NEW YORK — The transformation of West 34th Street has been on a steadily upward trajectory. Now the gentrification is starting to push west and south even as stores continue to open on the prime block between Fifth and Sixth Avenues.
This story first appeared in the November 10, 2009 issue of WWD. Subscribe Today.
Conway, the discount clothing store with its bins of bargains and cheap clothing squeezed onto rounders, has had a big presence in the area for years. Local real estate sources said the retailer’s stores at 245 West 34th Street and 225-253 West 34th Street, both between Seventh and Eighth Avenues, are on the market. Ricky Cohen, vice president of Conway, couldn’t be reached for comment.
Sources also said the Conway-controlled 11 West 34th Street, where Shoe Mania is located, is on the market. Another Conway location, at 1333 Broadway and 35th Street, was slated to close in February, although the landlord reportedly extended Conway’s lease for 15 months.
“Clearly the district is trading up,” said Daniel Pisark, vice president of retail services for the 34th Street Partnership and Bryant Park. “Seventh Avenue has always been heavily controlled by Conway, and we believe that’s about to change.”
The retail tenants at 14 Penn Plaza, also known as 225 West 34th Street, have been cleared out in preparation for the building’s overhaul. The property, owned by Dakota Realty Group, is being gutted. When finished, it will have close to 50,000 square feet of new retail space.
Howard Johnson’s at 215 West 34th Street is slated for demolition in the spring, Pisark said. The new building will have 60 feet of frontage. “The retail revitalization that spread [as far as] Seventh Avenue will finally make the leap over the Seventh Avenue and march toward Eighth Avenue,” Pisark said.
A large construction development at 885 Sixth Avenue will give a lift to the southwest corner of 32nd Street. A new 48- to 50-story luxury residential building under construction will have 47,000 square feet of retail space spread over three floors. The Manhattan Mall and J.C. Penney are on the opposite side of 32nd Street. Benjamin Fox, president of Winnick Realty Group, said, “One tenant would always be ideal, but that’s a challenge. It’s designed so that we can divide it into two spaces. I’ve gotten inquiries,” even though it’s not scheduled to open until second-quarter 2011. Asking rent for the retail space is $300 for the ground floor, $100 for the second floor and $75 for the third floor.
“It’s an extraordinarily busy corner,” Fox said. “There’s Penney’s, Macy’s, Gap, Victoria’s Secret and Old Navy. Also, 32nd Street is a main east-west pedestrian feeder street.”
The retail mix in the neighborhood has improved since the Nineties. Liquidators with permanent “going out of business sale” signs in their windows have been largely replaced by national chains with sleek facades. There’s a question about how upscale 34th Street can ultimately become. The consensus seems to be that fashion-oriented, midprice stores do very well, but anything too high end or edgy may not play on 34th Street. So far, retailers with populist products have generated high sales volumes.
In the last decade, rents have risen tenfold, from $60 a square foot to $500 to $600 a square foot in 2007, real estate brokers said. In the last two years, rents have lost some ground to the recession. A November report by the Real Estate Board of New York reported asking rents have dropped 35 percent on West 34th Street between Fifth and Seventh Avenues to $421 a square foot.
What hasn’t fallen off is pedestrian traffic. According to the 34th Street Partnership, 100 million people pass through the four corners of 34th Street and Broadway annually. One million public transit users a day walk through the district. A PATH station and IND subway station are located under the Manhattan Mall.
Penney’s first Manhattan unit, a 150,000-square-foot store at the Manhattan Mall, opened in August and was a vote of confidence in the neighborhood. The store, which has no entrance on the ground floor, is located on the mall’s two lower levels. The prospect of big volumes prompted Penney’s to open in the less-than-perfect space. Gap’s largest-volume store is at 34th Street and Sixth Avenue. Macy’s flagship is said to generate about $650 million to $675 million in annual volume.
Retailers are choosing to open some of their largest stores on 34th Street. Geox recently opened a 6,000-square-foot flagship at 29 West 34th Street between Fifth and Sixth Avenues. The store, which houses the company’s first showroom in the U.S., was designed to highlight Geox’s apparel collection. Coming soon to the block of 34th Street between Fifth and Sixth Avenues is an 18,000-square-foot Esprit flagship at 21-25 West 34th Street. Apple leased the building in 2006, then decided it didn’t want to open a store on 34th Street. Apple subsequently subleased it to Esprit. It will be Esprit’s largest store in North America and second largest worldwide.
Aéropostale on Tuesday held a soft opening at its flagship at 15 West 34th Street. Despite the fact that there was no advertising or promotion to announce the store, the 5,700-square-foot space was packed with shoppers of different age groups. Thomas Johnson, executive vice president and chief operating officer of Aéropostale, stood on the sidewalk in front of the store looking on in amazement. “I’m very excited,” he said. “Fifteen subway lines converge here.”