NEW YORK — A wave of development is seeping into inner-city neighborhoods here, potentially bringing a higher grade of stores and hybrid retail centers to fashion-deprived communities, and keeping some of the bridge and tunnel crowd shopping closer to home.

The topic of urban redevelopment is expected to be a major concern at next week’s International Council of Shopping Centers’ leasing convention here. Projects are taking form in such neighborhoods as Glendale, Harlem, Flushing and Bedford-Stuyvesant, though they’re still years away from the ribbon-cuttings. Among the most unusual is the city’s first lifestyle center, which is called The Shops at Atlas Park, and will be in the Glendale section of Queens at 8000 Cooper Avenue. It’s a 400,000-square-foot project across 12 acres with 375,000 square feet of retail plus 75,000 square feet for offices. A fall 2005 opening is anticipated. Letters of intent are signed with Coldwater Creek, Elizabeth Arden Red Door Salon, Jos. A. Bank and Mitchell’s Fish Market; several other deals are in “active negotiation,” according to officials at The Shops at Atlas Park.

Other retail projects generating steam include:

  • The conversion of the former RKO Keith’s movie theater in Flushing, Queens, into 500,000 square feet of mixed-use space.

  • The Gallery at Fulton Street, in downtown Brooklyn, which is about two- thirds constructed.

  • The repositioning of the Bedford-Stuyvesant Restoration Corp. complex in Brooklyn.

  • Empire Stores, in the Dumbo section of Brooklyn, which has on the drawing boards 500,000 square feet of stores, restaurants, galleries, a roof garden, a banquet hall and a marketplace.

  • The Livingston Street Shoppes, in downtown Brooklyn, intended as an off-price enclave.

  • Merchandise Mart 125, planned for opposite the Apollo Theater on West 125th Street in Harlem, intended for local and national retailers.

Among the most ambitious developments is an $87 million project on 116th Street and the FDR Drive in Harlem, sources said. Home Depot and Costco plan to anchor a retail center covering 500,000 square feet of retail space, with the two anchors each occupying 120,000 square feet. The Gap is expected to move in, also.“This is probably the largest retail development project in Manhattan,” said one real estate source.

It’s clear that developers regard New York’s inner-city communities as underserved by retail, but they will be challenged to attract quality retailers, many of which regard anything beyond Midtown, the Upper East Side and SoHo as uncharted and risky territory. Transportation is also an issue in many cases. For a retail development in inner cities to be successful, it has to be close to subway and bus routes and easy to get to by car.

At least two of the developments, The Shops at Atlas Park and Empire Stores, are trying to sign up retailersearly in the construction process.

“It’s hard for retailers to imagine what it would be like in some of these projects and that’s why they are struggling with leasing. In most cases, it just scares the retailers,” said Joseph Sitt, chairman of Thor Equities, which bought the former Albee Square mall on Fulton Street out of bankruptcy from Forest City in 2001 and is spending $400 million to transform it into The Gallery at Fulton Street.

Asked about The Shops at Atlas Park, he said, “It seems like a pipe dream now. But a lifestyle center is a wonderful idea. It will be fabulous, but they’ve got to build it, and then they will come.”

Overall, The Bronx, Queens and Brooklyn could use a lot of redevelopment, added Sitt. “The buildings are there. We’re not building on a corn farm. But it’s a matter of getting [retailers] to understand that the physical spaces available are not always to their specifications, so they have to be flexible. We will work with them. We’ll tell them how to control security, and how to control a multifloor space and where to put the registers in a multilevel location. Often, with inner-city shopping centers as opposed to regular shopping centers, retailers are concerned about developers not being able to deliver,” with such things as zoning permits and repositioning the property. “We take a ‘build it first, and they will come’ approach, and we have a lot of leg-ups.”Sitt touted his Thor Equities Urban Retail Consulting division, which specializes in urban retail environments, mostly in the five boroughs, as well as in Chicago, Detroit, Atlanta and Puerto Rico. “We create strategies for retailers to grow in urban environments, by providing information on demographics and transportation, negotiating lease terms, and recommendations on where they should be.” That sounds somewhat self-serving, but Sitt said a “Chinese wall” separates the consulting side of his business from his development business, and that his consulting team will sometimes steer retailers away from his own projects.

Despite the challenges in New York’s inner pockets, Sitt and other sources cited reasons why retailers will eventually commit to them. For one, many have maxed out in the more retail-concentrated streets of Manhattan, in terms of number of locations and sales productivity. In their mature state, they have to look for other viable locations where the demographics could work, such as Harlem and Dumbo. Wal-Mart, Kohl’s, Old Navy, Burlington Coat, Target, Penney’s, Sears, Foot Locker, Bed, Bath & Beyond, Ikea, Nine West, Home Depot, Athlete’s Foot, Charming Shoppes and its Lane Bryant division, Hennes & Mauritz, Motherhood Maternity, American Eagle, Lids, Children’s Place and Sprint are said to be among the most active seeking new sites.

Furthermore, after Sept. 11, developers and retailers with big stakes in the city have opened their eyes to the other boroughs.

“There is considerable retail development happening,” observed Laura Pomerantz, co-principal, PBS Realty Advisors LLC. “Just take Harlem. The expansion is amazing and basically it’s because of so much residential conversion. Retail and other services have to follow. It’s becoming a huge attraction to national retailers. Children’s Place is opening a second unit on 125th Street, H&M just opened, MAC Cosmetics just opened, and the Marriott is doing a project, on the corner of 125th and Park with retail. It’s under construction and will have approximately 75,000 square feet of retail over three levels with a hotel above. They are looking for small users, like Bath & Body Works, or Starbucks, not a big box.”

In Brooklyn, the Bedford-Stuyvesant Restoration Corp. complex, which has close to 500,000 square feet of retail space at 1368 Fulton Street, is being repositioned, with Thor as the developer. “We are putting together a plan to redesign the plaza and market the property, and will hire the architectural firm and brokers,” Sitt said. He said he wants a family restaurant, a drugstore and some fashion retailers, such as Forever 21 or H&M, to move in, and to get Lerner’s to remodel its store there. He also sees a need for plus sizes, such as a Lane Bryant or Catherine’s. Sitt, who also is chairman of the downtown Brooklyn Business Improvement District, sees the project being completed by the beginning of 2005.“Years ago, retailers were not interested in the five boroughs,” Sitt said. “The world is changing. H&M has moved into Harlem [it recently opened on 125th Street] and Forever 21 is on Fulton Street.”

About two weeks ago, Thor bought the Brooklyn Municipal Parking Garage on Livingston Street. The plan is to convert it to the Livingston Street Shoppes, which Sitt envisions as a 300,000-square-foot, lower-priced alternative to Fulton Street. He’ll be seeking off-pricers such as Dress Barn, Marshalls, or Ross Stores. “They’ve been craving to be on Fulton, but the problem is as a value-oriented retailer, you can’t get on Fulton because it’s over $150 a foot in rent.” At Livingston Street Shoppes, however, “We’re looking at $35 to $50 a foot, or about one-third the rents.” Construction is slated to begin in February or March, but there’s an ambitious opening date. “We hope tofinish the redevelopment by October 2004,” Sitt said.

Harlem’s Merchandise Mart 125 involves New York’s Economic Development Corp., as well as Chappel Ventures, Webb & Brooker Inc. and the FATA Organization. Plans for the joint venture are to attract national and local merchants.

“In the area of West Harlem between 115th and 140th Streets there is a real residential resurgence,” Pomerantz observed. “Retail will be following it for sure, but up to now, most of the development has been either on the east side of Harlem or along the 125th Street corridor. Now you will see it both north and south of 125th and on the western corridor, like Lenox Avenue and Broadway. There are a lot of young people with families who can’t afford apartments on the Upper East or West sides. In Harlem, rooms are larger, you get more for your money, and you also have hospitals in the area,” including Columbia Presbyterian, Mount Sinai and Harlem Hospital. “The transportation is spectacular, between the subways, buses and trains from Grand Central Terminal.”

Pomerantz even said that one French fashion retailer specializing in streetwear and sportswear, called Dia, could wind up opening its first U.S. store in Harlem, though she raised Times Square as another possibility. “It’s a hot company in France,” she said. “The company can go to Harlem because that is their target customer.”Empire Stores, formerly a storage area known as Empire Storage Buildings, is situated between the Brooklyn and Manhattan bridges, providing striking views of the bridges and the Manhattan skyline. The site is state-owned and being developed by Boymelgreen, a developer based in Brooklyn, which is also redeveloping the RKO Keith’s. Empire Stores will consist of seven Civil War-era buildings, with about 70 percent of the space, or 420,000 square feet, of retail. The plan is to open it in fall 2005.

“We want to preserve the buildings, retain the historical aspects and create something vibrant, something anti-South Street Seaport, something artistic that reflects the neighborhood. We don’t want to create another shopping mall,” said Jay Valgora, design principal of Walker Group, the architects on the project. He said the architecture would include two open courtyards, fieldstone walls, first-growth timber columns, and “massive arches.” It’s possible that the waterfront, which is like a cove off the East River, could be developed for recreational use, and that an arcade of cafes and restaurants will be along the waterfront with outdoor seating and a terrace. He also noted the possibility of a marketplace for fresh food and gourmet food, though all the plans are subject to change. Currently, no tenants have been announced. “We are in the early stages of leasing,” he said.

In inner-city areas, “more and more people are interested in creating retail centers,” Valgora said. “Something is happening where the boroughs are coming back to life.”

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