The borough has become an epicenter for the hip and cool when it comes to restaurants, bars and independent boutiques. Now it’s attracting the attention of national and international fashion retailers eager to tap into the wave.
Transactions involving retail properties in the borough in 2012 totalled $1.18 billion in value terms, a 499 percent increase over the previous year. The number of retail transactions rose 37 percent. While a large part of the borough’s 2012 retail sales came from the $751 million sale of the Kings Plaza Mall, the largest New York City transaction on record last year, even without the mall’s contribution, the uptick was a healthy 171 percent.
“Many people underestimate the strength of the outer boroughs,” said Isaac Chera, president of Crown Acquisitions Inc., who said rents on Fulton Mall jumped from $200 a square foot to more than $300 a square foot.
A foodie paradise with a thriving farm-to-table movement and an indie music scene, Brooklyn has a burgeoning high-tech corridor and is a mecca for college students, government workers and young families with children. If Brooklyn were an independent city, it would be the fourth-largest in the U.S., with a population of 2.8 million. Best of all, Brooklyn is considered by retail experts to be under-stored.
“Retailers have said that Brooklyn gets lost in the shuffle,” Chera said. “Brooklyn has the number-one-producing Kohl’s, Target, Toys ‘R’ Us and Costco [in their respective chains]. B.J.’s in Canarsie Plaza does $500 million in annual sales.”
Fulton Mall, a bustling eight-block pedestrian-only stretch of retail between Flatbush Avenue and Adams Street, is the commercial hub of downtown Brooklyn. Once populated by mom-and-pop shops, small family-run businesses are being edged out by national chains. Junior’s, famous for its cheesecake, anchors one end of the mall, with Borough Hall and courthouses at the other.
“Fulton Street is one of our greatest stores,” said Liz Crystal, chief marketing officer of Lane Bryant. “We have a corner [on the mall.] The store, which has two stories, has huge outdoor billboards at the top of the building. The retail on Fulton Mall continues to grow.”
A|X Armani Exchange last year unveiled a 6,500-square-foot store at City Point, a 1.9 million-square-foot mixed-use development on Fulton Street and Flatbush Avenue. Century 21 and Alamo Drafthouse Cinema occupy part of phase two’s 600,000 square feet of retail. TJ Maxx is bowing on Fulton Street in August, to be followed by H&M and Swarovski. “Just five years ago, the area was urban discount retail,” Chera said. “There was a vacuum for [the upscale] demographic. There was no place for them to shop.”
According to sources, Urban Outfitters has signed a lease at 102 North Sixth Street in Williamsburg, the same area where J. Crew is said to be looking. Nordstrom has reportedly zeroed in on a location for a Rack on the Fulton Mall. Apple is said to be eyeing the Salvation Army’s two-story building on Bedford Street and North Seventh Street in Williamsburg.
“Brooklyn is definitely on Apple’s radar screen,” said a source who’s worked with the company. “Williamsburg is still evolving and changing and growing.”
Aurora Capital Associates with Midtown Equities and Alex Adjmi acquired for $23 million a 150,000-square-foot site at 242 Bedford Avenue. Joe Fresh will occupy 15,000 square feet and Anthropologie 12,000 square feet, said Jared Epstein, vice president of Aurora.
Not far from Fulton Street, Atlantic Avenue, between Third Street and Clinton Street, has a different scale and vibe. Retail spaces are smaller and buildings are older. “[Atlantic Avenue in Cobble Hill] is a strong trading area for us and continues to build in momentum,” said Daniella Vitale, chief operating officer and senior executive vice president of Barneys New York, referring to the retailer’s 10,000-square-foot Co-op unit. “This is a strong store within our ‘small store’ portfolio and we feel there is a penchant [in the area] for a range of luxury products. We have a lot planned for this location and it will be part of the next round of conversions for Barneys New York. The demographics really reflect what we expect in Manhattan. We were quite prescient in identifying this area as having long-term potential.”
Jonathan Adler, Steven Alan, Eva Gentry, Urban Outfitters, Brooklyn Industries, Malia Mills and Mafalda are on the avenue. “Some of the retailers have locations in SoHo or Williamsburg, or both,” said Josef Szende, executive director of the Atlantic Avenue BID. “Atlantic Avenue is becoming a third hub.”
Allen Barcelon, owner of Boerum Hill Realty, said rents on Atlantic Avenue range from $60 a square foot to $70 a square foot. Large property owners are asking $100 a square foot and pushing rents up. “A lot of the mom-and-pop landlords are about to disappear,” said Barcelon. “Downtown is becoming like Manhattan.” But Szende isn’t worried about an influx of national chains. “Given our floor plates and store sizes,” he said, “it’s a little bit of a challenge for national retailers.”
“[Brooklyn] has become an iconic brand used by companies to market products, including vodka, ice cream, hamburgers, music and television,” Epstein said. “There’s a need to become part of the city that everyone’s talking about. The Barclays Center and Jay-Z’s involvement amped up the hype. The surge of new residential development has stamped the city as a required destination for most national retailers.”
Epstein cites Williamsburg as particularly sought after. “It’s an authentically hip area where grit meets luxury,” he said. “The neighborhood is thriving due to its youthful, energetic, stylish and creative population. Nearly 10,000 new residential units have been built since 2007 and there’s more on the way. The average age of Williamsburg’s 125,000 residents is 36 and over 50 percent are single.”
“We’re seeing a ton of interest from people who never looked in Brooklyn before,” said Ryan Condren, managing director of real estate services at CPEX. “[Retailers] are even moving to [less-built-up] areas such as Crown Heights and Sunset Park. Developers and residents are pushing the boundaries.”
Barclays Center is only one of the draws luring brands across the river. “Without the stadium there would be a very similar buzz,” Condren said. “It doesn’t hurt, but it’s not like that was the one driver.”
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