Nearly $10 million in real estate construction is getting ready to break ground.
NEW YORK — New York City retail developers are in a position of immense opportunity, afforded to them by an act of terror.
After Sept. 11, 2001, retail in Lower Manhattan was effectively wiped out. The only major retail corridors in the financial district were in the World Trade Center and the World Financial Center. With those gone, business people, tourists and the burgeoning number of residents in Lower Manhattan were without a place to grab a quick bite to eat, much less buy a pair of shoes or a shirt, unless they wanted to hazard the destination shoppers at designer-discount giant Century 21.
More than four years later, the retail landscape — or lack thereof — is virtually the same. The neighborhood, however, is vastly different, and aching for retail. Lower Manhattan, typically defined by the real estate community as south of Chambers Street, is the fastest-growing residential neighborhood in the city, and has a residential component bigger than the chic and retail-packed Gramercy area. According to real estate brokerage firm GVA Williams, there are currently 5,000 more residential units either under construction or on the drawing boards.
But the shopping options for young single professionals and young families consist mainly of an Ann Taylor and Nine West by Battery Park, and a Gap and a few other specialty stores in the South Street Seaport.
“The demand for good shops and services is there, but there aren’t any new stores,” said Faith Hope Consolo, chairman of the retail leasing and sales division for Prudential Douglas Elliman, a brokerage firm. “There are some obvious demands, not just for fashion and restaurants, but for a great supermarket, or lifestyle stores, like home accessories and furniture.”
Retailers interested in expanding in the financial district aren’t lacking for options. According to the Downtown Alliance, there is nearly $10 billion in real estate construction either breaking ground or planned for in and around the World Trade Center site, totaling 10 million square feet of commercial development and 500,000 square feet of retail. It’s the equivalent of space for two major regional shopping malls, in one of the densest neighborhoods in the country.
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And although development downtown has been plagued for years by community groups, politicians’ agendas and insurance and legal battles, it appears that retail is finally getting a kick-start. Though there have been no commitments from retailers yet, the city’s retail redevelopment effort was launched officially at the end of October this year by the Port Authority of New York and New Jersey, which owns and operates the site.
The Port Authority authorized the planning and preliminary design work for up to 200,000 square feet of retail in the Santiago Calatrava-designed World Trade Center Transportation Hub, which developers hope will become a kind of Grand Central South. Design is to be completed by next spring, and the first retail stores are expected to be open by 2010.
But still, space issues and a lack of critical mass plague the progress of fashion in the financial district.
“It could be a great retail plan that gets executed downtown,” said Robert Futterman, president of Robert K. Futterman & Associates LLC, a retail brokerage firm. “But it might be wishful thinking. You get the feeling that things are starting to happen, but tenants are all holding their breath to wait and see what Ground Zero will offer.”
Some retailers have dipped their toes in the waters downtown: DKNY, J.Crew, Talbots and Barneys Co-op all flirted with spaces in Lower Manhattan, but none could commit.
“Retailers don’t necessarily like to be pioneers,” said Clifford Molloy, senior managing director at GVA Williams. “But any one successful retailer or department store could be a great catalyst to the region.”
“A lot of people are circling Lower Manhattan,” said Consolo. “Everybody wants to replace the retail down there and everybody sees the potential. But somebody has to take the plunge. One large retailer just needs to step up.”
The expense of the real estate certainly isn’t stopping them. Though it is impossible to predict rents in the yet-to-be-developed World Trade Center, retail rents elsewhere in the financial district average $100 per square foot, which is far less than anywhere else in the city, said Consolo.
Still, the kinds of spaces currently available in Lower Manhattan are hardly ideal for fashion. Though the concourse at the trade center transportation hub should be well designed for retail, most of the office buildings aren’t configured well for specialty stores or other types of apparel or footwear tenants. Usually large spaces with limited frontage, they are better suited for restaurants or showrooms, such as Cipriani or BMW, both of which opened up impressive downtown locations recently.
More appealing options might soon become available outside of the World Trade Center, as well.
The South Street Seaport is rumored to undergo a major renovation. According to brokers, General Growth Properties Inc. will unveil a new plan in December to rejuvenate the retail and restaurants there. General Growth took over the seaport when it acquired the Rouse Co., which was the original developer.
Futterman also hinted that there is a significant real estate development that will be announced in January that will house a “tremendous” retail component of up to 200,000 square feet.
“Downtown just needs one block like the Meatpacking District or SoHo,” said Consolo. “A couple of cutting-edge fashion and accessories stores, or good home furnishings to cover the whole spectrum could make the whole area wake up. The potential is there and the customer is there.”