Northeast Real Estate Business

NOV-DEC 2015

Northeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Northeast United States.

Issue link: http://northeastrealestatebusiness.epubxp.com/i/610971

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58 • November/December 2015 • Northeast Real Estate Business www.REBusinessOnline.com King: But they always did. And again, in some ways I'm like a modern day Moses because I wandered in the wil- derness of Brooklyn for 40 years and I went to sleep and I woke up and I'm in paradise. I often tell the story of when we moved into our offce three years ago on Willoughby Street; the tallest building in Brooklyn was be- hind our building, The Brooklyner. Now, when walk out my front door and look to my left, there's a build- ing taller than that and across the street they built a building that was taller than that one. Two blocks away, where City Point is going to be built, there will be even taller buildings. In a space of three to four years, there will be 5,000 to 7,000 more families living in an area that once upon a time was a really classic central business district Monday to Friday. You have all these new folks coming, but the retail they need to be happy — whether that's a dry cleaner, liquor store or just a place to go to buy a cup of coffee — it has been there forever. The developers that are building were putting retail spaces in buildings, but they weren't thinking of retail when they built it; there simply is not enough, whether it's schools or services. It is going to be interesting to see what that does to the supply and demand equation. I sometimes take comfort that the rest of the world can blow up and we will still be okay because there's so much stuff going on. Kampler: It's not just Brooklyn, you have the eighth Apple store that opened in Queens in July, the devel- opment project Empire Outlets with the world's largest observation wheel being built in Staten Island, as well as several other projects. So, it's Brook- lyn and beyond. French: You have more tenants that have developed urban concepts, like Lowe's, which now has two stores in the city. You have Stop & Shop com- ing up with a new concept; they're opening up a test market in Bos- ton to compete with Trader Joe's — a 10,000-square-foot footprint. I would've bet years ago that because they're extremely low rent payers that they would never fnd locations in the city. They've already found multiple sites and are still looking for more lo- cations here in the city. Clearly, there are tenants that are looking at the bor- oughs because they are cheaper, but they're dense, and they've lacked re- tail. NREB: Brian [Katz], you represent a lot of retailers, where are they asking you to go and what do they see? Katz: In a lot of the suburban arter- ies, the word that comes to my mind is 'compression.' Whether it's offce supplies, books or consumer electron- ics, you're seeing a lot of these com- panies buying or looking for a way to downsize their footprint and use their footprint more as a showroom to make it work with what they're do- ing in the Internet world. For the frst time you are starting to see a little bit of new construction which is good. As much as you see compression, there is still a fairly decent pool of big box re- tailers out there looking for deals. Ev- ery time one goes down, another one pops up. Staples and Offce Depot are trying to combine; Macy's is out there with Backstage. Every time you think, 'Oh, we're fnished; the big box sub- urban world will completely collapse and compress,' a new pool of retailers is out there. Rabinowitz: I'd be curious to hear this group's thinking on outlet centers. I know our clients over the last fve to seven years have been looking more and more towards the outlet space and it's probably more for the suburbs than the city, except for Staten Island. There's a convergence happening with the outlets, you see them get- ting closer to regular retail. You have stores that might regularly open in a shopping center opening up in an out- let center. Maybe it's full price maybe it's not, and you have that combining with entertainment and restaurants. The outlet center is really becoming a real hub for a lot of the new retail. I'm curious what people think about that in terms of how that affects New York City and the suburbs? Breslin: It's a separate business. In the old days, retailers would ship their leftover goods to an outlet. Now, they are manufacturing specifcally. It kind of takes it out of the equation because the traditional retailers who come and open a store there are saying, 'I'm not going into an outlet center.' Jackson: But I think what we used to think of as an outlet and a regional shopping center and a lifestyle and specialty tenant are blurring. Graiser: That's the convergence. Jackson: What we're really seeing is someone that would say, 'Oh, I'm not going to an outlet center,' is not calling it an outlet center. That's a re- gional specialty center. Throughout the country you're seeing a lot of de- velopers taking the roofs off the tradi- tional center. They're adding the life- style tenants and restaurants; they're adding outlet retail or Last Call. Stephanou: Some retailers are having hybrid sites. They don't want to be in an outlet center, although they carry outlet goods, but they mix it with best selling full price merchandise. They fgure if you get them in, some of these best sellers will be bought, and they're looking for certain kinds of lifestyle centers that will accept this sort of mix. New England has got a lot of centers that fll those niches, some of which are even supermarket anchored. That's a real convergence. They'll say, 'we're not an outlet, we don't want to be associated with that,' and part of that also is the rent factor. Graiser: You're seeing traditional guys that have been in the outlets for years starting to exit because they're at $20 per foot. Kampler: But is there another reason 8th Annual InterFace STUDENT HOUSING April 13-15, 2016 Austin, TX For more information Please Contact Richard Kelley: 914-468-0818 rkelley@francemediainc.com The Most Important Event in the Student Housing Industry SAVE THE DATE "We're thrilled about how things are going on 34th Street," says Richard Cohan, 34th Street Partnership (at left). Listening on is Patrick Breslin, Colliers International.

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