Last month, Robert Futterman, one of the most prominent and powerful names in Manhattan retail, sent out a press release touting his venerable eponymous brokerage’s latest blockbuster deal: “a 525-square-foot lease with Joe – The Art of Coffee at 514 Columbus Avenue.”
If square footage isn’t your vernacular, that’s about the size of your apartment. If you live in a studio. With the bathtub in the kitchen.
But talk about visibility! “The space features 20 feet of frontage and very high ceilings, which is rare for a space this size,” according to the Jan. 15 announcement.
For a guy who famously secured some 22,500 square feet at the GM Building for Apple founder Steve Jobs to hawk his tiny 3.5-inch-tall iPods, this was pretty small potatoes. In fact, it was barely a quarter of the available retail space at that location: “1,500 square feet of retail space still available,” the release noted.
The Jan. 21 edition of Real Estate Weekly, the trade paper that prints just about every announcement of new dealmaking in New York City, had only two reports of new retail leases in Manhattan, both of the mini-mart variety: a 2,500-square-foot kiddie gym at 1135 Second Avenue, and a 1,075-square-foot shoe store at 364 Sixth Avenue. The following weeks have offered little news as well: Massey Knakal sold three retail condos at 1474 Third Avenue, totaling just 1,015 square feet; Newmark Knight Frank secured a comparatively sprawling 1,965-square-foot location at 400 Broadway for a new Miro Cafe.
Aggrandizing such tiny deals is rather uncustomary for retail brokers, whose careers are often measured in square feet. But these days, it seems, everyone is doing more with less.
“Although we may not advertise a lot of these smaller deals, that’s where we’re seeing a lot of activity,” Mr. Futterman said.
Even retailers traditionally inclined to staking large footprints are now looking to squeeze into something more snug. “Companies do downsize in terms of their store size,” Mr. Futterman noted. “A national chain usually in 10,000 to 12,000 square feet now might be able to figure out how to operate in 5,500 square feet, and be more efficient and pay less rent.”
Meanwhile, a slew of massive storefronts sit empty, with even more vacant retail space coming available all the time: 10,000 square feet at 1940 Park Avenue; 39,000 square feet at BellTel Lofts; and up to 1 million square feet in the pipeline at the Bronx Terminal Market’s new Gateway Center.
“There are plenty of big-box opportunities in the marketplace, but there are no big-box users in the marketplace,” said Brad Mendelson, an executive director at Cushman & Wakefield.
“When Circuit City goes out,” added Mr. Mendelson, referring to the mammoth electronics store at 52 East 14th Street, which is now in the midst of a massive liquidation sale, “who’s going there?”
Rumors abound, of course. Last week, The Villager published an article rife with speculation. Could it be Best Buy? Wal-Mart? Target?
The way things are going, the landlord, the Related Companies, may have to choose between letting the sprawling space sit empty—indefinitely, while the market recovers—or parceling it out to smaller stores.
“There’s very little warehousing of space,” said Faith Hope Consolo, chair of retail leasing and sales for Prudential Douglas Elliman. “Before, where the landlords wanted to lease five stores together, now they’re all listening to individual deals. If [they] have 5,000 square feet, [they] will divide. Last year, they wouldn’t divide.”
LANDLORDS ARE LOWERING their standards in all sorts of ways to adjust with the declining market: renegotiating rents, agreeing to longer lease terms—some will even accept fast-food uses, a sector that has long turned many stubborn building owners’ stomachs.
Advantage: little guy.