On a chilly March afternoon, around lunchtime, scores of New Yorkers found themselves roaming a former subway underpass at the 59th Street-Columbus Circle station in Midtown. They were there because the underpass had been transformed into a retail strip brimming with local food vendors, mom-and-pop shops and, yes, even a Starbucks—and whether they were grabbing a quick bite before getting back to work or had merely noticed the storefronts while making their way through the station and sought a closer look, they had been drawn to the space.
The place in question is Turnstyle, the 27,000-square-foot retail redevelopment of a 325-foot-long stretch of New York City underground into a transient shopping and food hub. The project, which is approaching its one-year anniversary in April, is the brainchild of developer Susan Fine and her firm, Oases Real Estate.
Fine, a 30-plus-year veteran of the city’s real estate industry, secured a 20-year master lease (with an additional, 10-year option) for the Turnstyle space from the Metropolitan Transportation Authority in November 2013. She then set about the complicated, challenging task of transforming the underpass—which runs under Eighth Avenue between West 57th and West 58th Streets—into a modern retail corridor that would appeal to tenants and consumers.
To do so, Fine had not only the help of the MTA and a team of architects and engineers (who had to work through an array of logistical challenges inherent in redeveloping a century-old underground station) but also a career’s worth of experience working in both the private and public real estate sectors.
In the 1980s, she served as the vice president of development for real estate firm Olympia & York, where she helmed the retail development of Brookfield Place (then known as the World Financial Center) in Battery Park City. Fine—who has two adult daughters and lives on the Upper West Side with her husband—later worked as the head of real estate for the MTA in the 1990s and spearheaded the agency’s development of Grand Central Market, the 6,600-square-foot retail component at the iconic Midtown train station.
“I’ve had what I think is really a privilege and an honor to work on some scale-changing, public mixed-use projects [in New York City],” Fine told Commercial Observer last week, seated in Turnstyle’s unassuming management office, tucked away near one of the space’s seven entrances. While she has worked in every real estate asset class with the exception of hotels, Fine said she finds retail “the most exciting and fun” of all.
“It’s kind of like setting a table,” she said. “You’re trying to curate a mix and figure out what people want.” In addition to drawing from her work at Grand Central Market, Fine said inspiration for Turnstyle came from closely quartered merchant bazaars seen all around the world—a model “not frequently done in the United States.”
“The most relevant models were outside New York—mostly in Asia, [places like] Japan and Korea,” said Marta Sanders, a principal at Architecture Outfit, the architecture firm that designed Turnstyle. “Concourse-type retail that fits a different standard. A lot of very small, shallow stores that you can pass and take a shallow dip into, rather than really deep stores that you invest more time in.”
As far as the specific stores at Turnstyle, Fine went about curating a mix of idiosyncratic, small to midsized tenants to occupy the 39 spaces (including seven kiosks) that the underground strip comprises. The diverse food offerings range from worldly purveyors like Bolivian Llama Party to homey establishments like grilled cheese specialists MeltKraft, while the shops feature several e-commerce retailers, including pet supplier Dog & Co., who chose Turnstyle as a unique opportunity to expand its brick-and-mortar presence.
“I remember walking through [Turnstyle] early on, and they strategized correctly,” said James Famularo, a senior director in the retail leasing division at Eastern Consolidated, who represented Kit’s Underground Wine & Spirits in its lease for a 600-square-foot space at Turnstyle. “They were looking to get one coffee purveyor, one sandwich shop, one pizza [place] so as not to cannibalize each other.”
Fine initially retained Lansco Corporation as the exclusive leasing agent for Turnstyle, where the stores (excluding kiosks) range from around 300 to 800 square feet. While the corridor opened fully leased, the project needed to secure 70 percent of its tenants before commencing construction—a task that proved a tough sell to tenants when the space in question was merely a bare subway underpass.
“You would take people down there to tour in the middle of the summer or winter, and they’d be hot or cold or uncomfortable and they didn’t see anything that was compelling,” Robin Abrams, a vice chair at Lansco, told CO. “If you didn’t tell the story and make tenants understand what they could be a part of, they went down there and saw something that wasn’t very attractive and could be a tough sell.”
Today, Turnstyle is nearly 100 percent occupied, with one present vacancy that is frequently occupied by pop-up stores. While there has been some turnover in a couple of the spaces, Fine and her team have been able to promptly replace most of the businesses with new tenants. Coffee shop FIKA’s roughly 700-square-foot space, for example, will soon be occupied by two new stores: frozen yogurt seller 16 Handles and bubble tea café Panda.
But there has also been turnover in management at Turnstyle: Lansco left the project last year, and Fine decided to handle leasing in-house. Fine refused to be drawn into discussing the separation, saying only that Oases “enjoyed working with Lansco, and we enjoy working with other brokers as well.”
Abrams said that while Lansco no longer has the exclusive, the firm still does leases at Turnstyle (including a recent kiosk deal). “The project is very dear to our hearts,” she said. “I think it has been a huge success and serves as a model for other transit-oriented retail projects.”
Asking rents at Turnstyle range from $300 to $350 per square foot “all in,” Fine said, citing how Oases covers costs for waste disposal and the heating and cooling of the space, as well as its property taxes. While Eastern’s Famularo was largely complimentary of the job Fine and her team have done at Turnstyle, he expressed the opinion that Oases “went out at market way too high” in terms of the rents sought.
“They’ll definitely be there for a long time, but the problem is that the rents are too high, and as a result of that, there will be [tenants] going out and you’ll see a few changing retail concepts there,” Famularo said. “You need someone who wants to make a name for themselves and has the time and patience to make [their store] profitable, because at $300 a square foot, that adds up.”
It is a criticism that Fine does not subscribe to. “Have you ever heard a retailer not tell you that the owner was charging too much?” she asked. Fine cited how street-level rents for space in the neighborhood above Turnstyle can range up to “double” what her spaces ask.
Another critique by outside retail market participants revolves around whether Turnstyle can command shopper traffic beyond commuter-heavy hours on weekday mornings and evenings, with some expressing doubts that local employees and residents will go underground to shop or find a meal. “You know who’s going through there: people on their way home,” Famularo said.
But Fine was also nonplussed with that line of thinking. While acknowledging that Turnstyle “had to be discovered” initially, she added that “most [retail stores] in Midtown do a Monday-to-Friday business.”
“Would I like there to be more [traffic] on weekends? Sure. Is it growing? Yes,” Fine said. “Certainly, just like Midtown, this is easy from 7 in the morning to 8 at night, Monday to Friday. The challenge is extending the hours.”
Yet, Fine’s efforts have paid visible dividends. In addition to Turnstyle’s high occupancy rate, the concourse is distinct in its design and is pleasing to look at. While it is an intimate and enclosed space, it still feels like a part of the surrounding city—one only needs to feel a breeze emanating from one of the entrances or be greeted by a canvasser making a pitch near the turnstiles leading to the trains to realize that.
From a design perspective, Architecture Outfit’s Sanders described “trying to create an illusion of height in a place that doesn’t have actual height” as one of the main challenges of the project, as well as dispelling “the perception of the subway as being dirty or not safe.” But the firm found a relatively simple solution to those problems: paint the concourse white and install uplighting to create “the perception of it being a fresh, different space.”
Then there were the construction and infrastructure challenges. “We’re heating and cooling the outdoors,” Fine said. “There’s no place to load from; we have to bring everything down the stairs. Everything that you would think is easy is hard, but I think that’s the nature of construction—it’s always hard.”
Sanders said Architecture Outfit worked with outside engineering firms to model air flows and temperature controls at Turnstyle. “We all had to accept early on that this wouldn’t be a fully climate-controlled environment,” she recalled. “You couldn’t seal it off 100 percent from all the tunnels and street entries.”
As far as dealing with typical subway-related issues like pests and vermin, Fine noted that the MTA “set very stringent rules” for maintaining the space and describing Turnstyle’s standards in that department as “cleaning and pest control on steroids.” In terms of security, the corridor is monitored not only by the New York Police Department’s Columbus Circle outpost but also a private security firm retained by Fine.
Turnstyle cost nearly $15 million to develop, and Fine financed the project with a sizable contribution from primary investor Goldman Sachs; the bank covered half of the cost via a construction loan while also putting up half of the required equity.
While Fine declined to discuss the financial terms of Oases’ master lease with the MTA, The New York Times reported that the agency will net a minimum of $1.3 million annually from rent and revenue sharing as part of the deal. (The MTA did not return an interview request for this article.)
The MTA “approved almost every aspect” of the Turnstyle development according to its “incredibly detailed construction guidelines,” Fine said. “They paid very close attention, they approved our plans, they quarterbacked a hundred unforeseen circumstances that arise from building in a 100-year-old space.” That included everything from assisting with the relocation of a standpipe to shutting down trains at the station when construction deemed necessary.
What the MTA didn’t do, however, was “make any direct financial contribution to the project,” Fine noted, describing Turnstyle as “probably the only public-private partnership which has no public funding in it at all.”
Those who worked with Fine on Turnstyle said she was intimately involved in nearly every facet of the project, from design and construction to leasing and the ongoing maintenance of the property. They also spoke of her commitment to the development.
“She’s extremely hands-on and definitely has extremely high standards, and when things don’t go right, she doesn’t hold back in telling you so,” Sanders said, mentioning how the firm “developed hundreds of little vignette renderings to review with [Fine]” and was accompanied by the developer when visiting a metal fabricator in Red Hook. “She pushes us to do our best work.”
Fine acknowledged the characterization, noting that it exemplifies her commitment to the development and its success.
“I think the essence of a great developer—and I’m not saying I am a great developer, very far from it—is attention to detail,” Fine said. “This is the kind of project that I have a lot of heart in. I care a great deal about what it is trying to do.”
She added that, in a commercial real estate perspective, Turnstyle has received rave reviews from landlords and developers who view the project and the template it has set as a valuable precedent in the amenitization of public spaces.
“How can you not like it? It gets a lot of traffic,” said Steven Hornstock, a co-managing partner at commercial property firm ABS Partners Real Estate. Hornstock recalled that he used to commute through the 59th Street-Columbus Circle station frequently but would “never walk through” the corridor that now houses Turnstyle.
“I would rather walk outside, but I guess now it would be different,” he said. “[The question is] how would you replicate it [at other properties]? You need something that gets foot traffic.”
But Fine said that the owners of the office building directly above Turnstyle, Empire State Realty Trust’s 250 West 57th Street, have “realized that [Turnstyle] is a huge amenity” and added that “many well-located office towers have approached me” about a similar undertaking elsewhere.
“Offering in-building access to Turnstyle within 250 West 57th Street provides a unique and valuable amenity to our tenants, giving them an underground market consisting of eateries and shops right at their fingertips,” said Thomas P. Durels, the executive vice president and director of leasing and operations for ESRT.
Fine noted: “If the shell and the core are there, it is very easy to do on a short-term basis. And there are all kinds of empty spaces around New York City.”