There’s a heightened level of excitement around 34th Street in Manhattan.
Several major buildings have traded hands in recent months, including the moderate Manhattan Mall, which Vornado Realty Trust bought from Argent Ventures for $689 million, and Two Herald Square, which an investment group led by the Sitt family recently snapped up from RFR Holdings for $500 million. Both properties are primarily office space; the nearly 1 million-square-foot Manhattan Mall has 164,000 square feet of retail, and Two Herald Square has 90,000 square feet of retail at the base of the property.
Though the retail tenants at Two Herald Square are unlikely to change — the building houses flagships of H&M and Victoria’s Secret — Vornado may dramatically make over Manhattan Mall, to the woe of underperforming retailers.
“The Argent guys did a fair job, but not being retail people, I don’t think they really understood who their customer was,” said Robert Futterman, president and chief executive officer of Robert K. Futterman & Associates. “But if anybody has experience maximizing property value, it’s Vornado. I’m sure they’ll do some research as to who’s performing the best and maybe buy some people out of their leases.”
Vornado’s stake in the Farley Post Office and Penn Station redevelopment, which is intended to create a transportation, retail and commercial destination to rival Grand Central, is also cause for excitement, though little progress has been made on the project since the real estate investment trust won the redevelopment bid with its partner, Related Cos., in 2005.
Still, the prospects for the neighborhood are tantalizing. Hundreds of thousands of retail could be added to the market for a captive audience that is nearly 10 times that of Grand Central’s. Many stores in Grand Central report sales of more than $1,000 per square foot.
A big department store between Eighth and Ninth Avenues is another stirring prospect for 34th Street, given the area’s strong demographics and easy access to transportation. It would also add another much-needed anchor to the corridor, in addition to Macy’s, the yet-to-be-redeveloped transportation hub and the Manhattan Mall.
Joanne Podell, managing director at Cushman & Wakefield, said more retailers targeting high-end, aspirational shoppers were eyeing the street, and landlords were eager to lure them in.
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Some new stores are already transforming the block and replacing mid-market general goods with fashion. Bebe Stores plans to open its fifth store in Manhattan at 1 West 34th Street, at the base of the Empire State Building on Fifth Avenue. The 4,000-square-foot boutique will replace a Champs Sports in the property. IBEX Construction is building the store, which is expected to open in April.
“Thirty-fourth Street used to be discount, and now it’s got a combination of luxury, mid-market and discount,” said Jeffrey Roseman, executive vice president at Newmark Knight Frank Retail. “I’m seeing a lot of interest from the better retailers. All of the usual suspects are perusing the street.”
Futterman said he wouldn’t be surprised if Coach, Anthropologie, and Martin + Osa soon joined the 34th Street mix. He declined to comment, however, on whether or not his client Apple sublet its space on 34th Street because the block wasn’t quite “hip” enough.