty Group has unveiled a redesigned logo, the first revision since Jeff Winick founded the Midtown-based firm in 1982.
The new logo uses a slimmer font with the same blue color. The change comes a week after Real Estate Weekly reported that Winick’s daughter Danielle planned to join the company.
The firm started to consider a new logo about six months ago, Steven Baker, company president, said.
“We have updated our corporate look to better reflect our market leadership,” he said.
Lori Shabtai, company executive vice president, described the new look as “fresher and more modern.”
Another Manhattan-based firm, RKF, went through an image change about a year and a half ago, company CEO Robert Futterman said. The firm adopted his initials as the name of the firm, in place of the name Robert K. Futterman & Associates, although the logo has remained the same since 1998. — Adam Pincus
1:40 p.m. Retail tenants are gearing up to leave their spaces at Pier 17 at the South Street Seaport before the pier’s redevelopment begins in October, a spokesperson for Howard Hughes Corporation, the company overseeing the project, said today at ICSC.
In the meantime, Howard Hughes Corporation is keeping the pier open during the summer months and has announced an arts and culture program starting Memorial Day to try to bring consumers back to the Seaport following Superstorm Sandy. Stores on Pier 17 were closed for almost a month following the Hurricane.
Among the attractions coming to the pier at the end of the month is SmorgasBar, a beer garden-style watering hole featuring dozens of food vendors curated by the Brooklyn Flea. Movies will also be shown at the pier over Memorial Day Weekend and an art exhibit will be mounted in the Cannon’s Walk area of the seaport.
Commercial brokerage Robert K. Futterman is heading leasing for the new major retail development coming to the pier, which will feature a shopping mall with a 10,000-square-foot rooftop space. No leases have been announced so far. — Katherine Clarke
12:33 p.m. The Real Deal just sat down with Andy Graiser, co-president of A&G Realty Services, a New York-based company which specializes in real estate dispositions, lease restructurings and facilitating growth for major retailers such as Aldo, CVS, Sbarro, Fashion Bug, Design Within Reach, Loehmann’s, Oakley and Restoration Hardware.
Nationally, big box retailers like Walmart are looking for growth opportunities outside of the big box concept, Graiser said. In some markets, those retailers already have substantial big box presence, while in other areas new shopping centers simply haven’t been built thanks to a couple of sluggish years of new construction.
Instead, companies such as Walmart are looking at different types of concepts, such as smaller boxes or stores within stores. A Walmart spokesperson was previously quoted as saying that the retailer was set to open 115 new outlets that have less than 60,000-square-feet of selling space by the end of 2013.
In New York City, Graiser said rising rents on Madison Avenue may lead landlords to try to buy boutique retailers out of their leases in order to secure major credit tenants like Uniqlo, which moved to Fifth Avenue last year. If a landlord has a credit retailer that’s willing to pay $1,500 a square foot, “why wouldn’t you try to get the tenant out earlier?” Graiser said. “A lot of people think the New York market is close to it peak. You don’t know where the market will be in three years.”
In a reversal, Restoration Hardware, which has a number of mid-sized stores in Manhattan, is sitting tight and looking out for opportunities to snap up a larger space of up to 40,000 square feet in which to showcase its products and with which to reduce its fixed costs, Graiser said. In Boston, where the company recently opened a 40,000-square-foot facility in the Back Bay area, Restoration Hardware has been able to transfer 80 percent of the business that came from its smaller stores to online, catalogue or to the new larger store, according to A&G’s Peter Lynch. Such spaces are harder to find in New York City.
“One the opportunity comes up, they’ll be all over it,” Graiser said. — Katherine Clarke
11:15 a.m. Our reporters Adam Pincus and Katherine Clarke are in Las Vegas scoping out all that ICSC’s annual retail conference has to offer. Any tips? Email Adam at email@example.com and Kathy at firstname.lastname@example.org. And don’t forget to follow @trdny for additional tidbits from the event.