New York City retail market continues full steam ahead.
Solid job growth and increased spending is fueling demand. Vacancy is expected to fall 20 basis points this year to a low 4%, spurred by retailer demand. Street-level and storefront retail will continue be added to mixed-use office and multi-family development projects in the city.
Owners will continue to raise rents, with asking rents expected to climb almost 5% to $113.32 per square foot by year's end.
Currently, Midtown South is seeing the largest amount of construction in Manhattan, with retail builders following quickly behind rising multi-family projects. There are three projects totaling 26,719 s/f under way and seven planned developments with more than 61,000 s/f in the pipeline. The Uptown submarket currently boasts the largest amount of development under way with more than 550,000 s/f in five projects.
The largest new development is Harlem's much-touted East River Plaza, which will add 485,000 s/f feet in the third quarter of 2008. A Forest City Ratner project, East River Plaza will be anchored by Home Depot and Target.
Currently the most active developers in Manhattan are Tiago Holdings LLC, Commonwealth Holding Co., Costas Kondylis and Partners and J.D. Carlisle Development.
In the boroughs, particularly in Brooklyn, retail construction activity will increase this year, compared to the amount of new projects delivered in 2006. Developers are expected to deliver nine new retail projects totaling more than 600,000 s/f, up significantly from 50,000 s/f brought online in 2006.
Population increases along with new condo and multi-family development projects are encouraging to retail developers throughout rapidly gentrifying neighborhoods of Brooklyn.
The largest new development under construction, the Shops at Gateway, is adjacent to the Gateway Center in East New York/Canarsie. The Shops at Gateway, which is expected to be completed in the fourth quarter, will add more than 300,000 s/f of new retail space to the borough's existing inventory. The controversial Atlantic Yards mixed-use development, despite community disapproval, is under way and will add 247,000 s/f upon completion in 2008.
By most accounts, the most significant development under way is the Triangle at the Junction, which will add 300,000 s/f of new retail space to the Flatbush section of Brooklyn in the fourth quarter. Triangle Equities is developing the project, which will be anchored by a new Target big-box store, the third Target to come online in Brooklyn. In all, planned developments in Brooklyn for the remainder of 2007 account for 242,898 s/f in nine projects, with the most new retail developments coming online in the Borough Park/ Ocean Parkway submarket.
All signs are pointing to another robust year for retail properties in New York City.
Additionally, record bonuses for Wall Street workers were to be paid out in early 2007, propping up citywide retail spending.
BY STEVEN SIEGEL, DIRECTOR, MARCUS & MILLICHAP NATIONAL RETAIL GROUP
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|Comment:||New York City retail market continues full steam ahead.(RETAIL)|
|Publication:||Real Estate Weekly|
|Date:||May 9, 2007|
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