MARKET HIGHLIGHT, SEPTEMBER 2007
NEW YORK CITY MARKET HIGHLIGHTS
New York City Retail Market
2007 Sees Strong Manhattan Retail Market
Consumer spending remains strong in Manhattan thus far in 2007, and the city’s retail market reflects that activity with ever-higher rents and increasing competition for prime locations. Strength comes from all sectors of the retail industry, and actually is not limited to those corridors traditionally associated with commercial use. In fact, as the core neighborhoods of the Upper East and West Sides, Midtown, Chelsea, Greenwich Village and Soho have attracted and retained a critical mass of retail tenants, latecomers have been increasingly compelled to seek out locations both on the fringes of these areas and in new markets in Manhattan and the outer boroughs.
Harlem, the Meatpacking District, Brooklyn, the Financial District, Houston Street and the Lower East Side have been the primary beneficiaries of this non-traditional retail corridor development. For example, Whole Foods Market, whose interest in a location often suggests that a neighborhood has “arrived,” recently announced that it will open a store in a new residential and commercial development on Columbus Avenue in the upper 90s, with rents in the $200 to $250 per square foot range. This comes on the heels of the chain opening its largest Manhattan location ever at the corner of Houston Street and the Bowery. Not long ago, a Whole Foods Market in the Bowery or the upper reaches of the West Side would have been unthinkable. However, as wealthier residents have discovered these neighborhoods, upscale retailers are also buying in.
As a result of this acceptance of less traditional retail areas to develop and open locations, tenants in some neighborhoods have regained some leverage. In the luxury retail sector, this situation, coupled with the weakening of the dollar in relation to both the British Pound and the Euro, has led to an influx of new European luxury boutiques in Manhattan, primarily from retailers without a previous U.S. presence. Large European brands with existing flagships in New York are also expanding to satellite spaces throughout the city.
In the coming year, look for retailers to further explore locations in all of the expanding residential markets throughout New York City. Areas that were not considered prime retail corridors in the past could be the next location for significant development.
— Stanley Lindenfeld is the senior managing director for the Grubb & Ellis Retail Group.
New York City Multifamily Market
Rezoning: Negatively Affecting the Historic Face of New York City or Paving the Way for the Future?
Over the past several years, there has been a rezoning of projects approved by the Department of City Planning which has led to an abundance of cranes and scaffolding popping up amongst the City’s skyline. In the past 5 years Hudson Yards, West Chelsea, Special Long Island City Mixed-Use and Maspeth/Woodside & Downtown Brooklyn are just a few of the 70 approved influential plans that have begun to change the way we once knew neighborhoods to be.
Yes, the birth of the rezoning has led to prosperity to those in the real estate industry — developers, architects, brokers, etc. — however, it also addresses the growing population, which many adversaries fail to recognize. Along with such population growth, emerges concerns regarding personal and professional space as well as economics. The Department of City Planning has done an exemplary job dealing with these issues.
The limited amount of office space was taken into consideration with an expansion of the business districts allowing for higher density commercial use. Could this expansion positively impact the unemployment rate? Additionally, there are low-income housing incentives for developers, plus plans for waterfronts and parks that have been ignored for quite some time that would allow for public use and enjoyment which is necessary in the high stress lifestyle of New York City.
On the flip side, there is also a proposed down-zoning in the Lower East Side/East Village, which focuses on maintaining neighborhood characteristics and the foresight of transportation problems if the zoning were to remain as is. Therefore, areas that could afford growth were targeted as well as those in danger of rapid growth.
The rezoning process in New York City has not been a mere opportunity for real estate moguls to make their mark, but rather a time to pave the way for a sustainable and prosperous lifestyle for future generations.
— Christen Portelli is the director of sales and associate broker at Besen & Associates, Inc.
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