Recovery was the name of the game in 2011 for many major retail corridors in Manhattan. SoHo and the Flatiron District were among the most significant rebounding areas.
SoHo has benefited from international retailers’ expansion into New York and the city’s record-breaking tourism. New York City welcomed more than 50 million tourists in 2011, including 10.1 million international visitors — more than any other year in its history. The city generated $32 billion in visitor spending and $48 billion in economic impact, according to Mayor Michael Bloomberg and NYC & Company. And SoHo is a major stop on any tourist’s path.
Broadway, Spring and Prince streets have long been the market’s primary retail corridors, and rents on these streets are nearly back to 2008 peaks, with very limited vacancy. In 2011, more tenants, especially European retailers, saw value and opportunity on the interior streets — Mercer, Greene and Wooster — which are one-third to half the rent of Broadway, Prince and Spring streets. The interior streets had suffered from higher-than-normal vacancy levels during the recession; now, they are flush with some of the biggest names in retail and are commanding higher rents than ever before.
The Mercer Hotel and early adopters, including Vera Wang, Costume National and Zadig et Voltaire, helped anchor Mercer Street in years past. In 2011, Yves Saint Laurent, Balenciaga and Versace all announced new stores, which will transform Mercer Street into a high-fashion enclave. TechnoGym first came to Greene Street in 2010; now, Stella McCartney is moving her Meatpacking District store here, and Tiffany & Co. will open a SoHo flagship at 93 Greene Street, with an additional entrance on Wooster Street.
Lower Fifth Avenue in the Flatiron District made a huge comeback in 2011. Unlike SoHo, this is largely a local’s shopping corridor. The area struggled at the peak of the recession; vacancy abounded just 18 months ago and rents dipped to nearly half of what they were at their peak.
The area’s rebound was evidenced by the entrance of five major retailers; Joe Fresh, Madewell, New Balance, Nike Running, and Ann Taylor Loft all took prime open retail spaces, and rents have nearly rebounded to pre-recession levels.
The Flatiron District has benefited from the opening of Eataly, Mario Batali’s 50,000-square-foot Italian artisanal marketplace, which has drawn large crowds, and the added foot traffic from technology and start-up companies that have entered and grown their presence in thriving Silicon Alley.
Outside of these markets, expect to hear a lot about retail in major new developments in 2012. Edward J. Minskoff’s 51 Astor Place, designed by architect Fumihiko Maki, has incredible flagship retail opportunities at the base of the new 400,000-square-foot LEED-certified office building. In Midtown, the World-Wide Group has started to market Phase II of 250 East 57th Street, the 1 million-square-foot mixed-use development site anchored by Whole Foods that will include a 59-story residential tower and two new public schools. Whole Foods is opening third quarter 2012 and will be a boon to the area. The second phase will include an additional 78,000 square feet of retail and the residential tower.
— Ariel Schuster, executive vice president of RKF