NYC’s retail sector heals as tourists and commuters return



Retailers in residential neighborhoods that attract local shopping and dining have flourished throughout the pandemic. But now, with workers starting to tiptoe into their offices and international tourism reviving, Manhattan’s urban avenues are waking up as well.

“A lot of tenants, especially those coming from abroad, think that New York is still struggling,” said Steve Soutendijk, executive managing director of Cushman & Wakefield as he strolled along Columbus Ave., noting there were few stores available. “We are back to pre-COVID rents except where they were driven by tourists, such as on Fifth Avenue, where rents are not in the same pricing levels.”

That’s one reason Swarovski jumped on the 14,000-square-foot former Gap spot at his client’s 680 Fifth Ave. where it 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 added life to the hurting avenue.

Exterior of 680 Fifth.
Swarovski snagged the 14,000-square-foot former Gap space at 680 Fifth Ave.
A shopper at Swarovski.
The crystal collectibles company will open there next year.
Sun Zhongnan / Costfoto/Sipa USA

But neighborhoods that are entirely reliant on five-day-a-week office traffic are still having a harder time.

“Madison Avenue in the 60s and 70s has certain pockets doing better,” said Brandon Singer, CEO of Retail by MONA, which represents storefronts in the area.

Store vacancy also appears exaggerated because most of those paper-covered windows are really rented and under construction.

“It can take six to nine months to build out a small store because of all the nonsense that small businesses have to deal with, from permits to getting Con Ed to turn on the gas,” Soutendijk said.

Exterior of Rockefeller Plaza.
Shuttered throughout the pandemic, the plaza at Rockefeller Center is set to reopen as a retail-rich playground.
Rockefeller Group

Massive entertainment complexes are ideal for places like 1221 6th Ave., which has a 65,000-square-foot space available off its plaza.

“We are looking for something special like a major lifestyle brand, health wellness and fitness hospitality and entertainment and to put a bow on this trophy asset,” said Eric Gelber, executive vice president of CBRE, who said a 23-foot lap pool can even be installed.

The asking rent is a blended $85 per foot, or $5.5 million per year.

At 11 Times Square, which sits at West 42nd Street and Eighth Avenue, its 45,000 square feet space that was never occupied by Lionsgate has significant activity, said Alan Schmerzler, vice chairman of Cushman & Wakefield. Ticketed attractions, experiential museums, art exhibits, aquariums, e-sports and others starting to kick that area’s bricks.

“We are back to pre-COVID rents except where they were driven by tourists, such as on Fifth Avenue, where rents are not in the same pricing levels.”

Steve Soutendijk, executive managing director of Cushman & Wakefield

More experiences will take place in the TSX Broadway entertainment and hotel project that has 100,000 square feet of retail. Once the entire Palace Theatre was lifted 30 feet up, it left the corner of Seventh Avenue and West 47th Street a column free retail space.

Currently, partnership of the developer L&L Holding and TSX Entertainment is hashing out a lease for massive signage and 74,000 square feet, including what will become a performance area with seating jutting out over the Red Staircase in Father Duffy Square.

Another entertainment concept, Game Square, is poised to be a showstopper when it opens in the base of the Margaritaville Hotel at Seventh Avenue and West 40th Street. The hotel’s developer, Sharif El-Gamal, said: “It is something that will make every pedestrian bypasser do a double take.”

As many as 80 guests will be able to play competitive and unique video games and win cash prizes while onlookers watch the leaderboard. Game Square’s COO, Paul Kessler, said when it opens in the fall, there will also be an NFT gallery.

Other building owners are dividing their larger offerings.

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.

Exterior of the Apple Store.
A sublease is available at the never-opened Under Armor store in the base of the GM Building at 767 Fifth Ave. by Apple’s flagship cube.
Johanna Syren

The former FAO Schwarz spot was pared down to 14,000 square feet on the ground and 11,000 square feet on the second floor and has a blended asking rent of $17 million per year.

Over in the Meatpacking District, a recent “bellwether” deal with Gucci for 10,000 square feet at 400 W. 14th St. woke up the retailers. “Now they are all looking in the neighborhood,” said Epstein, a principal of Aurora, whose company owns other properties in the area. “It sends a message to all of the other luxury retailers that this is a neighborhood they have to have.”

Watchmaker Breitling also signed a 3,807-square-foot retail lease at Retail by Mona’s client, 875 Washington St., that had an asking rent of $550 per foot, joining area timekeepers Rolex and Audemars Piguet.

Exterior of 112 Fifth.
Microsoft and Allbirds are coming to the reinvented 122 Fifth.

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 never got stratospheric like in Soho. They just ticked up over time and everyone is making a deal to make it a profitable store and it has allowed stores to survive.”

Further south, the reinvented Tammany Hall building at 44 Union Square East attracted Petco to “leash” a flagship of nearly 30,000 square-feet where it will move from 860 Broadway.

Meanwhile, retailers in both Brooklyn and Queens have been flourishing.

In Long Island City, Jake Elghanayan, senior vice president of TF Cornerstone, said retail was “a loss leader” during the pandemic.

“We offered our retailers a lot of support but we found the Long Island City folks bounced back greater and more fully,” he said. “It’s not just LIC but all the residential retailers around the boroughs.”

In Brooklyn, “Williamsburg is hottest on North 3rd between Berry and Wythe streets,” said Gary Steinberg of Lee & Associates NYC who represents several spaces in the area.

Last fall, Singer represented Padel Haus in a 30,000-square-foot deal at 307 Kent Ave. opposite the Domino Sugar project.

“You have a ton of new apartments getting gobbled up and they need services and places to shop and eat and drink and the retailers are following,” said Soutendijk.


Source link