BROOKLYN –There is a blurring of lines among the traditional food groups. Much has been written about the merging of retail and industrial, but less so about office and hospitality or office and retail.
Nevertheless, those changes are taking place, as office tenants strive for greater amenities (think of finer hotels) and as they borrow “experience” from the retail sector to describe a day at the office. Justin Myers, managing director and principal of the New York office of Lee & Associates NYC, sees the changes coming and says that 61 North 11th Street is a prime example of how those blurred lines play out on the broker side.
“We’re seeing greater collaboration between retail and office brokers,” he says, “especially in a mixed-use asset like 61 North 11th, a 40,000-plus square-foot asset in the smoking hot Williamsburg section of Brooklyn. The white-box renovation is one of a number of assets that are changing the landscape in Williamsburg and attracting the new-age TAMI tenants at rents that are comparable to Manhattan’s NoHo and NoMad districts.”
Increasingly, then, states Myers, it is essential that brokers of both stripes—office and retail—work hand-in-hand in marketing a building, not only to serve the tenant mix but also to do the most justice to the building’s potential. For Lee that means the office team of Myers and Corey Horowitz and a retail team that consists of Garry Steinberg and Jaime Schultz.
But what is driving this new age of commercial leasing? You already know one of the answers: On the retail side, says Myers, consumer habits are changing, and with the growth of internet sales, “brick-and-mortar walk-in customers aren’t spending as much in the front door as much as online after browsing showrooms.” As a result, retail rents are dropping and more retailers are finding workable space in second- and third-floor locations, the traditional home of office tenants.
Meanwhile, office tenants are finding the lower rents of what were once retail spaces very appealing, and are moving certain operations to the ground floor. According to Myers, white-collar workers ply their trade without assigned seating. As a result, “informal meeting areas and amenities become very important, such as kitchens and lounge areas,” that inspire both socialization and collaboration. Ground-floor spaces, formerly home to traditional retailers, are perfect for that.
And he adds that it’s a game everyone can play, as landlords are getting into the act by using some of that same ground-floor space for tenant-drawing amenities such as fitness centers and cafes. This is especially true in this particular market subsector, which increasingly is playing home to TAMI tenants who are looking for that flexibility, that collaboration and those amenities in their office space as well as in their retail options.
It is a sign of the times, concludes Myers, and both retail and office brokers can join forces to tap into the trend.