As America’s brick-and-mortar retail sector continues to come to grips with the impact of e-commerce on its long-term future, it is worthwhile to track the progress of the growing number of retailers who have chosen to step away from a web-only platform. These retailers are establishing an omni-channel presence by setting up operations in physical stores, and many are showing signs of success. Many such retailers are choosing to set up shop along the streets of New York City, with its massive and steadily growing population and its broad demographic mix. Despite the recent, well-publicized increase in the city’s available inventory of retail space, New York City remains the preferred market to launch a brand with aspirations of building a meaningful national profile. Considering the more-youthful and trendy profile of a large proportion of online shoppers, these “adding-bricks-to-our-clicks” companies are gravitating toward New York City submarkets that deliver this coveted, younger demographic. Moreover, e-commerce players possess a ton of data profiling their customers — including their buying behavior and their browsing interests and habits — and retailers tap this intelligence when making decisions about where to locate stores as well as how they should be merchandised to best cater to …
A trend in retail activity in Western New York and the Finger Lakes Region over the past six to 12 months has been the announcement or arrival of a number of high-end or specialty retailers and restaurants. Although traditionally these retailers are more selective about the markets they enter, as they continue to grow nationally they have to expand the list of potential markets they will consider. Some of them find that the Buffalo and Rochester metropolitan areas are markets in which high-end or specialty retailers or restaurants can thrive, particularly when Upstate New York’s lower occupancy costs and lighter competition are sufficient to offset potentially lower unit volumes. Whole Foods’ much-anticipated Western New York debut will be this summer in the Northtown redevelopment project by W.S. Development in Amherst. Whole Foods has also signed a lease in Brighton, a suburb of Rochester, for a 50,000-square-foot store at Palazzo Plaza, a proposed 90,000-square-foot shopping center on Monroe Avenue at Interstate 590. The project, being developed by the Daniele Family Companies, is currently making its way through the entitlement process. In a sign of the renaissance in progress in both Downtown Buffalo and Downtown Rochester, the first-ever national brand polished steakhouse …
As the U.S. economy passes through the third largest expansion cycle in the economic history, every sector in the economy has seen phenomenal growth over the last six to seven years. The growth in other industries has had a trickle-down effect on the real estate sector. U.S. real estate has seen rents surging and even surpassing the previous expansion cycle, as well as an increase in leasing and absorption activity and a record rise in the value of sales transactions. Manhattan has always been at the epicenter of this real estate growth. With the combination of developed market and investment-grade properties, Manhattan has regularly attracted the majority of foreign direct investment in the real estate sector throughout the country. Increased demand from TAMI (technology, advertising, media and information) and FIRE (finance, insurance and real estate) sector tenants have made these properties an attractive investment option for both the local institutional investors and foreign direct investment. The Manhattan commercial real estate market has seen a 33 percent (see footnote 1) increase in the transactions above $1,000 per square foot over the last seven years. These values are no longer limited to only trophy properties in Midtown but have spread across both Midtown …
The news is rife with stories regarding retail bankruptcies, store closures, challenges facing conventional shopping centers, and consolidations by department and specialty stores. Although not immune to some of these challenges, the Manhattan retail environment has enjoyed much activity during the second half of 2016 and the first part of 2017. To be sure, some submarkets and certain retail corridors have seen an increase in vacancies and a corresponding fall in asking rents. However, a number of new retailers have entered the market and certain strong retail brands have right-sized or repositioned themselves in the market. One high-profile shopping center opened its doors, and there is considerable retail development underway. It’s a big story but here are some highlights. Lower Manhattan There has been considerable focus on Lower Manhattan in the past several years, and this continues. On the grand scale, the opening in August 2016 of Westfield’s World Trade Center was the culmination of years in planning, constructing and leasing this $1.4 billion development. This multi-level project contains an assortment of national and international tenants, including fast fashion and better retail stores, such as Victoria’s Secret, Sephora, H&M, John Varvatos and London Jewelers. A 60,000-square-foot Eataly is the principal …
Rochester’s story is similar to those of other cities with once prominent downtowns. Starting in the 1970s, businesses and families largely fled to the suburbs as newer and nicer suburban offices were built. Larger companies, including many staple downtown dwellers such as large law and accounting firms, left the downtown in search of free parking, shorter commutes and a suburban lifestyle for their employees. Yet Rochester was a small city with big businesses. Bausch & Lomb was founded in Rochester in 1853. Eastman Kodak started business there in 1888 and beginning in 1906, Xerox Corporation was formed. Kodak is still based in Rochester, though it is a much smaller entity than it was before the digital era, and Xerox moved to Norwalk, Connecticut, years ago. However, the core technology culture never left Rochester. Over the past few years the University of Rochester — the area’s largest employer — received more than $1.9 billion in research money, most of it from the federal government. Organizations like High Tech Rochester, Greater Rochester Enterprise and the Rochester Downtown Innovation Zone have played important roles in the region’s comeback. In 2015, the Rochester region won a nationwide competition and was named the site for …
The Capital Region continues to experience low vacancy rates across the industrial sector. The region’s growth over the last decade has primarily been driven by multibillion-dollar investments by GlobalFoundries, a semiconductor foundry, and State University of New York Polytechnic Institute (known as SUNY Poly). With limited new construction and virtually no spec-built facilities, the rates on existing spaces have finally experienced some rental appreciation after remaining relatively flat over the decade from 2005 to 2015. For the most part, the region has seen existing tenants shifting to new locations within the marketplace as opposed to companies entering to the marketplace for the first time. Generally, new entrants to the market that have some technology component to their business are locating at the SUNY Poly campus or related facilities. One of the most notable recent transactions was the $57 million sale of The Beltrone Portfolio to The Rosenblum Companies. The portfolio totaled 23 buildings made up of a mix of office and industrial properties. The industrial assets included 10 buildings that would be classified as Class A and B product. Historically the entire portfolio maintained a low vacancy status and at the time of sale it was approximately 5 percent vacant. …
New York City’s retail outlook is sunny, as steady labor market expansion — bolstered by substantial Fortune 500 hiring — has spurred retailer demand for existing and new spaces in all five boroughs. Strong retail property performance in the City That Never Sleeps has supported continued rent and price growth, which will result in higher sales velocity over the short- and mid-terms. Employment Gains, Tourism Underlie Performance During the first six months of 2016, New York City employers created 33,600 new jobs. This pronounced job growth, which has been characteristic of the current cycle, reduced the unemployment rate to 5 percent by the end of the first quarter. This is the lowest rate unemployment rate the city has seen since November 2007. By the end of the year, area employers will add 90,000 workers, with the education and health services and professional and business services sectors projected to post the greatest increases. The leisure and hospitality sector will also contribute significantly to employment gains this year, as greater tourism spending prompts organizations in the sector to ramp up hiring. Another important indicator of NYC’s economic health is strong retail sales, which represent one of the best paces of retail spending …
Although it would appear that retail landlords in New York City are reaping the benefit of high rents — and many are, if they bought at the right time — demand has declined and leasing velocity has slowed, mostly due to inflated landlord expectations, tenant hesitancy and increased supply from tenant defaults. Yes, the Manhattan retail leasing market has softened, but not enough to significantly reduce historically high asking rents. For example, the fourth quarter of 2015 saw ground-floor average asking rent decreasing in the majority of the major corridors over the second quarter 2015. Fifth Avenue, from 49th to 59th, saw an 8 percent decrease; Madison, from 57th to 72nd, saw a 5 percent decrease; West 34th Street, from Fifth to Seventh avenues, saw a 16 percent decrease; and Broadway, from Houston to Broome, saw a 15 percent decrease. The corridors which saw rent increases were modest compared to the rises we saw in early 2015 and 2014. While this is in part due to increasing supply, an adjustment in landlord expectations is having the greatest impact. High rates of default and eviction have plagued New York City for years, mostly due to inexperienced tenants relying on unrealistic revenue …
In the Capital Region, an industrial/warehouse market with a little over 63 million square feet of space (spread over a 10-county area), vacancy rates have returned to pre-recession levels. It has been a long and steady climb out of a deep recessionary market, which hit this sector of the market the hardest during 2009. During that time, vacancy rates were hovering around the 11 percent mark. In the second quarter of this year, the regional vacancy rate stood at 7.3 percent. Compare this figure to the fourth quarter of 2014, when the vacancy rate was 8.9 percent. As a region, we are again enjoying the absorption of industrial space, as some regional operators expand and some new faces enter the market. We are constantly examining and reviewing the market to understand the current activity, and to anticipate and prepare for the coming trends and changes. So what has lead to the Capital District’s industrial/warehouse market recovery? Several factors are responsible. First and foremost, the overall recovery of both the national and local economies has played a significant role in our industrial recovery. According to the Bureau of Labor Statistics, the unemployment rate in the United States stood at 5.3 percent …
New York City’s multifamily market in the second quarter of 2015 was able to continue the momentum of 2015’s first quarter and generate an impressive $3.30 billion in gross consideration. The quarter also saw 364 properties trade over 225 transactions, which is a 33 percent increase in transaction volume compared to the same quarter last year. Boosting significant growth, both Brooklyn and Manhattan saw a number of institutional and portfolio deals again this quarter. Of the trades in Manhattan, the top 10 percent made up approximately 73 percent of Manhattans dollar volume and four of the five largest multifamily transactions to occur in NYC happened in Brooklyn, which contributed to both submarkets ending the quarter with dollar volumes above $1 billion for the second time in as many quarters. Pricing throughout the city continues to evolve by most measures. Gross rent multiples have increased by 1.4 year-over-year and the average price per square foot in Manhattan has eclipsed $900. Compared to last year, average capitalization rates were down 60 basis points in The Bronx, and are down in Brooklyn and Northern Manhattan. These are the signs of solid fundamentals in the market. Institutional caliber multifamily deals had a big second …