NEW YORK CITY-Attention real estate shoppers: Downtown retail is the purchase of the moment.
“Retail is the product that everyone wants to own,” says Michael Cleeman, VP, Cohen Real Estate. “We’re seeing an increase in transactions as people sell-off retail to finance the upstairs portion of their buildings, or just separating the two—especially in older buildings—and just selling the retail. A lot more people are doing that because there’s so much demand now.”
The spike in buyer interest stems from several factors. “Retail sales numbers were up 4.7% in late 2012, even in the face of the fiscal cliff, so people are clearly going out and spending,” Cleeman posits. “Retailers from around the globe are trying to get a piece of the incredible amount of disposable income locally and from the visitors that come to New York from around the world—there were 52 million last year, according to a recent report from the city’s tourism trackers—with money in their pockets to spend.
“And a lot of Canadians are coming,” he continues, “because their dollar is stronger than the US dollar [so they get more for their money].” Cleeman, along with another broker, pointed to some Downtown markets in particular as the place on which attention is laser-focused at the moment.
In December, Cleeman brokered the sale of a retail condominium at 350 Bleeker St. and the previous month he closed three retail condo deals on Bleeker and on the Bowery. Meanwhile, Adelaide Polsinelli, senior director at Eastern Consolidated and an industry power player on Real Estate Forum’s Women of Influence list, also recently closed deals in the city’s lower neighborhoods: one in Soho and another in Tribeca.
At year-end, Cleeman represented buyer American Realty Capital New York Recovery REIT Inc. in its $10.9 million purchase of 350 Bleeker, at the northwest corner of West 10th Street. The property’s 14,510 square feet of retail and garage space were acquired in a long-term master lease from an affiliate of Time Equities. The seller was represented by Vera Thomas, senior managing director of Cohen Real Estate.
In November, Cleeman brokered the sale of the retail condominium at 1 Bleecker Street, along with 324 Bowery and 3 Bleecker St., for $13.4 million to another private equity firm. The property was purchased by an affiliate of RWN Real Estate Partners LLC, a New York middle market real estate private equity platform, in partnership with Silverstone Property Group, LLC, a privately held real estate investment and management company
Polsinelli in early January represented both the seller and buyer of 119 Chambers St.—along with Eastern’s associate director Robert Khodadadian—for $2.5 million. That deal closed on the heels of Polsinelli brokering the sale of 72-76 Greene St., in late December, for $41.5 million. Eastern made the deal on behalf of BSJ Soho, an affiliate of the apparel company Bear USA. The buyer was L3 Capital.
There’s no shortage of incentives for retail buyers to shop downtown, says Cleeman. “We are seeing a lot of high-end retailers look for secondary stores in the downtown market to take advantage of the younger, hip clientele that doesn’t venture up to Madison Avenue, driving up rents. The Bowery, for example, is so hot and it used to be downtrodden.”
He adds, “Buyers are acquiring properties for the retail opportunities in the downtown market to take advantage of increasing retail rents as their older retail spaces turn over, giving them great upside potential to a lot of these transactions.”
The Downtown desireability is so significant that it’s adding new streets to the list of significant retail boulevards, says Polsinelli.
“Several side streeets have enough strength and pedestrian traffic that they’ve become secondary avenues,” she says. “Green Street in Soho is now the next main drag after Broadway because as the avenues get more expensive, the sidestreets benefit from spillover. Broadway was in the $500 per-square foot range and Green was in the $200; now it’s more like Broadway is in the $600-$700 range and Green is $300 to $350. You have to bow down to Prince and Spring, which are a higher value than Broadway.”
Other parts of the city’s lower region are seeing a transformation too, she adds. “The Meatpacking District has streets that are like avenues now: 14th, Gansevoort, but also Little West 12th, and others. Everything there has become significant. And in the Village, I’d have to call Bleecker Street an avenue. It’s gained the right to be called that.”