“There’s a lot going on Downtown that shows it is stronger and better today than it ever was,” said Douglas Elliman’s Faith Hope Consolo, when she reflected on the 9/11 anniversary last month. “I was very cautious in watching what would happen with all the new buildings and the changes, but it has really matured and I have a lot of confidence in Downtown.”
Average retail rents will only rise, with ground-floor rents in Lower Manhattan (Broadway, Wall Street and Fulton Street) already up 29.4 percent year-after-year to $277 per square foot, behind only the Flatiron District, the Meatpacking District and Soho, according to third-quarter data from Cushman & Wakefield (CWK).
“Clearly new buildings with strong, high-end retail, combined with the completion of the memorial and the museum, will attract a lot of additional foot traffic,” said Ken McCarthy, chief economist at Cushman & Wakefield, in an interview last month. “And the highest-priced corridors in Manhattan are those that have the most foot traffic.”
Brookfield (BN) and most likely Westfield will show that high-end retail has a place downtown, as the higher-end names mix in with kids clothing and home-furnishing stores that were absent a decade ago, as well as old favorites such as Century 21 and J&R Music and Computer World.
There is hope that the wealth will spread, and the Broadway corridor, for example, is already shining, with notable deals in the third quarter Downtown including Urban Outfitters’ 20,900 square feet at 180 Broadway, City Sports’ 10,000 square feet at 50 Broadway and TD Ameritrade’s nearly 10,000-square-foot deal at 100 Broadway.
As of spring 2013, average retail rents along the Lower Broadway corridor were up more than two-and-a-half times the 2001 rents, and up 26 percent from 2011, according to data from the Real Estate Board of New York.
Meanwhile, “The upper section of Broadway is really where you are seeing premium asking rents and you will see retailers who want to be Downtown, who simply can’t fit at Brookfield or the World Trade Center, looking there,” Mr. Schmerzler said. “The foot traffic on Broadway is spectacular.”
Still, Mr. Schmerzler and others doubt that Broadway will achieve quite the level of luxury retail, in terms of quality and quantity, as that seen at Brookfield Place. And Wall Street, despite select high-end retail – Tiffany & Co., Hermes, BMW, Tourbillon – is still viewed by some as the high-end corridor that never was.
If you walk along prime Fifth Avenue, the ground floor of its elite jewelry shops is often reserved for the most expensive items, while the second floor houses the cheaper items, said Joanne Podell, a vice chairman at Cushman & Wakefield, noting that the opposite is true at Tiffany’s on Wall Street.
“That speaks to who is walking in,” said Ms. Podell, who is marketing space at 23 Wall Street.
But, she added, there is extremely low availability and high demand Downtown, meaning that change will come, even if it’s a few years off. And others, like Mr. Hogan, cling to the idea that the emergence of luxury retail in clusters will more quickly spread its wealth.
“Retailers like company, and the tide is going to lift all the ships,” he said.
