Is everything finally coming up roses for city stores? Maybe.
Retail leasing velocity across the city is up 14%, year over year. That represents over 3.5 million square feet of new leases and renewals — and according to CBRE, the number of available storefronts on the main shopping streets has dropped.
That’s good news for shoppers — but a tough break for stores that want the better locations. It’s a situation that parallels Manhattan’s divided office market, said Lee Block of Winick Realty Group. Retailers want better spaces and are willing to pay top dollar for them.
“The flight to quality has been a big theme in the office world, and it also works in the retail world,” said Block, referring to the demand for luxury offices that is spilling over to some Class B buildings but leaving most C owners in the lurch while spurring residential conversions.
Adding to the competition are new to NYC retailers, who inked 24 deals that gobbled up 205,000 square feet just in the first quarter, according to CBRE.
For instance, the immersive art experience, Meow Wolf, leased over 74,000 square feet at Pier 17 at the South Street Seaport for its first NYC location. And Seaview Productions, the group behind George Clooney’s “Good Night and Good Luck,” leased the vacant 16,679-square-foot former Second Stage theater at 681 Eighth Ave. near Times Square.
If fact, Times Square has always been a target for large retailers, with shops like Sephora open until 11 p.m. to service late-day, pre- and après-Broadway show crowds. “It’s the busiest place,” declared Gene Spiegelman of Ripco.
At the end of last year, Lincoln Market signed to bring its supermarket to a 35,809-square-foot space left by Lucky Strike bowling at Silverstein Properties’ River Place at 650 W. 42nd St.
Nevertheless, Times Square still has massive holes, such as the 91,000 square feet that Forever 21 will give up at Vornado’s 1540 Broadway and 58,000 square feet ABC is leaving at 1500 Broadway.
Another sign of life comes from the Manhattan’s ultra-competitive restauranteurs who ate up 171,000 square feet in 39 Manhattan deals. Among them is Michelin chef Masaharu Morimoto who will occupy 17,600 square feet at 1255 Broadway in Nomad. Chicago’s Michelin steakhouse Maple & Ash leased nearly 17,000 square feet at Vornado’s 1290 Ave. of the Americas and STK will open in 12,600 square feet at 200 Park Ave. South.
Old Navy is giving up 150 W. 34th St. to Primark so it can move to 55,000 square feet on corner of Herald Square at 50 W. 34th St.
Looking further downtown, vacancies along Broadway in Soho are nearly extinct.
Crocs leased a new flagship at 543 Broadway, and New Balance will hop into 542 Broadway. Calvin Klein signed to open a flagship at 530 Broadway and GU opened at 668-678 Broadway. The Chinese-based, fast-fashion brand Urban Revivo opened its first US store in 30,000 square feet at 515 Broadway.
“Global brands stiltl consider New York the launch pad for expanding their businesses,” said Spiegelman who represented Urban Revivo. “The top of their list is Soho.”
Adidas will relocate its flagship from 115 Spring to 8,700 square feet at 135 Spring. Ray-Ban renewed its 7,000 square feet at 116 Wooster and is building out a new global flagship at 62 Prince. Additionally, 7 For All Mankind’s denims renewed 5,500 square feet at 392 W. Broadway.
As higher-priced space was leased, rents on prime Prince Street dropped to $750 per foot, down 24% quarter-over-quarter and 30% year-over-year, according to CBRE.
The competition for the best Soho spaces is now so fierce that even the biggest fish are being out bid. For instance, LVMH is hunting for a corner location for Tiffany & Co. (now at 97 Green St.) — but it’s already lost out on spaces like the new Ferrari former Nespresso space location at 92 Prince St. which may have leased for $1,800 per foot, the Apple location at 103 Prince and Ralph Lauren’s digs at 109 Prince which the retailer just bought for $132 million.
“Everyone is keenly aware and the uncertainty is having an impact.”
Matthew Siegel of Lantern Real Estate
“It’s hard to find space on Prince, Greene or Spring — you almost have to pay key money,” said Richard Hodos of JLL.
Like Ralph Lauren, some stores are tired of playing games. They’re simply buying their space outright.
To capitalize on the frenzy of both investors and retailers trying to lock in prime locations, CBRE is offering 115 Spring for sale on behalf of SL Green as the 5,100-square-foot, two-level store will be vacant when Adidas relocates to 135 Spring next March. Uptown, Chanel is in talks to buy 60,000 square feet in the base of Gary Barnett’s upcoming luxury residential tower at 655 Madison Ave., according to the Commercial Observer and, if that goes sideways, could turn to Related tower on the next block at 625 Madison or return to its first choice of the former Barney’s at 660 Madison should the families that own the building realign their future goals.
Meanwhile, B&H Photo paid $150 million to buy 333 W. 34th St.
Even so, stock market gyrations over global tariffs are still top of everyone’s minds.
“We are seeing our clients preparing for the impact and implications of the tariffs on both consumer behavior and input costs,” said Matthew Siegel of Lantern Real Estate. “Everyone is keenly aware and the uncertainty is having an impact.”