How does that trend bode for retail space? Wouldn’t you imagine that with fewer retailers who are smaller in size, it’s going to create permanent vacancy and also fewer deals for brokers to do?
Long term, there are absolutely going to be fewer deals and fewer retailers and very few projects coming online. That’s another reason there’s a renewed focus on New York. There’s all this opportunity here. The volume and New York traffic are terrific.
How do retailers differentiate between New York and the rest of the country when on balance they’re shrinking but perhaps also interested in expanding here?
They do differentiate. And New York City is one of the few places where you have positive absorption right now.
What about the West Side rail yards and the World Trade Center site, where large retail projects are envisioned and in process—how will they fare?
Retail in New York is very much transit-based. If the train is finished on the West Side by the time the rail yards are developed, which appears on schedule, I think they’re fine. For the West Side, like any new retail market, it takes time for customers to discover it. Downtown, though, is a proven shopping destination that is way under-retailed and there’s no question that will be successful. Westfield’s deal person, Sandi Danick, was brought on to lease that project up. The plans they have are good, it’s going to be phenomenal. You’re still a ways off from that being available, 24 to 30 months. I think most of these guys do strategic leasing. They’ll maybe do a larger-format store to set the tone for the rest of the space. I don’t know what the approach will be that they take, in terms of whether they want to do a food or a department store. But Sandi is pretty approachable and she’ll get deals done. Brookfield at the World Financial Center is also building new retail space and they’re making the same decisions. New York is unique in that you can use a food component to brand a retail space, which is not traditional elsewhere in the country. Look at the Time Warner Center, where they did four or five destination restaurants that everyone wants to go to. The retail success there owes a lot to that component.
You represent large retailers like Whole Foods and Dick’s Sporting Goods. Have you spoken to Brookfield or the Port Authority about bringing any of your tenants to those projects Downtown?
We have talked about it with Brookfield but, honestly, it is nothing too serious right now.
ICSC is coming up. How is that conference regarded in the industry and what are you doing to prepare for it?
We are almost fully booked for the company. We send out about 100 professionals. It’s a convention that you can go to and walk around, meet folks and talk to them, but it’s really appointment driven. There are people going out to show their projects and their space and there’s dealmaking and pitching. You don’t just walk up to people and do that stuff, you usually have to book those appointments weeks or months in advance. Every year the planning for that has been getting earlier and earlier. We’re basically fully booked for the two and a half days of the show in two-and-half-hour increments, 8:30 to 5:00. And then there’s the entertaining and social aspect of it. We do a client function. ICSC has about 35,000 attendees. At the height of the market in 2007 it was about 51,000. That’s our whole industry. It’s fairly small and for the guys active in our markets and the major markets in the country, it’s even smaller. So the social part of it all is very important. It’s very much relationship-oriented.
Are you discussing any particular business this year?
We’re in the market with a one million-square-foot project that we’re pitching. We have two assets, one that will be about $19 million and another that’s around $26 million in Manhattan that are for sale that we’re marketing. One is a retail condo at Second Avenue and 23rd Street that is net leased to Duane Reade, and the other is a retail asset in Chinatown that is net leased to East West Bank. People who are pitching new deals are about 40 percent of it and 30 percent is trying to finish deals that we’re active with. Then there’s business development. We have at least four meetings with guys who are considering coming to New York. It’s interesting—people who aren’t in our business have this perception of things getting crazy in Vegas, and there is a time and place to have fun at ICSC, but there is a lot of business too. You’re spending thousands of dollars entertaining people and you want to get a yield on that.
Lately there has been seemingly a lot of movement in the brokerage services industry in the city. Has that been felt on the retail side of the business?
There is a lot less movement than you think. The only thing that has happened were that a few brokers left Newmark.
It was recently reported that you were in the market with Dick’s Sporting Good at 3 Columbus. Is that deal progressing, and how big will it be?
I really can’t talk about it now.
What other large deals are you working on?
We’re active with Dick’s in the entire metro New York area. Whole Foods is active. We’re active with Party City. We’re going to announce a few more. I think there’s a reason for each one of them. I mean it seems like all the guys in the pet supply category are active, in fast fashion, limited service fitness like Planet Fitness and Crunch. You’ll see them do some deals. There’s a lot of activity in the walk-in medical center tenants, which is a new trend.
Is Nordstrom still out in the market looking for space?
I’m aware there’s still a requirement to do a store. They’re looking at stuff, but where they’re at I’m not sure.
What do you think of the living-wage legislation passed by the City Council?
There’s a difference between my own personal ideology and what I think from a business perspective. Look, it’s a great thing to do from the standpoint that everyone should be able to earn a living and I support that. But also something that we all need to be aware of is that anything that imposes operating restrictions on a retailer, and I’m privy to their thinking and decisionmaking, and you’re going to have problems. As soon as you bring in issues that are different from anywhere else that they operate, and you create a significant problem. It will kill a deal in my opinion. That’s not an opinion on whether it’s right or wrong. It’s just a fact. You’re now getting into the way that they operate their stores and it creates a huge issue.
11 Times Square was a much-heralded retail space at the edge of one of the city’s busiest retail neighborhoods. What is happening there?
It’s a great space with a beautiful design and a strong location. They have had transactions there but nothing has closed. I don’t have anything to do with that building directly so it wouldn’t be right for me to comment beyond that.
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