While East 86th Street Waits for H. and M., It’s Real-Estate DMZ

Back in the 1970’s, when raising children in New York City was thought to be freakish and cruel, not the modish and impossibly expensive choice it is today, families called 86th Street the 42nd Street of the Upper East Side—and that was before Disney gentrified Times Square.

Presently, the 86th Street subway stop is filled with chain stores that wouldn’t be out of place at most suburban shopping malls, including Barnes & Noble, Petco, Staples and Best Buy. In the past few months, two local landmarks closed: Old Fashioned Donuts at 86th and Lexington—“The best doughnuts!” mournfully said Lee Stahl, 43, an interior designer who has lived in the neighborhood since 1989—and Service Hardware, three blocks north.

On July 19, about 75 residents assembled at the Ramaz School on East 85th Street for a community-board meeting to address a couple of massive projects currently underway. Extell Development’s luxury condominium at 150 East 86th will offer shiny new retail space of 100,000 square feet, 30,000 of which will be taken up by a new branch of Swedish clothing retailer H&M. Barnes & Noble—which plans on closing two nearby stores—will claim 55,000 more square feet, for a store only slightly smaller than the behemoth in Union Square. The new location will be one of the “real motherships for the company,” said Mitchell Klipper, the book chain’s chief operating officer.

Meanwhile, Related Properties has not yet released the roster of commercial tenants for their modern residential tower at 200 East 86th Street, now partly covered by scaffolding. The Flaming Embers steakhouse has closed ( sob!), though its red-and-gold sign is still there.

Remember the Rheinland?

“If an H&M comes, I say whoo-hoo!” said Victoria Delgado, 43, an architect and stay-at-home mother who has lived in the area since 1991. “That store gets lots of hipsters.”

But more residents seem to be looking back than forward, bemused by the ongoing identity crisis of a strip that has long failed to actualize its potential.

“Very sad” was how Kathy Jolowicz, a lifelong Yorkville resident and block-association president who testified at the board meeting, summed up the coming changes. She was raised in a six-room apartment at 77th Street and First Avenue and attended the Julia Richmond High School on 67th Street, and later N.Y.U. and Parsons School of Design. “I lived the life here,” she said.

“When we were in college, we would go to the Lorelei, the most famous dance hall, and meet cadets from West Point. And we walked through Central Park at midnight. Everybody came here. They had all the dance halls, all theaters—vaudeville and movies. It was my Disneyland.”

Ms. Jolowicz is currently writing a history of the neighborhood from the 18th century, when German immigrants put down roots that are in scant evidence today, to the gaudy early 1970’s, marked by the arrival of the department store Gimbel’s (replacing an old-fashioned drugstore with a soda fountain) and then a Kentucky Fried Chicken. And though she may be one of the few locals to remember the Corso, Forester’s, the Brauhaus, Bavarian Inn, Café Hindenburg, the Rheinland and Kerekes Bookstore, she’s not the only one keeping an eye on the new developments.

“It almost looks generic—like a giant mall,” said William Schimmel, 59, a classical accordionist and composer who lived near 86th Street for 35 years. “It’s not the Yorkville village look.” Mr. Schimmel came to the hood when he was working on his Ph.D. at Juilliard, “because it was quiet, and virtually scene-less,” except for pickup joints like Barney Googles.

“It’s still scene-less,” he said.

Micki Goodman Schimmel, 60, a personal trainer who has lived in the area for 30 years, waxed nostalgic for places like Bremen House—“1,500 varieties of sausage!”—Ideal Restaurant and Elk Candy. “The way people eat now, the old restaurants couldn’t sustain themselves,” she said. “When our son was little, we actually bought a booster seat and left it at a coffee shop, because there were so few kids that they didn’t have one. Now every place has high-chairs and booster seats.”

Adam Shapiro, 42, a lawyer who grew up downtown but spent lots of time on East 86th in his high-school years (he attended Collegiate), also has vivid memories. “The old Irish and German bars that were clinging to life by letting kids drink as long as they could pay!” he said. “The rundown rock club between Second and Third that served as a Collegiate/Chapin senior-class clubhouse.” Before police-precinct boundaries were realigned with the community boards, Mr. Shapiro remembered, 86th Street was the dividing line between the 19th Precinct, which wouldn’t tolerate drug sales but was more lax about prostitution, and the 23rd Precinct, which wouldn’t tolerate prostitution but was an open drug market. “Eighty-sixth Street offered something for everybody,” he said dryly.

“I think people who are nostalgic for the old neighborhood are nostalgic in a very unrealistic way,” said Mr. Stahl, the doughnut lover, who remembers the street being “dangerous” in the late 80’s and early 90’s. “It was like the demilitarized zone,” he said. “In about 1990 or 1991, I was bringing home houseplants and I heard gunshots.”

Emily Rover, 30, a financial advisor who grew up on Park Avenue and 90th Street and returned to the area after college, fondly remembers getting Secret Santa presents at age 12 from the old Woolworth’s on Third and 86th, but also stepping out tremulously into the darkness after going to a movie with a friend at the theater close to Lexington Avenue that used to show blaxpoitation flicks and have a smoking balcony and is now a Duane Reade. “I called my parents to pick us up, but they told us to get in a taxi and they’d give the doorman money,” she said. “I’m more comfortable at night there now. But I still don’t think it’s great at night.”

Her brother William Rover, 28, another lifer, thinks things have improved somewhat. “I went to an Upper East Side private school, and I thought I was a target,” he said. “It’s not necessarily bad for me that the area is like a mall. I do go to Best Buy. I feel like I’m ‘selling out’ from an elitist techie standpoint, but it’s convenient and I can get anything I want.”

Au Revoir, Dumas

Michelle Birnbaum, vice president of the East 86th Street Residents Merchants Association, is adamant that the strip not turn into a mall. Through her organization, Ms. Birnbaum has already had three meetings with representatives from Extell—the most recent of which occurred two weeks ago, in her apartment at Park Avenue and 86th Street.

The group has several construction concerns, including that the building reflect the character of the neighborhood, as well as the anticipated closing of one Lexington Avenue subway entrance, proper extermination, and the relocation of the loading docks to 85th Street. The group also wants to make sure that extensive work is not carried out on nights and weekends, complying fully with city laws.

Aesthetically speaking, the Resident Merchants Association was quite critical of the first renderings that Extell presented.

“The original design that Extell had for the building was a completely all-glass structure,” Ms. Birnbaum said. “We have stressed very strongly to them that we would like them to alter that design, so that the first couple of floors are in keeping with the neighborhood. We have been informed by Extell that they are going back to the drawing board. It is being redesigned.”

Naturally, there is the usual chain-store issue: the difficulty in forging the same type of close relationships that one has with a small business owner. “That’s a downside—the sameness,” Ms. Birnbaum said. “But are we against progress? No.”

During last week’s community-board meeting, spokespeople for the developers each gave a 15-minute presentation, followed by a question-and-answer period. David Liston, chair of Community Board 8, said that he was impressed with Extell’s and Related’s willingness to listen to the community.

“The two projects are both ‘as of right,’ meaning that there is not a legal requirement to come by the community board,” said Mr. Liston, who has lived in Yorkville since 1993. “They face a room filled with people who are anxious, concerned and worried. They got lots of questions and complaints [and] handled themselves well.”

“It behooves us to inform [the community board], to keep them involved,” said Extell president Gary Barnett, who attended an earlier community meeting, but not last week’s. “I think the community is very happy to get that corner cleaned up.”

Mr. Barnett described the site as “one of the finest locations available in the Upper East Side.” There, “a bunch of a run-down tenements” is currently being taken down and replaced with a “beautiful, modern glass building” with 150 luxury apartments and about 20 rentals—opening in late 2008. “It will be one of the finest-quality projects done in the city,” Mr. Barnett promised.

“Anytime you hear about developing luxury high-rises, these are concerns,” said Mr. Liston. “Yorkville has had a nice tradition of small businesses, and little by little they have been squeezed out.”

As a realist, Mr. Liston understands that market forces must be allowed to work their capitalist magic. Yet “there is a uniqueness and individuality that is lost when those sorts of businesses get squeezed out by higher rents,” he said. Think of Dumas Bakery, with its corpulent proprietor and flaky fruit strips (a standard-issue house gift for a certain generation of Upper East Siders) … the Paper House, with its party favors and greeting cards … the Kodak Store, which used to develop photos in “just” a few days.

Higher rent isn’t only on the minds of community activists and anti-development crusaders, of course.

“The magnitude of the project will just overshadow what is there,” said Gary Trock, a senior vice president at CB Richard Ellis. Mr. Trock serves as the leasing agent for the Extell project and brought H&M and Barnes & Noble to the table. “It’s increased the value on the street,” he said. “The dollars per square foot are substantially going up—almost double.”

He’s not kidding: The asking prices per square foot at 150 East 86th Street were set initially set at $325 (ground), $125 (second floor) and $100 (basement). Already, Mr. Trock said, deals are breaking those asking prices, reaching as much as $400 a foot.

“Eighty-sixth Street has always been a mainstay,” he said. “This is just a redevelopment of the whole market. You’re going to start to see some more action between Second and Third avenues. You’re going to see this trickle down 84th, 83rd, 82nd streets. You’re going to start seeing higher rents there, too.”

These days, it’s still possible to find a good bratwurst on Second Avenue—perhaps at Schaller & Weber or the Yorkville Hungarian Meat Market. But for many New York carnivores these days, only organic, free-range meat will do, hence the particularly persistent rumor that Whole Foods—the natural supermarket that serves as a beacon for gentrification, or at least a sign that the neighborhood has now “made it”—was moving up to 86th Street.

Sorry, Charlie!

“Whole Foods can’t afford to pay over a certain dollar amount per square foot,” said Mr. Trock. “We tried hard to do some creative things with them. At the end of the day, the constraints that we had were size.” The massive supermarket requires about 50,000 to 70,000 square feet.

“I think the rents up there are as high as they can be,” said Jeffrey Roseman, executive vice president at Newmark Retail. “Some of the numbers I’ve heard up there are mind-boggling. I find it hard to believe that retailers would be able to pay those types of rents.”

A few years back, Mr. Roseman brought Whole Foods to the Chelsea Mercantile building on Seventh Avenue, the chain’s first Manhattan location. Later, Whole Foods took up the anchor location at the Time Warner Center, part of a deal that included below-market rent.

“It’s a shame, because Whole Foods would be a welcome addition up there,” said Mr. Roseman. “But they would never be able to pay the rent. Unfortunately, some developers are shortsighted and only looking for the most rent—not realizing that the ground floor sets the image of the building.”

Meanwhile, the luxury condominiums sprouting over the Lexington Avenue subway station—with expansive views of Petco and Best Buy across the street—seem to some like a risky proposition. “I think the Lexington and Third Avenue properties will be tough to call,” said Margie Goldin, a broker at Stribling & Associates. “That has been a commercial strip for so long.”

And while the move-in dates are still at least two years away and the Manhattan market could certainly fluctuate, Ms. Goldin is still hesitant to accept “the idea of people going out of their way to live in an area with a subway stop that is really busy.”

There are three-, four- and five-bedroom apartments planned by Extell, but it’s unclear what kind of rich New Yorkers will want to raise families at this well-trafficked yet increasingly homogeneous spot.

“They’ve had every chain store—some that lasted longer than others,” Ms. Goldin said. “It went from being a very distinct neighborhood to being one that is not clearly defined.” While East 86th Street Waits for H. and M., It’s Real-Estate DMZ