Unlikely retail areas - a success in progress.

For years we have been leasing and selling warehouse/garage space to the usual tenants-parking, building/electrical supply, storage, auto repair, etc. However, in September 1994 we sold a 37,000 square-foot garage to the existing tenant, Guy Roberts, who operated a fleet of taxis from the building. This one sale changed the future of Chelsea.

The property, a two-story 37,000 square-foot garage, had frontage both on 21st and 22nd Street, between 10th and West Street. Roberts' vision was to open the first retail art gallery on 22nd Street, just doors away from the Dia Center for the Arts, and the Arnulf Rainer Museum. Before the ink was dry on the closing documents, the Lannon Gallery opened - coinciding with the Dia's Warhol show.

The entire international art community turned out for a magical evening in the dark, lonely commercial district of West Chelsea. Many who arrived commented that they were reminded of the early days of Soho - dingy, deserted areas in which people of means wouldn't normally be found after dark. Only a month later, and just two doors away, Matthew Marks converted a 10,000 square-foot garage into his beautiful spacious gallery.

Many were impressed with the scope of these two galleries, 5,000 square feet and 10,000 square feet respectively. Their way was paved for a major renaissance in commercial property use - converting decades of warehouse/garage space to retail space in an unlikely area.

With the interest of the art community focused on "We-Che," Roberts asked us to lease the vacant 5,000 square-foot ground floor area beneath the Lannon Gallery. Two months later we signed leases with renowned Soho art dealers Pat Hearn and Paul Morris, who divided the space into two separate 2,500 square-foot galleries.

Roberts has since closed the Lannon Gallery and leased the 5,000 square feet to the Anina Nosei Gallery. He is currently considering converting the 27,000 square-foot frontage on 21st Street and relocating his taxi fleet to another commercial area.

Roberts is rare as a landlord in realizing that if he tries to ask Soho rents, galleries will stay in Soho. Unfortunately, for real estate brokers and prospective tenants, few We-Che landlords have this long-term vision. Spaces that were available for $7 to $9 per foot gross two years ago are priced at $10 to $15 net today.

For some reason they are all trying to hold out for the "rich & famous international galleries," not realizing that most galleries are like any other retail business, watching to contain costs to make a profit.

The concept of establishing major retail stores in unlikely areas of the city has flourished in 1995. Besides the art galleries in We-Che, other areas of Chelsea have exploded with major retail activity. Eighth Avenue from 23rd to 26th Streets saw five large franchises open within months of each other. Rite-Aid, CVS, Discovery Zone, Boston Chicken and Blockbuster Video have transformed a dreary stretch of frontage into a clean, populated, well-lighted shopping area.

Almost overnight, Sixth Avenue between 23rd and 21st Streets saw extremely ambitious, multi-story retail chains open their doors. Barnes & Noble's three-story bookstore with reading areas and coffee bar anchors a short stretch which includes Today's Man, Burlington Coat Factory and Staples.

Similarly, Columbus/Broadway at 65th Street, which, apart from Lincoln Center and Tower Records, had little draw to the area (being mostly tenement buildings with run-down stores) now offers another multi-story Barnes & Noble, Starbucks Cafe, Nine West Shoes and Reeboks Sports Club.

Manhattan is becoming attractive to "suburban" outlets that would anchor strip malls with large 80,000 to 100,000 square-foot mega stores. Sports Authority on 7th is another example.

There are unlimited areas of the city that could house these giants, and there is a realization that "if you build it, they will come." This is a boon to the landlords who previously struggled with their tenants for the monthly rent. They rarely attracted financially sound tenants, much less "triple A" tenants. However, the key to a continuation of this growth and expansion is for the landlords to realize their prime attraction, which is lower rents for larger space!

The exodus of the art community to We-Che has been ground to a halt by shortsighted owners. Instead of taking a little less now, as an investment in the future appreciation of the entire area, they either continue to lease to the same unstable commercial tenant or hold out, with inflated prices, for that one big score.