COVER STORY, DECEMBER 2005

RETAIL IS IN A NEW YORK STATE OF MIND
Banks and boroughs highlight discussion of New York City metro market activity at this year's New York roundtable.
Roundtable chaired by Jerrold France and Randall Shearin

Shopping Center Business and Northeast Real Estate Business recently held our annual New York Roundtable at the New York City offices of Herrick, Feinstein LLP. To find out the state of the market, the magazines invited many developers, brokers and owners to this year's roundtable. In attendance were: Joe Povinelli, Acadia Realty Trust; Sandeep Mathrani, Vornado Realty Trust; Mitchell LaBar, Marcus & Millichap; Richard Hodos, Madison HGCD; Ed Hogan, Brookfield Properties; Andrew Fawer, CIBC World Markets; Jonathan Adelsberg, Herrick, Feinstein LLP; Patrick Smith, Staubach; Gene Spiegelman, Cushman & Wakefield; Cory Zelnik, Winick Realty Group; Andrew Pittel, Andrew A. Pittel & Co.; Brian Katz, Katz & Associates; David Rosenberg, Robert K. Futterman & Associates; Frank Zuckerbrot, Sholom & Zuckerbrot Realty; Stephen Stephanou, Madison HGCD; Richard Brunelli, R.J. Brunelli & Co., Inc.; and Richard Brown, Herrick, Feinstein LLP.

NREB: Mitchell [LaBar], if you could give us an idea of the real estate investment climate, particularly on the retail side, and how active it is in New York and the surrounding boroughs.

(left to right) Sandeep Mathrani, Frank Zuckerbrot, Gene Spiegelman, Mitchell LaBar, and Richard Hodos.

NREB:   Who are the buyers and sellers?

LaBar: On the single-tenant side, the buyers are consistently exchange buyers from across the country. Many of them are coming from the West Coast, taking advantage of their apartment assets, things of that nature, which we're selling for them out there. The buyers are from New York, Florida, Nevada, Texas — a lot of states without any state income tax. On the major retail sales, we don't see as much. Four or 5 years ago, we saw a lot more movement from major apartment owners, big families in New York who were selling apartments, looking at moving into retail. That's kind of gone away. Most of the bigger retail [deals] are the major players most of you know.

NREB: Do you find investors looking for retail properties?

LaBar: In New York, it's a double-edged sword. The retail component of a lot of the buildings here creates some stability, but it's priced into it, so it is almost a wash.

NREB:   As far as finance is concerned, what is the climate in the city versus the suburbs? Everybody is talking about a bubble.

(left to right) Andrew Fawer, Cory Zelnik, Jonathan Adelsberg, and Steve Fleissig.

NREB: Because there's so much money out there chasing retail, has there been a drop at all in the amount of equity that a developer or a real estate investor has to put up?

Fawer: Several months ago, you needed more equity because it cost more. The way that the market is working, we're putting in larger deals into larger securitizations, so that requirement has gone down. So before, we used to say that they needed that equity for the deal. Lately, what's been happening is more equity is going into deals.

NREB:   A lot of buyers want to sell, but don't know how to redeploy the money. Mitch, you must see that a lot.

LaBar: Sure. That's where all the exchange opportunities come up. A big part of what's driving our business is the ability to move that capital across the country.

NREB: Sandeep [Mathrani], as one of the major owners in the city, how do you see the market?

(left to right) Andrew Pittel, Sandeep Mathrani, Frank Zuckerbrot, and Gene Spiegelman.

NREB: I remember many years ago when there was a glut of office space, and buildings were empty. Investors came in and were buying office buildings because the one thing about New York is that it's not going away and it continues to grow. And you always take a look at what they're buying a building at today and saying how can you buy it at this level, and then, 2 years later, you read in the paper, they're selling it for three times what they bought. Do you see that disappearing from the New York market?

Mathrani: I think when you're buying at 8 or 9 caps, which is what you did the last time around with the vacant office buildings, you were buying it for below-replacement cost. When you were buying an office building, you were paying $200 a square foot, perhaps, but that's not applicable anymore. You're paying above-replacement cost today. You're buying it at forecasted cap rates. What is a great example is pre-9/11 rents on Broadway that were $250, $300 a square foot. Post-9/11, they dropped dramatically to $125, $150 a square foot. Deals that had been cut after Bloomingdale's opened at $250 a foot, what should you be buying with that? If you're buying it based upon $300 a square foot, but their lease rolls in 2007, if you're not willing to assume that today is 2007, what happens? I think the issue then becomes, do I see values tripling in the next 10 years? I don't think so, because I think you're buying it above replacement cost. I think you're buying it at market rent, I think you will see rents coming down.

NREB: Frank, do you see rents coming down?

(left to right) Andrew Pittel, Sandeep Mathrani, and Frank Zuckerbrot.

NREB:   Richard [Hodos], you had mentioned before the roundtable about the lack of locations that fit specific retailers. What is your take on that, as far as the city is concerned?

(left to right) Gene Spiegelman, Mitchell LaBar, Richard Hodos, Andrew Fawer and Cory Zelnik.

Mathrani: At the price.

Hodos: At the price, and the locations along the major corridors that we need.

Stephanou: And in the configurations that we're looking for.

LaBar: It's sort of contrary. On one hand, there isn't the supply; on the other hand, prices are high.

Stephanou: What's the big challenge for apparel retailers on Madison Avenue? A perfect example, is that assuming that advertising is not part of the strategy of a Madison Avenue store, you really have to make the pro forma work. When you take the rent numbers, except for maybe a luxury jewelry store, where there are huge margins, it becomes very difficult. The national brand tenants that have been expanding or looking to expand, like Apple Computer and H&M, and various other brands like Liz Claiborne and American Eagle, they have come into the market and are more aggressive. The challenge for them is finding locations and configurations because retailers walk together; they like to cluster together, so that suitable locations are essentially taken along those corridors.

Hodos: The banks took a lot of the locations.

LaBar: Just like they're doing right now. A big bank just came in on 38th and Madison, signs just went up in the last 2 days, and they just put four retailers out.

Stephanou: It may be great if you're a landlord, but it's difficult because it sort of destroys the retail synergy. Typically corners are the most significant sort of bookend in branding the block, so I think there's been some challenges.

NREB: It was Starbucks before, and now it's the banks?

(left to right) Patrick Smith, Ed Hogan, Brian Katz and Joe Povinelli.

Zelnik: I think a lot of that leads to the general dynamic of New York as a market, and so retailers really have to step back and rethink. They have to look at ground-floor and lower levels, and ground floor and second floors to justify some rents to create their positioning. Every CEO sits with his board and says, ‘Why aren't we in New York?' Some of the response is, well, ‘It's $400 a square foot, we can't do it.' [Retailers] need someone to make a very big operational decision to say, ground and up or ground and down, and that's how you'll get there. That is just what New York is all about. Now that Home Depot is here, they're showing people that they can do it on multiple levels. I've represented Duane Reade for years, and they were one of the first to do two levels, and we're working on our first three-level store. It's about location, and that's what you have to adapt to. I think most of the brokers in the room here will tell you that. One of the hardest things to convey to a major national tenant in bringing them here, is that New York is different. We can't just cut out 4,000 feet on the corner. You've got to find a way to adapt and change and get yourself here.

NREB: You represent property owners. How are the property owners looking at the market? Are they being unreasonable as far as what they expect for rent? Are they giving direction as to the retailers they want in their buildings?

Andrew Fawer (left) and Cory Zelnik (right).

NREB: Andrew [Pittel], what is the most active retail area?

Pittel: There are so many out there. I think based on what the biggest developers are building buildings, and creating markets, like Vornado and Related Companies. You have the Bloomingdale's area now that is incredibly hot. There's major retail, there are high rents. The landlords dictated their rents when they bought the properties and fill up their buildings. The area around Bloomingdale's, Time Warner Center on Columbus Circle, and downtown in the Bleecker Street area of the West Village are some hot areas.

NREB: The barrier to entry in New York is pretty tough for big boxes. Gene [Spiegelman], how are big boxes expanding in the New York market? We heard earlier that Home Depot has been successful. Are they going to find more locations, and are there other big boxes that are looking at the New York market?

Spiegelman: The rapid expansion of big box retail is really going to be a political thing. There's so much land, or sites, that potentially can absorb big box space in the city of New York and boroughs, it's really up to politics, because of zoning and use issues. Also, the other big box retail family, Wal-Mart, has had a union backlash, and labor issues created all this of New York City. You have the best examples in Target. It is expanding successfully in New York and the five boroughs, and I think they will continue to do so, but it's going to be a very moderate pace. You're not going to get two, three projects a year that will be able to accommodate some of the 100,000 to 125,000 square feet, it's just not a real fast pace. I think it's quite amazing, actually, that Home Depot opened two stores in New York City. That was quite a risk on their part, it's quite an accomplishment to bring them into the market. And you look at Costco over the years, and they have banged out three different sites in New York City between 1996 and probably 2000 or 2001. Regarding escalating rents, there's one thing I have to say and that is, yes, banking is the three-legged chair. At some point, the demand will cease, the banks will satisfy their appetites, and the net rents will come back. In areas like SoHo you've seen rent levels increase without that banking demand. Banks are not as lively in the market in SoHo and you're seeing retail is into the thousands, $1,200, $1,400 a foot in sales. And that's also what is driving the rents, the people who pay those rates. Retailers who fit in that 25,000 to 50,000 square foot range; you have retailers that are just doing unbelievable business, like $1,000 to $1,300 a foot, which is typically two and half times what these retailers do within their boxes in suburban environments. As long as people still cook up those numbers at the cash register, this market will remain stable. I think if a crash comes up in the office market, and vacancies increase, we'll see more of those moderate sized boxes going into the city, especially in Midtown.

Pittel: The credit [for the big boxes] is due to the landlord, because they brought a vision, they brought the attention to their project, and they worked with the big boxes to make it possible for them.

Smith: Retailers mimic success. It will be really interesting here to see if the next traunch of mid-size and large boxes are going to be the guys that come down and see Whole Foods in Union Square. It is amazing to see a grocery store unit is on three levels. Filene's Basement is also on upper levels. That is pioneering stuff. We've had two tours in the last 2 weeks, one with a guy who is just looking at vertical transportation — what works, what doesn't work. How does a store on [the third level], with a ground-floor entrance, with very little signage and presence, how do you get them up there? I can't point to another grocery store in the United States that is on three levels, that's powerful. I think that's going to be the next traunch of the evolution of big box stores in this city.

NREB: One of the unique things about New York is that there are so many different neighborhoods and boroughs. Now, areas that you would never drive to, fly over, or even talk about, are now the place to be. What areas are really hot for retail?

Rosenberg: In boroughs alone, you've probably have 50 or 60 viable shopping districts. You've got up and coming areas — like Williamsburg and segueing into Greenpoint [in Brooklyn]. There are little pockets in downtown Brooklyn where you see a tremendous amount of development, like Smith Street, which historically is a very local, service-oriented, lower-income stretch. It is now starting to see the transition from a housing perspective to a much more middle and upper middle class residential population. You're starting to see local designers open up boutiques, and little local restaurants open up. That's carrying down Fifth Avenue, which we consider to be in Park Slope. Most of you are familiar with Blue Ribbon Restaurant in downtown [Brooklyn], they've opened on this little stretch where you've got, again, a lot of restaurants. You're starting to see some of the more boutique operators, the local designers open up. Then you've got your traditional shopping streets, like Fulton Street in downtown Brooklyn and 86th Street in Bay Ridge. You look at the expansion of Queens Center, with all the developments that are going on in and around the boroughs, and I think it's just a function of the density and a function of, again, as Patrick said, success breeds success. They were the pioneers, so to speak, in the medium and big box sector. You have to look at Target as probably being one of those. You never would have thought a store of that size could locate, because you wouldn't find a 7- to 10-acre piece of land in Brooklyn or Queens, so what they did is they went into projects and did multi-level, or they were on the second floor and the third floor. Look at Atlantic Terminal in downtown Brooklyn: who would have ever thought that you would have Target on second and third floors, entering through a mall?

NREB: Can you expand on Brooklyn retail?

Rosenberg: Related is looking to do a second phase to their Gateway Center. They're going through the design issues and entitlements. Gateway Center was a traditional suburban power center, which, again, you never would have thought that could have been built in the city of New York. But there was a 100-acre piece of land just sitting there for a long time, and finally got zoning and entitlements, and you've got Target, a Home Depot, a Bed Bath, an Old Navy, a Circuit City, a BJs. These stores are all building a tremendous amount of business, probably in the tops of all of their companies, because they've got highway access, the new interchange was creative, they've got highway visibility, they have surface parking. Each one of these stores has parking in front of their door, and it's very atypical of New York City. You look at the opposite, and the downtown Brooklyn, the Atlantic Terminals, or the project that Sandeep's working on now in Regal Park. Whoever thought of 100,000-square-foot retailers stacked three to four on top of each other? But that's what you're starting to see. In Brooklyn, you've got Related's property, and there is another project that we're working on with a local developer that is sort of piggybacking off the success of Gateway. They're actually going to call this project The Shops of Gateway, which is about 250,000 square feet with great parking; it will be a two-level project. There are a variety of projects that are going on in downtown Brooklyn. Most of the developments are residential projects with retail components anywhere from 10,000 to 30,000 square feet. We do a lot of business with the luxury brand retailers, and a lot of them have come to us and asked about Williamsburg. You get out there now, and you don't really see the evolution yet. You're seeing projects, small-scale projects, residential projects that have been converted, but you just don't have the density to support the retail businesses quite yet. As time goes by, I think in 5 years, if we all sit back around this table, we are going to see a completely different retail complexion in Williamsburg and in Greenpoint.

NREB: The Ratner stadium, is that a go? If it is, how is it going to affect the area around it for retail?

Rosenberg: From what we read today, it's a go. One never knows what the community boards and local groups can do when they voice their opinions, but I think that it would be great for the area. We can take an area that, where they're going to build this thing, it's not much of anything today. It's a bunch of open railyards. I think the stadium will bring people to that area of Brooklyn that don't typically frequent that area. You've got the residential component of the project, you've got the retail component. It will create more life and more activity in that area, where right now, you've got the crossroads of two major arterial roadways, Flatbush Avenue and Atlantic Avenue. Then you've got Forest City's two projects, which for the most part, one is an internal big box center, and one is in some respects a mall. So people aren't out on the street, people aren't out walking around, people aren't shopping on the street because they're in all of these projects, so I think it will be a windfall for the area.

NREB: Brookfield is obviously a major player in lower Manhattan. Is retail starting to come back? Is it becoming more of a sought-after location for retailers? I know that it was having difficulties a year ago. Has it begun to improve?

Hogan: It has. Eighty percent of our retailers are at or above the pre-9/11 sales numbers, so that's good. What's interesting to me is the mix of people downtown. You now have more tourists there, the residential population keeps growing, and the office population is as good as it gets in North America. It is the most densely populated square mile of office space in North America. What has happened in the last 6 months, and I can't explain it, is that I've had retailers who I've called for years — high-end, higher than anything we've got at the World Financial Center, calling me, and wanting to come down. They understand downtown. I think that people are realizing that there is $10 million of investment being done within a 3-block radius of ground zero. Whenever you invest $10 million there's quite an opportunity out there, especially with retail. Goldman Sachs committing to the neighborhood has been huge. It's really changed the whole makeup of downtown. You know, what's interesting too, is how restaurants that were down by Water Street are now open on Saturdays and Sundays. Their business includes residential life, the tourist life. We're looking at ways to expand our retail substantially. I'm sure General Growth is looking for ways to expand their retail at the Seaport. The studies post-9/11, pre-9/11, all say the same thing — Downtown needs more retail.

Smith: I think [downtown] has turned a corner. I'm amazed at what we're hearing about DSW down there. Every time we've gone down there, especially when you're doing a Manhattan trip, and you stand there at Broadway and Houston, you're going to have to have a whole different experience. A lot of the guys that we represent are co-tenant driven. They're doing the same thing — trying to mimic success. When you see guys like DSW, and you see the performance in World Financial, you see now the bigger boxes coming down to set up.

Hodos: I agree. Borders is extremely pleased with their success they've had at 100 Broadway. We're about ready to sign a lease that will be announced by the time this is published, for Sephora at 150 Broadway. Sephora could do three stores in Lower Manhattan, and I think they will eventually.

NREB: Is that an area high-end retailers are going to look at?

Hodos: Yes. A lot of them have waited. A lot of them had stores at the World Trade Center, or World Financial Center. Some of them are still waiting to see what happens, but I think the wait is now over, and they're ready to recommit.

NREB: Joe [Povinelli], Acadia owns property in the suburbs. How have your properties been doing in terms of retail?

Joe Povinelli (left) and Richard Brunelli (right).

NREB: How are sales per square foot in the boroughs?

Zuckerbrot: In the outer boroughs, we have retailers anywhere from about $400 a square foot to $1,000 a foot. Drug store numbers in the outer boroughs, in parts of Brooklyn, in parts of Queens, are out of sight.

Rosenberg: I think that holds true for other retailers. Look at Queens Center Mall. Before the expansion, the mall did $900 a foot. I think the numbers point to the fact that they're in the top 20 malls in the country. And that just speaks of the volume power that is in the boroughs. The boroughs are completely under retailed.

Spiegelman: Five million people are living in Queens and it has two regional malls.

Rosenberg: That's why you see all of these central business districts all throughout Brooklyn and Queens and the Bronx that are very viable shopping alternatives, because they've evolved instead of the malls. You just don't have the land to build more malls. You now are starting to see more of these vertical projects being built for that reason. The demand is there by the retailers, and the costs are justified because you can get the rents from the tenants.

Mathrani: If you look at the growth and you think about Queens, there hasn't been a new project in a few years. The Shops at Atlas Park is the next biggest project with 600,000 square feet that's not going to come online until 2007. Regal Park is our project; we just got board approvals for 400,000 to 600,000 feet.

Zelnik: Related has got the Bronx Terminal market now, about 1 million square feet.

NREB: Cory, what new retailers are coming in?

Zelnik: There are always people coming in looking. The domestic retail in New York has just proven itself to be beyond excellent. There's a little bit more of the “stick my big toe in the water” type of approach down on Bleecker Street, as opposed to, you know, when H&M came to New York. They came [in and opened] large stores at top dollar. I don't know that you'll see a lot of that. I think you will see more of the Bleecker Street type experimentation, and then growth from there. While there are a tremendous amount of success stories throughout the city, there are certainly a tremendous amount of failures. People are a lot wiser; the public companies that are behind a lot of these do very careful studies. New York has been and will always be an area [in which] people must be, so they will find their way here if they're not here already.

Brown: To follow up your question on foreign retailers, we just finished a lease for a tenant from Spain, Zara, another sort of H&M.

Pittel: There have a been a few big deals done in the city; major mall tenants that are here in the city now. Abercrombie & Fitch is opening at 56th and Fifth, and then you've got Anthropologie that recently signed a 20,000-square-foot deal at Rockefeller Center. New York & Co. has also signed a lease.

Hodos: Reece is a store from Great Britain that opened on West Broadway recently. It's their first store in the country, I believe. You have Mango from Spain that is actively looking in the market; they're about to sign some leases. American Apparel has been very aggressive in the market. Polo Rugby just opened on 12th and University; it's a great-looking store, I think their second store in the country. And we're actively looking for a lot of the Liz Claiborne brands in the market. Mexx, which just opened next to Bloomingdale's in SoHo and I have another store on Fifth Avenue in the Plaza District, is looking for other locations. Juicy Couture, which is another Liz Claiborne brand, opened its first store in the expansion of The Forum Shops in Caesars [in Las Vegas] and is actively looking in Manhattan for several locations as well.

(left to right) Gene Spiegelman, Mitchell LaBar, Richard Hodos, Andrew Fawer, Cory Zelnik, Jonathan Adelsberg, and Steve Fleissig.

Mathrani: I think if someone really treks all the way down [Canal Street] and then back, you are actually seeing what's really happening. If you go down Broadway, the retail is actually going closer and closer, it's probably a block away from Canal Street.

Spiegelman: I agree. We just leased a store to Z Gallerie, down at Howard Street. It is 10,000 square feet for their first store in Manhattan. It took us a year and a half to convince someone to go down the street from Pier 1.

NREB: Jonathan [Adelsberg], as a firm that represents landlords, what do you see going on? What are the landlords looking for? How are they negotiating with the retailers? What are they giving and what are they asking for?

Adelsberg: Well, it really depends upon the type of deal that you're doing. With regard to the retail banks, we've been seeing it on both sides. Everybody wants the retail banks in the space, and everyone sees in a few years that, 5 years from now, we're all going to be sitting around the table, and the retail guys are going to be subleasing all that space. What we're really seeing is significant discussions of what types of restrictions you're placing in terms of retail use on location. Really significant negotiations have been what's the exit strategy for the bank in terms of who we're going to allow in, when we're going to allow them in, and what we're going to do. Needless to say, everybody wants the credit of the bank that secures your financing and a lot of other things. But there is a real concern, not intending to be judgmental at all, but a lot of Class A businesses don't want Duane Reade to replace a bank on Madison Avenue, or in a prime Class A office building. So we see a lot of negotiation on that part. We've also been seeing a lot of creativity with regard to opening up opportunities in areas that have been traditionally restricted for retail use. The Fifth Avenue corridor has had a restriction on bank use for a number of years. The Theater District has had a restriction on bank use. We've been working with a number of our clients, both landlords and tenants, pushing the city to remove some of these restrictions, which happen to be a bit archaic at this point, since they never fit the intent of what these business districts are all about. In Lower Manhattan and in the boroughs, we're actively involved with changing the use to go from manufacturing to retail. Historically, you've seen a lot of the entrepreneurs that would be willing to go to locations where technically they've been prohibited from operating.

Brown: What we're seeing is the landlord shake hands with clients, like Wachovia, and then a week later, you get a call that Bank of America is going to take $50 a foot more, and a week later, HSBC is saying another $50 a square foot more, so you have to now pay, after you've had a handshake, $150 a square foot more just to secure the space.

NREB: Richard [Brunelli], how does New Jersey compare to New York City and the boroughs? How do you see retailers that are looking at your market? Are they looking at Manhattan first, or are they looking at New Jersey, then New York City?

Brunelli: It's hard for me to say where they've been first. The national chains probably have a real estate director that would have New York City and some of the five boroughs [as part of their territory]. Sometimes, that same person will have Northern New Jersey and Central New Jersey. From my point of view, we are apt to tour Northern and Central New Jersey with a real estate director, then head into New York, because it's really a separate market. Whole Foods has just come into Northern New Jersey, and of course, Whole Foods has come to New York City. The same thing that is happening in New York, with the banks, is happening in New Jersey. They're bidding it up. We also have a tremendous problem with regard to inventory; we have very low vacancy rates, approximately 2 percent in Northern Jersey, and about 4 percent in Central New Jersey. There continue to be the good old areas, around Paramus, and Wayne/Route 46. Clifton is picking up and has the Meadowlands now. Xanadu is going to be built; they [The Mills Corporation] just broke ground in Secaucus on that unbelievable Xanadu project. But in terms of real growth, Middlesex and Monmouth counties offer the greatest opportunity for growth because there is still land available.

NREB: Brian [Katz], as one who does work in New Jersey, how do you see this market?

Katz: I think the best example, to answer your question, is Cost Plus World Market, who is a 20,000-square-foot store based in San Francisco. They have no locations in the region; the closest store they've got here is with Joe [Povinelli] in Wilmington, Delaware. That makes our strategy for them for the whole metro New York area. The inventory is so low that it's really a matter of where can they get physical locations and get them open. So there might be one in Northern New Jersey, one in Manhattan and one in Long Island.

NREB: Are there any new restaurants that are opening up and serving as a magnet for retail?

Zuckerbrot: We've had hot restaurants come out and open up on Long Island, and some of the outer boroughs, and that's an industry that has taken off — restaurant growth in our suburban world. Not just middle-of-the-road restaurants, but high-end restaurants, such as Umalino, which is ranked one of the top 10 restaurants in the city. We actually have a number of cooking schools that have opened up on Long Island, culinary art institutes, for training. We're just creating a much better product out there. Right now, they're going toward traditional high-end locations, like the Miracle Mile in Manhasset.

NREB: We're all facing an increase in gas prices and energy prices in general. Will there be an impact on retail?

Spiegelman: There's no doubt that the gas prices are starting to hit everywhere, from people driving cars to flight. You're going to see it really happen this winter with home heating oil. Because that's where it will really hit people's pockets. The home heating oil prices are $3 a gallon. Whatever that cost is, that's when it's really going to start to impact people in this specific region. It hits a certain segment of the population very hard.

Smith: To kind of dovetail what Joe was talking about, we think probably one of the biggest stories that is evolving is some of the new development in the Bronx. The fact that there have been successful projects, and the big boxes have done great in Queens. That hasn't happened to a great extent in the Bronx. The fact that between Joe's [Povinelli] project and stuff we're doing in Pelham, Related is doing an 800,000-square-foot project, Bronx Terminal Market. It's a project that we're involved in, which is 500,000 square feet. Talk about some pioneering things, that's kind of the next undiscovered borough. You think about how well tenants do on the major shopping corridors in the Bronx, then you have this massive borough that basically is serviced by really small bodegas, for the most part. The next 3, 4 years, you'll have national tenant retailers.

Rosenberg: It's the fastest growing borough, but before, it was Manhattan.

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