NEW YORK — The Real Estate Board of New York’s most recent retail report held few surprises for the New York market, but there was at least one standout: Prices for prime real estate in Times Square and lower Manhattan are increasing at a fast clip, as demand for retail space in those neighborhoods starts to catch up with supply.
“There’s very little inventory coming online in Times Square. The big deals with long-term leases have taken up a lot of space,” said Ariel Schuster, managing director at Robert K. Futterman & Associates. “Ann Taylor’s store in Times Square Tower was a major vote of confidence for the area for apparel retailers, and now more people are interested in the area than ever.”
Lower Manhattan’s retail corridor showed the greatest increase in asking rents in the past year. It’s a tough area to enter, but it may be on the brink of ensnaring several luxury retailers. Hermès’ lease in the financial district — like Ann Taylor’s at 15 Broad Street — served as a wake-up call to retailers who are now increasingly interested in tapping into the burgeoning upscale residential community downtown.
“In the next six months, you will start to see luxury retailers that are as high caliber as Hermès commit to space, especially near the New York Stock Exchange,” Schuster predicted. “The rents are starting to creep up a bit.”
Still, neither Times Square nor lower Manhattan are likely to explode in retail rents as much as other fashion-focused retail strips in Manhattan, such as Bleecker Street, where retail spaces are said to be going for as much as $500 per square foot and rents are slowly approaching Fifth Avenue’s.
“There will be a leveling off of rental rates in most neighborhoods,” predicted Laura Pomerantz, principal of PBS Realty Advisors.
In addition to its retail report, REBNY also hosted its 2005 Retail Deal of the Year Awards Tuesday night. Taking top honors as the most creative deal in Manhattan was the Apple Computer lease at 767 Fifth Avenue, brokered by Robert Futterman and Karen Bellantoni of Robert K. Futterman & Associates. The innovative property, which features a glass cube at street level and contains its entire 22,500-square-foot operations below ground, opened May 19 to throngs of fervent Macintosh fans, who prior to then had only Apple’s SoHo store to visit.
REBNY rewarded Newmark Knight Frank brokers Jimmy Kuhn and Amira Yunis with the retail deal that most significantly benefits Manhattan. The duo won for bringing Trader Joe’s to Union Square, where the retailer opened its first Manhattan store at 140 East 14th Street. Like the Apple store in midtown, the Trader Joe’s opened to lines of New Yorkers eager to get their hands on the inexpensive, fresh merchandise. The chain’s recently opened wine shop is housed separately from the main store.
Another grocer won for REBNY’s Most Creative Deal in the Outer Boroughs. Chase Welles of Northwest Atlantic Real Estate Services won for placing Whole Foods at Third Street and Third Avenue in Brooklyn, at a crossroads of Cobble Hill and Park Slope. According to REBNY, Whole Foods’ arrival in the neighborhood jump-started discussion of redevelopment of the region as a whole, and a possible rezoning of the industrial property into mixed-use loft and artists’ residential spaces.
Abercrombie & Fitch’s new headquarters at 720 Fifth Avenue, brokered by John Brod and Pomerantz of PBS, was the only fashion deal nominated as one of the top retail deals of 2005.