Retailers in residential neighborhoods that attract local shops and restaurants have thrived throughout the pandemic. But now, with workers beginning to tiptoe into their offices and international tourism reviving, Manhattan’s urban avenues are also waking up.
“Many tenants, especially those from overseas, think New York is still struggling,” said Steve Soutendijk, executive general manager of Cushman & Wakefield as he strolled along Columbus Ave., noting that there were few shops available. “We’re back to pre-COVID rents except where they were driven by tourists, like on Fifth Avenue, where rents aren’t in the same price points.”
It’s one of the reasons Swarovski jumped on the former 14,000 square foot Gap spot at 680 Fifth Ave. of his client, where he will open next year in time for the holidays.
In May, the opening of Mango at 711 Fifth in 23,000 square feet of the former Ralph Lauren store also brought Hurt Avenue to life.
But neighborhoods that rely entirely on office traffic five days a week struggle even more.
“Madison Avenue in the 60s and 70s has certain pockets that do better,” said Brandon Singer, CEO of Retail by MONA, which represents storefronts in the area.
Store vacancy also appears exaggerated as most of these paper-covered storefronts are actually rented and under construction.
“It can take six to nine months to build a small store because of all the nonsense small businesses have to deal with, from permits to getting Con Ed to turn on the gas,” Soutendijk said.
Massive entertainment complexes are ideal for places like 1221 6th Ave., which has 65,000 square feet of space available next to its plaza.
“We’re looking for something special like a great lifestyle, hospitality and health, wellness and fitness entertainment brand and put a bow on that trophy asset,” said Eric Gelber, executive vice president of CBRE, who said an 82-foot pool can even be installed.
The asking rent is $85 per foot, or $5.5 million per year.
At 11 Times Square, which is at West 42nd Street and Eighth Avenue, his 45,000 square foot space that has never been occupied by Lionsgate has significant activity, said Alan Schmerzler, vice president of Cushman & Wakefield. Paid attractions, experiential museums, art exhibits, aquariums, e-sports and more are starting to hit the bricks in this region.
“We’re back to pre-COVID rents except where they were driven by tourists, like on Fifth Avenue, where rents aren’t in the same price points.”
Steve Soutendijk, Executive Managing Director of Cushman & Wakefield
Other experiences will take place in the TSX Broadway entertainment and hotel project which has 100,000 square feet of retail space. Once the entire Palace Theater was lifted 30 feet, it left the corner of Seventh Avenue and West 47th Street a column-free retail space.
Currently, the partnership of developer L&L Holding and TSX Entertainment is in the process of securing a lease for massive signage and 74,000 square feet, including what will become a performance area with seating overlooking the red staircase in Father Duffy Square. .
Another entertainment concept, Game Square, is poised to be a staple when it opens at the foot of the Margaritaville Hotel at Seventh Avenue and West 40th Street. Hotel developer Sharif El-Gamal said: “This is something that will make every pedestrian passing by do a double take.
Up to 80 guests will be able to play competitive and unique video games and win cash prizes as viewers watch the leaderboard. Game Square COO Paul Kessler said when it opens in the fall there will also be an NFT gallery.
Other building owners are splitting their larger deals.
Stoutendijk is marketing a sublease of the never-opened Under Armor store in the base of the GM building at 767 Fifth Ave. by Apple’s flagship cube.
The former FAO Schwarz spot has been reduced to 14,000 square feet on the ground and 11,000 square feet on the second floor and has a mixed asking rent of $17 million per year.
In the Meatpacking District, a recent “flagship” deal with Gucci for 10,000 square feet at 400 W. 14th St. has woken up retailers. “Now they’re all looking in the neighborhood,” said Epstein, a director of Aurora, whose company owns other properties in the area. “It sends a message to all other luxury retailers that this is a neighborhood they must have.”
Watchmaker Breitling also signed a 3,807 square foot retail lease at Retail by Mona’s client, 875 Washington St., which had an asking rent of $550 per foot, joining regional timekeepers Rolex and Audemars Piguet.
The reinvention of 122 Fifth Ave. – between West 17th and 18th Streets by the Bromley Companies where Microsoft will open offices – led to a lease with Allbirds.
Bromley CEO Nicholas Haines explained: “Rents here have never gone stratospheric like in Soho. They just ticked with time and everyone made a deal to make it a profitable store and that allowed the stores to survive.
Further south, the reimagined Tammany Hall building at 44 Union Square East has enticed Petco to “leave” a nearly 30,000 square foot flagship where it will move from 860 Broadway.
Meanwhile, retailers in Brooklyn and Queens flourished.
In Long Island City, Jake Elghanayan, senior vice president of TF Cornerstone, said retail was “loss leader” during the pandemic.
“We’ve offered a lot of support to our retailers, but we’ve seen people in Long Island City bounce back more and more completely,” he said. “It’s not just LIC but all the residential retailers in the boroughs.”
In Brooklyn, “Williamsburg is hottest on North 3rd between Berry and Wythe streets,” said Gary Steinberg of Lee & Associates NYC, which represents several spaces in the area.
Last fall, Singer represented Padel Haus in a 16,000 square foot deal at 307 Kent Ave. across from the Domino Sugar project.
“You’ve got a ton of new sunken apartments and they need services and places to shop, eat and drink and retailers follow,” Soutendijk said.
