Lower Fifth Avenue
It might be time to stop looking down on lower Fifth. Vacancies from 42nd to 49th streets fell more than any major retail area in the third quarter, from 13.9 percent to 6 percent year-over-year.
The upcoming debut of Joe Fresh, a down-market Canadian version of the Gap, at Fifth Avenue and 43rd Street, has created momentum for discount dealers. In addition, the block-long hole from 37th to 38th streets has been filled, according to George Constantin of Heritage Realty Services, which owns and manages the nearly 72,000 square feet of retail space.
The former CompUSA space has sat empty since December 2008, but Mr. Constantin will soon have leased the entire 72,000-square-foot space to different tenants and will also manage to triple the rent over what the previous tenant paid.
Just a year or two ago, Brooklyn didn’t warrant a place on anyone’s list of retail hot spots. Now it’s impossible to leave it off.
The borough is rapidly becoming a foodie’s paradise, with Whole Foods, Shake Shack and Panera Bread all on their way. The spiffed-up Fulton Mall, including H&M and Aeropostale, seems destined to bring some long-overdue life to downtown Brooklyn in particular.
“Amazing creativity is coming out of Brooklyn right now,” said Michael Phillips of Jamestown Properties, which owns and manages the be@schermerhorn condo, amongst other properties in Brooklyn and Chelsea. He sees the future of retail in the borough as a hybrid of mega-chains and smaller local stores.
“In downtown Brooklyn, we’re seeing a great marriage of the two. It’s really the chicken-and-the-egg thing,” he added, noting that giants like to see smaller stores thriving, but the little guys also benefit from the ability of bigger stores to draw crowds to the area.
Let them eat organic seven-grain bread!
Grocery stores are always ravenous for space, so cheap recession rents and the possibility of major concessions have lured food sellers into neighborhoods that were previously too expensive for their taste. Grocery stores have been popping up all over Manhattan since the recession, from Trader Joe’s in Chelsea to Fairway on the Upper East Side.
“The prices have been more affordable,” said Mr. Futterman, speaking generally of big-box stores. “Tenants realize that they can do more sales volume in central parts.”
“High-end consumers were afraid to shop, afraid to vacation,” said Ms. Kampler, of CB Richard Ellis. “But the core consumer still has to eat, still has to buy shoes for their child.” In good times and bad, people have to eat, and they might as well enjoy sifting through six flavors of hemp ice cream.
Everyone who was anyone wanted to be on Madison Avenue when times were good. But the chichi neighborhood fell hard when investment bankers and their wives became too afraid or too ashamed to buy designer goods.
In the most recent quarter, Madison Avenue had the highest vacancy of the major retail areas, sitting at 11.1 percent, according to Cushman & Wakefield. Availability is up from last year, even though Uggs took space at 600 Madison and Agent Provocateur grabbed a spot at 675 Madison.
Ms. Consolo, of Douglas Elliman, briskly rejects the view that Madison Avenue’s heyday is passed (one can assume that among brokers at least, her sentiment is shared). “Let me tell you, that is simply not true,” she said. “It’s one of the most resilient streets in the neighborhood. Not only has it come back, but it’s come back stronger.”
The East Side
From the Bowery to 96th Street, the sun is not yet rising in the east.
A few years ago, Third Avenue in the 60s “was incredibly desirable, with very little vacancy,” said Ms. Bellantoni of RKF. But now that area “has been very difficult to lease,” she said.
Likewise, “Second Avenue’s been tough with the structure of the subway,” she said. Even the Lower East Side has been struggling, Ms. Bellantoni added. The area around the Bowery “was super, super hot,” she said, but “there’s been a slowdown.”
The good news is that’s opened the way for discount and food retailers like Fairway, which signed a 45,000-square-foot lease in Barnes & Noble’s former spot.
When Starbucks announced in 2008 that it planned to close 600 stores across the country, it wasn’t the only bloated chain that had oversaturated its market.
But with the recession thinning the number of franchises around the city, European and out-of-state stores are diving into the New York market. Before, “it was like, we’ve already got 1,200 of those,” said Nina Kampler of CB Richard Ellis. “Now we’re looking for the next great retailer to come.”
Most prominent is Uniqlo’s mega-lease for 103,817 square feet on Fifth Avenue (previously it had one small location in Soho). Milan designer (via Miami) Tui Pranich, which just opened a location in Soho this fall, is already eying a second uptown spot. Brokers predict that Europeans will continue to make the Atlantic crossing, lured by the dependability of the New York market and the allure of being where high and faux fashion converge.
That might just be the most striking result of the recession, which has stripped away many of the effects of the boom. Core midtown neighborhoods are returning to prominence, and smaller retailers are returning, no longer as fearful of being trampled by giants.
New York in 2011 might look strikingly as you remember it.