Shopping Center Business

MAY 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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HIGH STREETS 258 • SHOPPING CENTER BUSINESS • May 2016 "Rents there have been strong, but if retailers can find space, it's still generally more affordable than some of the other districts," Stephanou says. "The neighbor- hood has character and a great tenant line up with Eataly anchoring the northern end. That area is as good as it's ever been." The Chelsea neighborhood — two av- enues west of the traditional Flatiron/ Union Square shopping district — got a boost of confidence in February. Barneys New York opened a downtown flagship at Seventh Avenue and 17th Street in the same spot where the luxury department store first opened its doors in 1923 (be- fore vacating in 1993 to move to its flag- ship on Madison Avenue). The new 58,000-square-foot, five-story space will be Barneys' fourth store in New York City. And, with most of the area's retail tenants traditionally falling into the home furnishings or off-price appar- el categories, the addition of this luxury department store to the tenant mix will serve Chelsea's upscale clientele. "I think it will be great for the area," Bellantoni says. "It's an extremely affluent neighborhood, and, in New York, people who live downtown don't want to cross above 23rd Street to shop. Barneys did such a chic job with the downtown store. It's going to be a great new frontier. I imagine more retailers will want to fol- low suit." MEATPACKING DISTRICT AND SOHO Moving west a few blocks into the Meatpacking District, in what was a new frontier 10 years ago, the recent relocation of The Whitney Museum of American Art is a sign of yet another wave of trans- formation within the submarket. Last spring, the museum left its home on the Upper East Side to occupy a brand new 63,000-square-foot stark white space de- signed by Renzo Piano at 99 Gansevoort Street, located at the southern entrance to the High Line. At the corner of Ninth Avenue and West 15th Street, a new office-and-retail tower is going up on the former site of long-time tenant Prince Lumber. Starbucks recently announced plans to occupy the tower's retail space with The Starbucks Reserve Roastery and Tasting Room. Modeled af- ter a concept first tested in Seattle in 2014, the New York Roastery will integrate cof- fee roasting, manufacturing, education and retail in a massive 20,000-square-foot space. It is scheduled to open in 2018. "What's happening here, spurred by the Chelsea Market, High Line and the Whit- ney, is phenomenal," says Bellantoni. "It's been a game changer for the area." According to Cushman & Wakefield's Manhattan Retail Market Statistics report, average ground-floor asking rents were $384 per square foot at the end of last year in Meatpacking. SoHo, once considered the go-to neigh- borhood when a retailer was looking to expand off of Fifth Avenue, has struggled with vacancies in recent years due to con- sistently rising rents. According to Cush- man & Wakefield's Manhattan Retail Market Statistics report, ground-floor asking rents in SoHo — looking at the blocks stretching south from West Hous- ton Street to Canal Street, and east from West Broadway to Broadway — averaged $541 per square foot at the end of 2015. "SoHo has been an anomaly," Breslin says. "Rents on prime corners skyrock- eted 10 years ago from $150 per square foot to over $1,000 per square foot. The problem is there aren't a lot of big spac- es, which makes it easier to achieve high rents. It's still a cool neighborhood with great foot traffic." Breslin attributes this uptick in rents to new investors who are willing to pay a premium and pass that premium onto H

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