LEE NYC RETAIL MANHATTAN TREND TRACKER 3Q2014 NYC

Transcription

1 LEE NYC RETAIL MANHATTAN TREND TRACKER 3Q2014 NYC

2 HARLEM UPPER WEST SIDE UPPER EAST SIDE GOLD COAST TIMES SQUARE HUDSON YARDS FIFTH AVENUE HERALD SQUARE MEATPACKING DISTRICT FLATIRON DISTRICT UNION SQUARE NOHO SOHO NOLITA DOWNTOWN MANHATTAN RETAIL CORRIDORS

3 LEE NYC RETAIL MANHATTAN TREND TRACKER 3Q2014 ECONOMIC OVERVIEW In September, New York City s unemployment rate dipped 50 basis points from August, to 6.8 percent the lowest it has been since December Year-over-year private sector employment added 95,400 jobs and the retail trade sector added 15,700 jobs, a 4.6 percent increase. The strengthening job market and economy are heating up Manhattan retail activity. In 2013, Manhattan s population of 1.6 million residents and its over 54 million tourists spent approximately $33.4 billion on goods, services, and dining. In 2014, the household income will average $115,812 and that number is expected to reach $141,798 by Tourism in 2013 was estimated at 54.3 million visitors, roughly 3 percent higher than 2012 and a 19 percent increase from the 45.8 million visitors in In the second quarter of 2014, the U.S. Gross Domestic Product increased at a rate of 4.6 percent. This is greater growth than the quarterly 1.7 percent growth averaged over the past ten years. The Commerce Department announced in August that the trade gap shrank from $40.3 billion in July to $40.1 billion, the lowest reading since January. From 2010 through 2012, the last year with available statistics, consumer spending per person in New York increased a total of 12%, close to the 10.7% national average. In 2012, spending per capita in New York was $42,043. One of the biggest unknowns for the retail industry is how the policies of the current administration will impact their businesses. The City Council s Committee on Small Business is proposing a bill called the Small Business Jobs Survival Act that reworks the City s commercial renewal process. The provision applies to any lease that expires on or after January 1, The lease renewal should be a minimum of ten years, unless the landlord and tenant agree on a shorter term. The program would create a new city-supervised mediation program for lease renewal negotiations and allow landlords to decline a renewal only under certain circumstances. Champions of the bill promote that it will save mom and pop shops, but it has reached opposition from the real estate community. In addition, on September 30, Mayor de Blasio signed into law a bill that will increase the minimum wage for workers employed by private companies that receive more than $1 million in city subsidies. The Living Wage will be set at $13.13 for employees without health benefits, or $11.50 per hour for employees receiving benefits, and will be adjusted each year to match changes in the Consumer Price Index. According to Mayor de Blasio, the increase will benefit 18,000 employees of private companies in the food services, retail, construction, and other industries over the next five years. New York State s minimum wage is currently $8.00 an hour, set to increase to $8.75 on December 31, and $9 by the end of 2015, according to the National Conference of State Legislature. The mayor sees his increase as a stepping stone to raising the minimum wage in New York to $10.10 per hour. Earlier in the year, President Obama raised the minimum wage for workers under federal contracts to $10.10 per hour. AVERAGE YEARLY EMPLOYMENT 2013 NEW YORK CITY WAGES NEW YORK CITY TOURISM NUMBER OF JOBS 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, % 11.0% 10.8% 10.6% 10.4% 10.2% 10.0% Arts, Entertainment, and Recreation Finance and Insurance Information Professional and Technical Real Estate AVERAGE Average SALARY: Salary: $80,425 MILLIONS $45.00 $40.00 $35.00 $30.00 $25.00 BILLIONS 500, % 9.6% Retail Trade Employment Private Sector Employment Retail Trade Composition of Total Private Employment New York State Department of Labor Education Government Healthcare and Social Assistance $0 $50 $100 $150 $200 $250 $300 THOUSANDS New York State Department of Labor Number of Tourists Spending by Tourists nycgo.com $20.00 $15.00

4 FIFTH AVENUE, 42ND TO 59TH STREETS The northern part of Fifth Avenue, between 49th and 59th Streets, is the priciest retail corridor in New York City, with rents averaging $3,550 per square foot. South, between 49th and 42nd Street, asking rents average $1,029 per square foot (REBNY). Several factors have contributed to an increase in asking rents, with foreign investment being one of the major factors. In September 2014, Microsoft Corporation signed a lease for its first Manhattan flagship store, a concept five years in the making. The electronics giant is taking over space at 677 Fifth Avenue, between 53rd and 54th Streets, currently home to Fendi. The store will occupy 5,000 square feet between the ground and fourth floors, in addition to a basement used for storage, when it opens sometime in Ralph Lauren has opened its 35,000-square-foot flagship Polo store at 711 Fifth Avenue. The store, between 55th and 56th Streets, will feature an in-store restaurant similar to its Chicago and Paris flagship stores. The new Polo store will replace the Disney store that closed in December Following the upgrading of its store on lower Fifth Avenue, at 79 Fifth Avenue, Coach is looking for a new flagship on upper Fifth Avenue. The new store is part of a rebranding the company is going through. In June, it announced the closing of 70 North American locations. The Juicy Couture at 630 Fifth Avenue at 52nd Street closed in June and many large retailers are pursuing this prime site. In July, Vornado Realty Trust and Crown Acquisitions teamed up to purchase the 24,700 square feet of retail space plus air rights at the St. Regis Hotel and a neighboring townhouse at 2 East 55th Street for $700 million. That comes to $28,340 per square foot, a record high price. The St. Regis space is leased to Kering SA (KER) s Gucci division for its Bottega Veneta brand, and to LVMH Moet Hennessy Louis Vuitton SA (MC). SOHO Houston Street on the north to Canal Street on the south; Crosby Street on the east to Sixth Avenue on the west SoHo is one of the most desired and popular neighborhoods for retailers. Asking rents on Broadway are approaching $1,000 per square foot, and on a prime corner at Broadway and Spring Street, asking rents are as high as $1,200 per square foot. The side streets have also appreciated considerably in the past year, ranging between $300 and $700 per square foot; and further south, rents on Broome Street are $400 per square foot. For many retailers, particularly international tenants with large marketing budgets, opening a store in SoHo can be more about the image and branding than it is about making money. The escalated rents are pushing out some of the long-standing tenants, such as furniture stores, art galleries, and restaurants. Luxury retail brands are expanding in SoHo. For example: earlier in the year, Dior announced it would be opening a second location in SoHo at 103 Greene Street, scheduled to open in the fall of 2014; and Louis Vuitton has twice expanded its SoHo flagship at 116 Greene Street and is considering a third expansion to 122 Greene Street. Nike has reportedly signed a deal for a retail flagship building to be built-to-suit by the prolific developer Jeff Sutton. In May, H&M s sister label, & Other Stories, finalized a 10,915-square-foot lease for it its first U.S. location at 575 Broadway (142 Mercer Street). The space features 7,215 square feet of ground floor retail space with an additional 2,750 square feet in the lower level. The flagship location places the fashion brand, which offers women a wide range of shoes, bags, accessories, beauty, and ready-to-wear options, next to Prada, which holds a long-term lease at the adjacent space. The store is set to open by the end of the year. The U.S. opening of & Other Stories follows the opening of COS, H&M s high-end brand, which signed a lease for its first location for 4,500 square feet at 129 Spring Street in October After opening a couple of pop-up locations, Birchbox, the beauty sample delivery service, opened its first permanent

5 brick-and-mortar location. The online start-up took 4,200 square feet at 433 West Broadway. The store features 250 brands and a hair, makeup and nail studio downstairs. West Broadway is the only street in SoHo with two-way traffic. Reed Krakoff, former Coach creative director, took 2,000 square feet at 95 Greene Street. The asking rent was $550 per square foot. This is the retailer s second location, with the first at 831 Madison Avenue. Google has also been rumored to be opening a store on Greene Street, and Samsung extended their lease following their success as a pop-up. TIMES SQUARE According to REBNY s Spring 2014 report, asking rents on Broadway and Seventh Avenue, between 42nd and 47th Streets, average the second highest in the city, at $2,407 per square foot. In May, Fossil signed a new lease to keep its 3,241-squarefoot space in Times Square for 15 more years; while next door, Skagen, a subsidiary company, will open a new flagship store. Skagen s 1,585-square-foot store at 1585 Broadway will feature leather and jewelry lines. In June, SL Green announced plans to acquire 719 Seventh Avenue for $41.1 million. At the time, the property was occupied by a deli, but can accommodate a tenant up to 28,114 square feet in addition to offering highly coveted LED signage towers. A new Dos Caminos restaurant and revamped Blue Fin restaurant are coming to the W Hotel in Times Square as part of a master plan by James Gersten, CEO of BR Guest Hospitality. In August 2014, the firm announced that The Blue Fin, located at 1577 Broadway, will be split in half to 7,500 square feet, with Dos Caminos taking over 6,700 square feet. floor of the building. The deal had an asking rent of $65.00 per square foot. New to the market: A 76,000-square-foot retail component of the development 20 Times Square, located on Seventh Avenue between 47th and 48th Streets. The retail at 20 Times Square will be one component of a mixed-use development that will include the 452-guest room Times Square EDITION hotel and 40,000 square feet of flagship dining, entertainment and event space. The project is being developed by A Witkoff Group, Winthrop Realty Trust, New Valley LLC, Maefield Development, and Ian Schrager Company, the joint venture announced. Durst is planning a new 13,000-square-foot retail development at 136 West 44th Street, between Broadway and Avenue of the Americas. The space offers a build-to-suit opportunity and significant tenant signage. Lee & Associates is marketing the space. HERALD SQUARE Herald Square and the 34th Street corridor have always been home to a long list of national retail chains. For the past two years, the corridor has been transforming into one of the most productive shopping corridors in Manhattan. Demand has pushed the average asking rents along 34th Street between Fifth and Seventh Avenues up 22 percent to $883 per square foot from the spring of 2013 to the spring of In 2011, the neighborhood s anchor, Macy s, announced that the Herald Square flagship was going to receive a four-year, $400-million renovation to begin in the spring of In the fall of 2012, portions of the remodeled first and second Designer Rachel Roy is relocating from her current showroom at 1411 Broadway to 58 West 40th Street. As of September 2014, the company occupies 15,000 square feet for its office and showroom space on the mezzanine and second

6 floors were completed, including the world s largest women s shoe department store with 60,000 square feet of space. New multi-level luxury shops by Louis Vuitton (the department store s luxury anchor), GUCCI, Burberry, Longchamp, and a new fine-jewelry section opened at the same time. Macy s has also added its first fine-dining restaurant, Stella 34 Trattoria, on the sixth floor. The upgrade also includes a restoration of the building s façade and, when completed, the addition of 100,000 square feet of retail space, which will bring the store s total to 1.2 million square feet. In August 2013, H&M (Hennes & Mauritz AB), the Swedish fast-fashion clothing retailer, announced it signed a 25-year lease to take over the former Daffy s store at the Herald Center. The 63,000-square-foot space is the retailer s fourteenth store in Manhattan and its largest in the world. It will be H&M s third location on 34th Street. The new huge H&M is scheduled to open in Fall The store will occupy four floors of the 10-story, 250,000-square-foot office-retail, owned by JEMB, undergoing a multi-million dollar makeover. When the lease was signed, the building was owned by Malkin Properties; it is now part of Empire State Realty Trust, the investment trust that launched an IPO and REIT, with holdings that also include the Empire State Building. In June 2014, Urban Outfitters opened its largest store, unveiling a new lifestyle concept at 1333 Broadway. The company signed a 15-year lease for the 56,730-squarefoot space one year earlier, for a reported blended starting rate of $6.5 million per year. In addition to the typical items found at an Urban Outfitters, the location features a In September 2014, it was announced that Danny Myers fast-food chain Shake Shack will be opening at 1333 Broadway in the fall of To make room for the 3,265-square-foot Shake Shack, the two electronic stores and Pronto Pizza will move out in the spring. Other stores that serve the corridor include Victoria s Secret, which expanded and renovated in 2012, Forever 21, Uniqlo, the Gap, and Zara. In April 2014, Starwood Capital Group and Crown Acquisitions purchased 150 West 34th Street, between Broadway and Seventh Avenue, for $252 million, at $3,240 per square foot. Old Navy currently occupies the four-story, 77,800-square-foot building, and has a few more years left on its 20-year lease. The building has enough air rights to permit a new building of around 300,000 square feet. The purchase price works out to about $850 per buildable square foot. Plans for the site have not yet been announced, but the buyers have expressed faith in the area s booming retail. Slightly south of Herald Square, at 307 Fifth Avenue between 31st and 32nd Streets, Uncle Sam Fast Food, a Beijing based hamburger chain, will open its first U.S. location by the end of this year. The reported asking rent for the 5,600-square-foot location was approximately $200 per square foot. The chain, which hopes to create the perfect Chinese-American or American-Chinese burger plans to compete with Shake Shack. THE GOLD COAST: MADISON AVENUE, 57TH TO 72ND STS Madison Avenue, between 57th and 72nd Streets, continues to attract high-end women s clothing, jewelers and small boutiques. hair salon, an expanded makeup department, an in-store shop from eyewear company Tortoise & Blonde, a large record department with more than 800 vinyl titles curated by Amoeba Records, and a coffee shop powered by Intelligentsia Coffee. In January 2014, the global luxury fashion brand Qela, based in Doha, Qatar, signed a 6,230-square-foot lease at 680 Madison Avenue, part of a large retail space between 61st and 62nd Streets owned and under redevelopment by Thor Equities. Qela will occupy approximately 3,000 square feet on the ground floor and a little more than that on the second floor. Reported rents for the street-level space average more than $2,000 per square foot,

7 topping its nearby neighbor s rent. Qela is expected to open fall It will be the brand s first U.S. store. In April, German upscale fashion brand Rena Lange, owned by parent company Rudigier & Partner, signed a lease for its first flagship U.S. store. The company inked a lease for 2,550 square feet to occupy 1,200 square feet on the ground floor, 850 square feet on the second floor, and 500 square feet in the basement of the historic landmark building 791 Madison Avenue at the southeast corner of 67th Street. Philipp Plein also picked Madison Avenue for his first New York City presence. The men s, women s and children s wear designer signed a 2,000-square-foot lease at 625 Madison Avenue, between 58th and 59th Streets. According to REBNY s spring report, asking rents have increased 24 percent since the spring of Asking rents for inline space range between $1,200 and $1,300, with corner stores fetching approximately $2,000 per square foot. The low vacancy keeps the area in high demand, particularly on the side streets where there is tight availability and the space can go for a rent as low as $100 to $200 to a gallery. 85th Streets, for its first uptown location. The ground floor space totals 5,635 square feet. The Third Avenue corridor on the Upper East Side in the 70 s is starting to transform. The strong residential base is driving more local and amenity-type tenants to the neighborhood. Retailers geared to service a neighborhood, compared to high-end destination-type tenants, are opening. French Bakery Maison Kayser signed a 15-year 5,400-square-foot lease at 1535 Third Avenue, at 87th Street, for its second Upper East Side location. The asking rent was $250 per square foot. Teavana Café, the tea concept owned by Starbucks, has signed a 1,954-square-foot long-term lease at Third Avenue, at 63rd Street. The asking rent was $255 per square foot. This marks the brand s second location on the Upper East Side, the first at 1142 Madison Avenue, opened in October UPPER EAST SIDE: 72ND TO 86TH STREETS, MADISON TO THIRD AVENUES Apple has reportedly signed a lease at 940 Madison Avenue at 74th Street for its Upper East Side outpost. The electronics giant would occupy the historic 12,560-square-foot U.S. Mortgage & Trust Co. building as its sixth location in the city. The rising rents on the lower part of Madison Avenue are pushing tenants northward on Madison Avenue, between 79th and 86th Streets. Rents along the corridor average $300 per square foot, almost 80 percent less than the southern corridor. Luxury chains like James Perse at 1128 Madison Avenue and Jonathan Adler at 1097 Madison Avenue have opened stores. More recently, J. Crew spinoff Madewell signed a lease at 1144 Madison Avenue, between East 84th and East HARLEM 1 25th Street and south is the more developed of the Harlem corridors. The West 125th Street corridor, near the upcoming Whole Foods, is the most prestigious area in Harlem. Rents along 125th and Fifth Avenue to the far west (from Lenox to the Magic Johnson complex) range between $85.00 per square foot to $ per square foot. The neighborhood is now attracting more national and regional tenants. Baby clothing store Carter s chose Harlem to house its first Manhattan location. The chain signed a 4,211-squarefoot lease at 215 West 125th Street, between Frederick Douglas and Adam Clayton Powell Boulevards. The asking rent was $ per square foot. The transaction was completed by Lee & Associates.

8 North of 125th Street and west of Adam Clayton Powell Boulevard, asking rents average $50 per square foot. The tenant mix is still predominantly neighborhood-type retail, with 95 percent being mom-and-pop -style shops, and the other 5 percent chains. Bed, Bath & Beyond and WeWork have leased the full, 30,000-square-foot floors at the new 5 W. 125th Street project. Richie Notar, restaurateur and co-founder of Nobu, is planning to open a jazz lounge at the site of the former Lenox Lounge, at 288 Lenox Avenue. Notar is also working with New Orleans baker Dwight Henry on a project in the adjacent space, called Mr. Henry s. In East Harlem, Extell Development purchased a 68,676-square-foot retail property in April that is home to a Pathmark, from seller East Harlem Abyssinian Triangle Limited Partnership. The site, at East 125th Street, also includes 306,490 square feet of residential air rights, and 370,853 total buildable square feet with inclusionary housing bonuses. The site was purchased for $39 million, and Extell has not announced plans for it yet. DOWNTOWN In response to the growing residential population and booming office market, the Downtown retail market is transforming. Westfield Group s $1.4 billion project at the World Trade Center is evolving. Upon completion, the project will total 365,000 square feet of retail space, which is built around the site s new transportation hub. As of June, Westfield reported that 80 percent of the 150 stores that will occupy the retail complex have signed leases or have leases out for signing. Turnbull & Asser, the British men s shirt maker, and designershoe brand Stuart Weitzman, have both committed to space in the transportation hub s central corridor. Michael Kors, Kate Spade, MAC, Tom Ford, Hugo Boss, and Apple have all signed or are close to finalizing leases at the complex. In April, Italian food and wine marketplace Eataly committed to space at 4 World Trade Center. Asking rents for the space range between $350 and $500 per square foot. Owner Brookfield Properties has signed a lease with Hudson s Bay Co., the owner of Saks, Saks OFF5th, and Lord & Taylor. The deal includes a new 85,000-squarefoot Saks Fifth Avenue to open in the spring of 2016 at the newly renovated Brookfield Place; a 55,000-square-foot Saks OFF 5th at One Liberty Plaza to open in the fall of 2017; and 400,000 square feet in office space at 225 Liberty Street and 250 Vesey Street. Other tenants to agree to space at Brookfield Place recently were J.Crew (6,859 square feet) and Paul Smith (2,555 square feet). Gap signed an 18,900-square-foot lease at 170 Broadway at the upcoming Marriot Residence Inn. The store features a 6,500-square-foot ground floor; 5,400-square-foot lower level; and 7,000-square-foot second floor. The reported rent for the ground floor was $600 per square foot. There are some approachable clothing retailers entering the Financial District, too. In January 2014, Zara, the Spanish clothing chain, signed a 15-year lease for 30,000 square feet at 222 Broadway. The two-story wraparound store will occupy space on the ground and second floors, and lower levels. The expected opening is by early Asking retail rents for the Zara space at 222 Broadway were $500 per square foot for the ground floor, $125 per square foot for the second floor, and $50 per square foot for the basement. Gyms, which are expanding throughout the city, took three new spaces Downtown. SoulCycle is opening its first location in the Financial District. In April, the cycling phenomenon signed a 5,000-square-foot lease at 2 Gold Street. New Jersey-based Retro Fitness signed a 17,000-square-foot lease at 1 New York Plaza. This is the gym s first Manhattan location. In August, Blink Fitness, an affordable division of Equinox, signed a lease at 111 Nassau Street. The gym will occupy 19,322 square feet on the three bottom floors of the apartment complex. Asking rents for the space were $ per square foot on the ground floor and $40.00 per square foot for the upper floors.

9 NOHO Mercer Street on the west, The Bowery on the east, and East Ninth Street on the north; Houston to the South and NOLITA North by Houston Street, on the east by the Bowery, on the south roughly by Broome Street, and on the west by Lafayette Street Tenants that are being priced out of SoHo are looking towards NoHo and NoLiTa. The asking rents drop dramatically once you cross the north side of Houston, ranging between $195 and $250 per square foot, depending on the location. A prime example of this is clothing brand Original Penguin, which moved its flagship location from 103 Greene Street to 654 Broadway. Iron Chef Bobby Flay chose NoHo as the home of his latest restaurant, the Mediterranean-themed Gato, which opened at 324 Lafayette Street in March. Flight Club, a consignment retailer of mint condition vintage and limited edition sneakers and street wear, expanded its presence on Broadway, three years after opening at 812 Broadway. The company took 4,300 square feet on the ground and second floors with an additional 4,000 square feet of storage space at 814 Broadway, mirroring its existing footprint. The asking rent was $225 per square foot. Lee & Associates represented the tenant. Barry s Bootcamp signed a lease for 8,000 square feet at 419 Lafayette Street for its biggest location. The gym chose the location because of its close proximity to New York University and the neighborhood s strong residential growth over the past five years. The reported rent for the space was $100 per square foot on the 6,200-square-foot ground floor and a 1,800 square-foot basement. The neighborhood is also attractive to smaller tenants. The smaller floorplates, averaging about 1,000 square feet, offer a boutique feeling and are attractive to jewelers, lotion shops, and novelty stores with smaller-sized items that do not need large floorplates. Unique restaurants and bars with a twist like this area, as well, and particularly the Bowery. UPPER WEST SIDE 59th Street to 110th Street, Central Park West to the Hudson River The tight vacancy and availability on the Upper West Side has kept leasing activity to a minimum over the past several months, and the demand has pushed asking rents up. The three avenues running through the Upper West Side Broadway, Columbus, and Amsterdam are each traditionally composed of a different tenant mix. Broadway is home to the big-box retailers; Columbus Avenue, which typically has 2,500-square-foot floorplates, is known for its boutiques; and Amsterdam Avenue is the destination for food establishments ranging from smaller coffee and juice shops to cafes with outdoor dining. Asking rents on the Upper West Side have reached and surpassed pre-recession levels. Asking rents for space on Broadway in the 70 s can be $400 per square foot. The corridor on Columbus Avenue between 65th and 72nd Streets is very active and has pushed rents up to $450 and $500 per square foot. Today s asking rents may push some of the existing tenants with current rents of $125 out when it comes time to renew. A retail development is taking shape in the 59th Street and Columbus Street subway station. In November of 2013, the Metropolitan Transit Authority chose Columbus Street Development LLC, led by developer Susan Fine, to build the 27,000-square-foot complex called TurnStyle. The project, scheduled to complete in early 2015, is a $6.5 million investment for the developer. The

10 complex includes 34 stores ranging in size from 153 to 621 square feet, and is divided into three sections: Grab N Go, Dry Goods, and Food Market. The asking rent is approximately $400 per square foot. Notable leases: The Coach in Columbus Circle is one of the brand s twelve existing locations that are undergoing a makeover. Also on Amsterdam Avenue, Vanguard Wine Bar at 189 Amsterdam Avenue, for 1,000 square feet. MEATPACKING DISTRICT The Meatpacking District is a destination spot and, while it lacks seven-day-a-week traffic, the neighborhood sites do generate crowds, drawing New York City residents and tourists alike. Neighborhood attractions include the High Line, lots of dining options, and popular hotels like The Standard and the Gansevoort, with the restaurants and bars they house. The new Whitney Museum building underway at Washington and Gansevoort Streets is scheduled to open to the public in the spring of 2015, which will increase traffic to the neighborhood even more. The 200,000-square-foot space will include approximately 50,000 square feet of indoor galleries; 13,000 square feet of outdoor exhibition space and terraces facing the High Line; and an 18,000-square-foot gallery for special exhibits. A retail shop will be located on the ground floor along with a restaurant, and a café on the top floor will be operated by Danny Meyer and the Union Square Hospitality Group. The neighborhood has benefitted from the growth of the TAMI (technology, advertising, media, and information) industry in New York, with companies in this sector leasing up office space in Midtown South. Most recently, in July 2014, electronics giant Samsung announced it signed a lease to occupy the entire 55,000-square-foot building at 837 Washington Street. According to reports, the electronics giant will pay about $500 a square foot for the ground floor and slightly more than $120 a square foot in rent for the floors above. The new office space will house its brand marketing team and showcase business mobile products. For a little over a decade, from the late 1990 s to slightly past 2010, the Meatpacking District was one of the most desired locations for very high-end, high-priced couture designers looking for a neighborhood with a little bit of edge. However, some of the luxury brands, like Alexander McQueen, Stella McCartney, and Yigal Azrouel, have since closed their stores in the neighborhood, finding that sales did not justify rents. Christian Louboutin was one of the last high-end retailers to open in the Meatpacking District. In August 2012, the French designer opened his first New York City men s shoe shop, totaling 1,085 square feet at 808 Washington Street, where the reported asking rent was $250 to $300 per square foot. The women s shoe shop opened at 59 Horatio Street back in Over the past five years, more mainstream retailers now line the streets. Levi s opened a 4,500-square-foot store at 414 West 14th Street back in A little over two years later, in August 2012, Patagonia signed its third New York City lease in the same building, in a space that had been vacant since the building was redeveloped in The 7,521 square-foot space is composed of 3,741 square feet on the ground floor and 3,780 square feet on the lower level. The reported asking rents for both the spaces were between $375 and $400 per square foot. In July 2013, online eyewear retailer Warby Parker opened its second brick and mortar location in New York City at 819 Washington Street. The location had been a pop-up for the retailer before becoming permanent. In September 2014, Porsche leased a pop-up store at 446 West 14th Street for its 50th Anniversary of the 911 coupe and to debut a new car. The 4,400-square-foot ground-floor store will be open from September 15 to October 16. The reported asking rent for the space was $ per square foot. In October, high-end homefurnishings retailer Restoration Hardware Holdings Inc. signed a 15 year lease at 9-19 Ninth Avenue. According to reports, the company is paying approximately $250 million over the term of the lease to take the building. The building s owners, a joint venture of Aurora Capital and William Gottlieb Real Estate, are renovating and expanding the two-story structure

11 by an additional three floors, creating about 70,000 square feet of space. Asking rents in the neighborhood have dropped over the past year, from spring 2013 to spring 2014, down five percent from $356 to $339 per square foot on 14th Street between Ninth and Tenth Avenues. UNION SQUARE AND FLATIRON Union Square offers the perfect blend of residential, commercial and public space. The neighborhood enjoys seven-day-a-week traffic. In 2013, the 14th Street Union Square train station was ranked the fourth most traveled in all of New York City, servicing 35 million subway riders. Union Square has one of the city s largest clusters for big box retailers. In 2010, Nordstrom Rack opened at 60 E. 14th Street. Two years ago, Burlington Coat Factory opened in 4 Union Square, in the place where Filene s Basement closed. The location became the store s flagship, occupying 92,000 square feet on three floors. Other stores at the complex include a Whole Foods, which opened in 2005, DSW, and Forever 21. In July 2014, Reebok FitHub opened at 1 Union Square West in a space formerly occupied by Diesel. The Hub will be split between 4,800 square feet of ground-floor retail space and a 6,800-square-foot gym on the lower level, for a total of 11,600 square feet. Planet Fitness will also be coming to the area. The gym signed a 16,000-square-foot lease at 22 E. 14th Street to include 1,000 square feet on the ground floor and 15,000 square feet on the lower level. Lower Fifth Avenue has traditionally been home to furniture tenants, with ABC Carpet & Home as one of the anchor tenants in the neighborhood. Reasonably priced luxury retailers offer shopping options, with stores that include Club Monaco, Anthropologie and Zara. HUDSON YARDS transformation is underway on the far West Side of A Manhattan, from Ninth Avenue to the Hudson River, and from 34th to 30th Streets. Developers including the Related Companies, Brookfield Properties, The Moinian Group, and Tishman Speyer have projects under development that will add millions of square feet of office, residential and retail space to create a vibrant live-work community in Manhattan. The Related Companies 17 million-square-foot master planned community, Hudson Yards, recently secured an anchor tenant for The Shops at Hudson Yards, the retail pavilion at the project. Following months of speculation, in September it was announced Neiman Marcus is opening its first New York City location at the development. The 250,000-square-foot store will occupy the fifth through seventh floors of the 750,000-square-foot shopping pavilion. A little over a year earlier, in August of 2013, it was announced that Fairway Market will anchor the food market at Hudson Yards. The 45,875-square-foot store will occupy the ground floor at 10 Hudson Yards, a 1.7-millionsquare-foot office tower scheduled to open in the fall of Coach, L Oreal and SAP all have office leases signed at the skyscraper. *Rental rates provided by REBNY retail report and Lee & Associates NYC research.

12 Lee & Associates NYC 600 Madison Avenue, Third Floor New York, NY Peter Braus Managing Principal James Wacht President Lesley Kamnitzer Research Manager Caroline J. Kaplan Marketing Manager