Manhattan—From Storefronts to Office Space
A couple of weeks ago, I wrote about retail sales expectations for Early Bird Thursday through Black Friday and on to Cyber Monday.
If you missed it, you can find the column here: https://commercialobserver.com/2013/11/retailing-it-around-manhattan/. Now, it’s early December, and the preliminary numbers are in. It wasn’t exactly “all that” regarding brick-and-mortar Black Friday sales, but Cyber Monday (as well as online sales throughout Thanksgiving weekend) pumped things up.
What I really wanted to speak to this week, however, was leasing activity and not storefront leasing activity, though we do love our high streets in Manhattan. No, I thought I would focus on office leasing by consumer products (retail/wholesale) companies with operations here in New York and how important this industry really is, though it is often usurped by the chatter about TMT (tech/media/telecom) and even financial services.
Total leasing activity for all industries in Manhattan through November of this year stands at 29.1 million square feet, already surpassing last year’s total of 27.5 million square feet, according to Newmark Grubb Knight Frank’s proprietary data. Of this, 3.1 million square feet, or 10.6 percent, was within the consumer products industry—quite a significant volume. Though 92 of the 105 deals completed thus far in 2013 comprised 25,000 square feet or less, the large transactions have garnered much of the attention. These include Macy’s, which renewed its 646,000 square feet of space at 11 Penn Plaza, and VF Sportswear, which renewed 100,000 square feet at 40 West 57th Street.
Other leases included everything from J. Crew at 770 Broadway to Under Armour at 601 West 26th Street to H&M at 110 Fifth Avenue. A company has to have office workers to manage those retail outlets. Though a number of these consumer products companies are more or less situated around the historic garment center area of Manhattan, they’ve spread their wings across other parts of the city, as well.
A couple of early commitments also stand out for 2013—both in the Related Companies’ Hudson Yards South Tower (now with the “sexy” address of 501 West 30th Street—why do I think that won’t last?). L’Oreal has preleased 402,000 square feet and is relocating from 575 Fifth Avenue, and Coach purchased 750,000 square feet and will consolidate from several spots in the neighborhood with its HQ now at the company-owned 516 West 34th Street (Related is purchasing this building, and it remains to be seen what exactly will happen to it—is that the sound of a bulldozer I hear?).
I would be remiss not to mention the hybrid Internet firms (although one could make the argument that all of the companies mentioned above now fall into this category). Though still smaller on average than a Macy’s or a Saks Fifth Avenue or a Lord & Taylor, they are growing like wildfire. A standout is Warby Parker, the (primarily) online eyeglass operation, which started out quite small here and has just relocated to 54,000 square feet (with an option for another 21,000 square feet) at 161 Avenue of the Americas. There are plenty of small start-ups as well, including one creating men’s accessories called Well That’s Just Dandy (full disclosure: It’s a friend’s company). Finally, there are the consumer products companies, ranging from Polo Ralph Lauren to Amazon, that are currently out in the market searching for space.
Obviously, this segment of the market, whether retail or wholesale or somewhere in between, means a heck of a lot to New York City. No, it’s not as concentrated in the Penn/Garment submarket as it used to be, and most of the actual manufacturing no longer takes place here (save for that $200 pair of jeans made in Brooklyn along with a few boutique items). But the greater consumer products industry has, is, and always will be a huge part of what makes New York New York.