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Posts Tagged ‘store leasing’

HIGH TIDE-NAVIGATING NEW YORK’S RISING RETAIL LEASING RATES

August 3rd, 2013 No comments

New York is a town defined by diversity and disparity. From East New York to the Upper East Side, everyone is here. And everyone wants to come here. Variations in retail rents reflect this rich mixture. Soho rents are so much more expensive than South Street’s. Madison Avenues leases for far more than Midtown. Fifth Avenue in Manhattan is a million miles in pricing from Fifth Avenue in Park Slope. All are defined by the same dilemma of rapidly rising rents. What makes New York incredibly attractive to retailers also makes it incredibly expensive. Sticker shock is common to new entrants to the market.

Retail rents are surging, pushed by high levels of tourism coupled with a prospering local economy. Fifth Avenue, Times Square, and Madison Avenue have historically demanded the highest prices. SoHo has joined these neighborhoods as a prime shopping location for both tourists and locals. The limited supply of available space, especially in the most sought after corridors, adds to price pressure. However, a good broker can guide a client toward the goal of great location.

The REBNY Spring Report notes “Asking rents in Times Square on Broadway and 7th Avenue between 42nd and 47th streets jumped 55 percent to $2,175 psf ” The Real Estate Weekly article “Luxury Retailers Jumping on Soho’s Brand Wagon” of April , 2013 reports that “the famed Fifth Ave strip saw the second largest price growth rise at 15.2 percent, and still is the most expensive retail rent area in the city, with the average asking price hovering around $2,631 psf

A WWD article from May 2013 reports “asking rents for available ground-floor space on Madison Avenue between 57th and 72nd Streets increased 36 percent to $1,325, since the fall.” In SoHo, according to The Business of Fashion’s article, “The Shifting Winds of New York Retail, “the concentration of international fashion and luxury brands is thicker than almost anywhere else on the planet.” According to the Crain’s article from April 2013, “SoHo Joins the Top Tier as Retail Rents Cross $1K Mark,”“SoHo is taking its place alongside Fifth Avenue, Madison Avenue and Times Square as a must-have location for retailers.” The article adds, “For a long time, there were brands there because it was hip and it was sexy, but they weren’t necessarily making a lot of money,’ said Michael Glanzberg, of Sinvin Real Estate”. “Now there are a lot more shoppers who come and really spend, not just a few hundred dollars, but thousands on luxury items.’” The article continues that “rents on Broadway have soared more than 50%, to $756 per square foot” and “on Prince Street between Wooster Street and Broadway, SoHo’s priciest block, rents did better, ballooning 65% to $850 per square foot on average”

With such a low supply and a high demand for space in SoHo, an article in The New York Times from December 2012 reports that “luxury clothing brands that would normally flock to Prince and Spring Streets, are facing little inventory and sky-high rents, and so are now searching out these smaller side streets.” As a result “Rents on side streets such as Wooster and Mercer have doubled from about $150 per square foot to close to $300 per square foot on average”

Other neighborhoods that are experiencing changes in reputation as well as retail rents, include the West Village, Meatpacking District, Chelsea, Herald Square, Lower Fifth Avenue and the Flatiron District. WWD reported in a May, 2013 article that “Bleecker Street between Seventh Avenue South and Hudson Street rose to $540, also an 18 percent increase.” Meatpacking rents escalated significantly “as the neighborhood has completed its transition from blood-soaked industrial use to a 24-hour shopping and nightlife destination,” according to Real Estate Weekly’s article “Pioneers Breaking Newest Ground.” Due to the multitudes of tourists who walk down the High Line, rents climbed “10 percent to $356 psf.”

The Post’s article “$50M Makeover On Tap for Herald Center,” explains that “Macy’s went more upscale [and] The Gap, Forever 21, Victoria’s Secret and H&M moved in nearby and prospered.” The article reports properties in the heart of Herald Square between West 33rd and 34th streets are asking “$1,200 per square foot for roughly 10,000 square feet at sidewalk level” REBNY reports rents “in the Flatiron corridor along Fifth Avenue between 14th and 23rd Streets [where] asking rents also rose 37 percent to $413 psf since spring 2012”, and that “the Flatiron shopping corridor along Broadway between 14th and 23rd streets saw a significant increase in asking rents with a 50-percent-increase to $322 psf since last spring.” In Flatiron North, “asking rents are between $115 and $175 per square foot”

What’s a retailer to do? Few but the largest can pay the price for the more glamorous locations. That’s always been so. There are always alternative blocks and neighborhoods offering reasonable rents with the right traffic mix for any particular product. It’s difficult to chart the course to find such a location at an affordable price, on a block with a desirable co-tenancy. Treacherous waters to navigate even for experienced local retailers. A wrong turn and you’re sucked into a Bermuda Triangle vortex of high rent and low business. Who sets sail without a captain? And that’s what an experienced broker should be; sailing clients s through turbulent seas, straight to the fabulous Fantasy Island of pure profit. Choose one who knows the waters and arrive quickly and safely. Bon Voyage.

Grease Trap or Grease the Wheel- NBAT-The Kinder, Gentler, City Agency Offers Help for New Food Businesses

December 29th, 2010 No comments

The daunting task of negotiating the maze of city agencies has gotten easier. As reported in the New York Times article of December 28, 2010, before opening, a new food business might have to face up to 11 different departments, and secure up to 30 different permits, registrations, licenses, and certificates, and pass 23 inspections. The New Business Acceleration Team helps new restaurateurs through the jungle of the permitting process.

According to administration officials, the 200 establishments serviced so far, have opened, on average, 10 weeks faster than planned. Nice, considering how little free time is often offered in a new lease. Currently the team is comprised of four inspectors, plus supervisors from agencies that issue permits, like the Depart of Health, Department of Buildings, Fire Department and Landmarks. The hope is that at one point there will be a single restaurant license that would replace all others. A long range goal is something like a Mayor’s Office of Hospitality.

NBAT works with qualifying businesses to schedule and coordinate most required inspections and, when appropriate, to schedule multi-agency inspections on the same day. For example, NBAT works with the Bureau of Fire Prevention to ensure the timely submission of plans and equipment documentation as well as provide inspections regarding range hood devices and other hazardous installations. NBAT inspectors are also trained to conduct Department of Environmental Protection grease interceptor inspections ensuring that grease traps are correctly sized to handle grease discharged by cooking and kitchen equipment. NBAT works with the Depart of Health to ensure that all food service establishments are properly permitted and operating safely. NBAT, and the Department of Buildings, work together to ensure the safe and lawful use of buildings and properties while facilitating the issuance of Certificates of Occupancy and Place of Assembly permits.

The ideal participants in this program are generally; new restaurants, bars, bakeries or butcher shops seating 50 people or less. Qualifying bars must serve food. However Batali’s mammoth Eataly found a way to be serviced. While a new venture, it is hardly a small place, and ownership is hardly inexperienced. As always, there is a way around certain limiting requirements. Therefore I suggest all who are opening a new food business to seek this valuable help. For complete information, as well links to the specific city agencies involved, go to: http://www.nyc.gov/html/nbat/html/about/about.shtml

Good luck- get picked and get open quick.

The Good News/Bad News Index-Retail Sales Rise Two Months in a Row

March 7th, 2010 No comments

Upbeat reports about the economy and retail in particular, continue. In both February and March articles the Times reports positive results.

NY Times February 12, 2010-“Surprising Strength in January Retail Sales”

http://www.nytimes.com/2010/02/13/business/economy/13econ.html?scp=1&sq=retail%20sales&st=cse

Sales at retailers were unexpectedly strong last month, suggesting consumers were feeling a little more comfortable about spending, which could improve prospects for first-quarter economic growth. Retail sales rose 0.5 percent as consumers stepped up spending not only on essential goods but on luxury items as well, the Commerce Department said on Friday”

NY Times March 4, 2010- “Despite Storms, Stores Beat Expectations with Relatively Strong Gains”

http://www.nytimes.com/2010/03/05/business/economy/05shop.html?scp=5&sq=retail%20sales&st=cse

“ Despite fears that snowstorms in February would dampen sales, the nation’s stores posted their strongest results on Thursday since late 2007, suggesting the beginnings of a broad recovery in retailing. Nearly every major chain turned in robust figures, beating analysts’ expectations and recording the sixth consecutive monthly sales increase. Even long-struggling stores and sectors came back from the dead.”

Using the Wall Street yardstick that the market predates the economy by six months the, good news/bad news index seems to indicate that stores might see real gains for Back to School selling in August. Eighteen months ago the papers were littered with stories indicating the likelyhood of a possible depression. The bad news indicator stood at 100%. The pendulum began to swing back about 6 months ago. Here and there, some positive reports appeared. Now the anecdotal evidence seems to point to a fifty fifty mix of hopeful versus frightful. Nice! My guess is that on the ground, store owners in the City might soon get some real evidence of this change in perception. Sales should start to increase. Perhaps, in a few months, business might actually look good to some store owners. And optimists always, they will look to expand, taking advantage of increased availability and lower rents.