Billion-Dollar Retail Listing
When the renderings become realities and the cranes give way to condos, the new towers along 57th Street will give rise to a soaring enclave of extreme wealth perhaps unlike any in the world. The tallest building along what some now call Billionaires’ Row, Extell Development’s Nordstrom Tower, will climb to 1,775 feet.
But how is the coming influx of super-rich tenants affecting the ground level—that is, the bustling corridor’s retail scene?
“It’s sort of two-fold because there’s an awareness that the market is going to skyrocket,” said Kelly Gedinsky, a broker at Winick Realty Group who is currently negotiating retail leases at three addresses along the corridor. “There’s almost [a sense that there’s] today’s price and then there’s tomorrow’s price. We’re all looking into our crystal balls, but is it going to change from $700-a-foot to $1,200-a-foot? We can’t say yet.”
The biggest driver of rising rents and a shift toward higher-end retail along the corridor will be Nordstrom’s flagship store at 225 West 57th Street at the base of the Nordstrom Tower. Ground broke on the cantilevered structure earlier this year.
Ms. Gedinsky, who lives on 56th Street, did not discuss rents on either of the deals she’s working on in the area but noted that she expects prospective tenants near the future Nordstrom Tower to accept higher rents now that the new department store, hotel and residential project is under construction. “It feels more real for people now that it’s one step closer to completion,” she said.
One of Ms. Gedinsky’s current listings along West 57th Street is a 39,700-square-foot, three-floor retail space at SL Green’s 3 Columbus Circle. Ms. Gedinsky told Commerical Observer that the space, last occupied by Daffy’s, is in negotiations with a tenant she described as “fast fashion.” It sits directly across from 1780 Broadway, which adjoins the future site of the Nordstrom Tower.
As The New York Observer first reported, 1780 Broadway will keep its vintage facade through an agreement with the Landmarks Preservation Commission. The land now occupied by the 105-year-old building, once the home of the B.F. Goodrich Company, will become part of the footprint of Nordstrom’s new flagship store.
A source with knowledge of the area’s retail landscape told Commercial Observer that the adjoining two buildings, 1776 Broadway and 5 Columbus Circle, will also include retail space for the new Nordstrom store. Together the three buildings form a full-block frontage on the east side of Broadway between 57th and 58th Streets and adjoin the future site of the Extell mega-tower, just to the east. Representatives for Extell did not return repeated requests for comment for this story.
Faith Hope Consolo, a retail broker at Douglas Elliman, agreed that the tower would be a game-changer, but painted a more nuanced picture, noting that the transformation of the area’s retail scene has been characterized by several nodal points, of which the opening of Nordstrom will be just one. “The development—and you can’t discount this—of the Time Warner Center [at Columbus Circle, which opened in 2003], was so strong that it’s kind of been the anchor and it led to a lot of what we’re seeing now,” she said.
Ms. Consolo closely follows developments along the crosstown corridor from her office at 57th Street and Madison Avenue. She’s seen incremental but steady change along the stretch, even in areas where it has been slow to come. “Between Broadway and Seventh Avenue there’s discount stores but right now not a lot else,” Ms. Consolo said. “Will new tenants on that stretch be super-luxury? Probably not. But if you’re gonna get a wine store, for example, it’ll be a high-end wine store.”
According to a spokesperson for the firm, Thor Equities recently closed on the acquisition of a four-story, 21,837-square-foot landmarked building at 220 West 57th Street, between Broadway and Seventh Avenue. The building, which sits directly across from the future Nordstrom location, currently houses an art supply store. The property went for an undisclosed sum after a deal for Safka Holdings to acquire it, reportedly for $65 million, fell through. Thor declined to comment on any future plans for the property.
Farther east, between Fifth and Park Avenues, retail rents along the corridor run in the ballpark of $1,000 per foot, Ms. Consolo said.
The coming addition of 75,000 square-feet of retail space in CIM and Macklowe Properties’ 432 Park Avenue will further bolster the high-end character of retail on 57th Street east of Fifth Avenue. Macklowe Properties reportedly purchased the retail space from CIM earlier this summer at a price that works out to about $6,000 per foot.
Ms. Consolo noted that on the block between Fifth and Avenue of the Americas, rents drop by about half compared to just one block east, except in buildings very close to Fifth Avenue.
On that stretch, at 3 West 57th Street, Ms. Gedinsky told Commercial Observer she is working on behalf of the landlord, Kamran Hakim, on a one-year lease for a “very high-end fashion” tenant to fill 11,100 square feet of retail space. Several short-term leases in that space have been inked for as little as a week to as long as a year in the three years Ms. Gedinsky has been showing it. The tenants on those deals have included top-flight retailers like Bulgari, Coach and Ferragamo.
Luxury clothing stores have long coalesced on and around 57th Street below Central Park. Now, tenants catering to the global elite of Billionaires’ Row are putting down stakes. After all, the penthouse at Extell’s One57 tower sold for over $90 million in 2012. And what’s a $90 million apartment with plain old bare walls? High-end art galleries are moving back to one of their traditional strongholds along the corridor, said Ken Aschendorf, a principal at APF Properties, which owns the Gallery Building at 24 West 57th Street. The building’s roughly 16,000-square-foot combined ground and second floor retail space has been occupied by Ana Tzarev, a high-end gallery, since 2007. A total of 10 galleries rent space on higher floors, with two more negotiating moves into the building , according to Mr. Aschendorf.
“They’re overrun by lookers, less so buyers,” Mr. Aschendorf said of the galleries farther downtown. “Chelsea will maintain itself as a center for the arts, but a lot of it is moving back up to Midtown and particularly the area around 57th. It caught my eye about nine months ago. Everybody pointed to the new super-luxury condos and the wealthy tourists. Their customers are right there.”
Foreign investors account for a significant share of publicly announced buyers of the new multimillion-dollar apartments along 57th Street. Concerns over whether the units will be mostly empty or occupied by their wealthy owners don’t faze Mr. Aschendorf.
“I think they’re going to mostly be living there, and I think they’re going to be spending money,” he said. What’s more, several new high-end hotels have recently opened or are in the works on West 57th Street. They include the Viceroy, at 120 West 57th Street, which opened last fall, and the Park Hyatt at One57, which expects to welcome its first guests this month. That, according to Mr. Aschendorf and several others Commercial Observer spoke with, will help ensure the strength of West 57th Street’s retail.
Gene Spiegelman, a vice chairman of retail services at Cushman & Wakefield, said that changes in the works for West 57th Street are without any recent precedent. “As long as I’ve been doing this, retail on 57th has been pretty much the same,” Mr. Spiegelman said. “The west side’s never had a full-line department store. Now there will be one, at a time when the future growth of Manhattan is to the west. It’s going to change the traffic pattern and give people a reason to come to the area.”
Fresh retail options will await visitors before they even get above ground. Turn-style, a new 14,750-square-foot retail development in an underground concourse connected to the Columbus Circle subway station, will be home to 30 new shops. The development has commitments from restaurateurs, confectioners, coffee shops, fashion brands and accessories retailers, according to a statement emailed to Commercial Observer from Susan Fine, the founder and CEO of Oasis RE, which the Metropolitan Transit Authority tapped to develop the concourse.
“I’d hoped it would happen. I’m glad it’s happening,” Mr. Spiegelman said of the revitalization of West 57th Street and Columbus Circle. “It’s been a long time coming.”