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.

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Page 60 of 64

60 • November/December 2015 • Northeast Real Estate Business transportation arteries and commercial hubs.] But then, with the stroke of a pen, the zoning resolution changed. You take a street like Fourth Avenue that kind of goes from Bay Ridge into downtown Brooklyn. For a really long time that was nothing but automo- bile service businesses — dealerships, muffer shops, transmission. Today, I call it the canyon of broken dreams, but to some extent there are lots of midrise apartment houses going up. You can almost follow the R train as it goes from downtown into Bay Ridge, and there is a lot of infll retail and lots of new folks living there. Over time, you're going to continue to see more and more transformation. A lot of that transformation today is taking place in former industrial buildings which are becoming retail buildings, and that's a trend that has really taken on legs and is just not going to stop. French: What you need to remember about the boroughs is that they're so under retailed. I'm a person who works in secondary and tertiary mar- kets, and in any of these spots if you plop down a grocery-anchored prop- erty, it would be successful just be- cause of the number of people. That's why these boroughs — the Bronx will come next after Queens — are ripe and ready to be developed. Campione: These large-scale develop- ments that you talk about, especially the supermarket-anchored. We're see- ing they want that footprint as close to the suburban model as possible and they don't want to park under, they want to park on top. King: A perfect example of this is Walgreens. Forever and always, Wal- greens tormented me that all they ever wanted to do was have their clas- sic acre on a corner of two, two-way streets and a signalized intersection. I'm like, 'go look in Jersey. You're not going to fnd that in Brooklyn,' and Duane Reade ate their lunch. Duane Reade was the ultimate urban gorilla — upstairs space, downstairs space, and narrow entryways, whatever. [Editor's note: Walgreens acquired Duane Reade in 2010.] Stephanou: Brooklyn has an advan- tage that the other boroughs don't have in that it's highly populous, it has a historic downtown and it has a cultural center. It has a museum, it has the Brooklyn Academy of Music, and it has Prospect Park. It's more than just a borough, and I think part of it's success, and why national retailers were able to understand it, is that they could go there, and think 'wow, we've sort of fgured out New York City, and this is like a New York City — there's historical buildings, there's infll with high-rise apartments.' I think that's what, from a national retailer's point, made Brooklyn really attractive be- cause you have the density of Manhat- tan; it ostensibly was more affordable and you have younger people. I think the appeal of Williamsburg and all that is it's appealing to younger peo- ple that want something that's urban. I don't want to discount the more sub- urban feel of Staten Island, and parts of Queens with tree-lined streets and residential. A lot of people have found the urban experience they were seek- ing by going to Brooklyn. It was more affordable, and they liked the urban industrial chic concept. Take Industry City, and the way that's being market- ed and the way people are looking at that area in Sunset Park. Twenty years ago, people would've thought, 'wow, this is so derelict.' Now, people like a raw industrial look. They're willing to go to places like that, even to work and to live, because most places like that in Manhattan have completely evaporated. Spiegelman: At the turn of the cen- tury, Brooklyn rivaled Manhattan in every way, shape and form. Then, after the world wars, it hit the skids — the Brooklyn Dodgers left, the city went into disrepair and they moved out to suburbia. So Brooklyn basically was traditionally Manhattan. Now that's changing with businesses there. People don't want to go to Manhat- tan; they don't feel they need to go to Manhattan. Brooklyn is developing its own offces, there are more hotels there, the Mets are now there, the Is- landers are there. So it's really com- ing into it's own, and coming into where it was initially in the 1890s and 1900s where it really rivaled the city. That, you won't see in Queens. You'll see expansion in Queens, you'll see trickles of gentrifcation in the Bronx, you'll see some in Staten Island with people coming into the market look- ing at values, but if there is any down- turn, that will be the frst thing to go. NREB: Let's talk about New Jersey. Danielle, why don't you give us an update on what's going on there? Brunelli-Albrecht: Over the past year, there have been several new develop- ments that have opened. In Bridgewa- ter, for example, they have a Whole Foods Market-signed lease and Saks Off Fifth, so there are several of these new construction projects going up, not many of them. Now, we're going to see a little bit more vacancy with the A&P and Pathmarks becoming available. It's going to slow down any newer projects that they were hoping to get off the ground. We're working on a few of them. [Editor's note: A&P Supermarkets, which operated A&P, Su- perfresh and Pathmark grocery stores in New Jersey, declared bankruptcy leaving many stores in its wake. Acme Supermar- kets acquired most of the stores.] Overall, New Jersey is healthy. There's compe- tition, rents are up high still and new concepts are coming to the area. Stephanou: What do you think of American Dream? Brunelli-Albrecht: American Dream is amazing; I think fnally they have the right developer to get it done. They have leases with Cinemex, LegoLand Discovery Center, Sea Life Aquarium, and for the frst time ever the compa- ny Hudson Bay is having all three of its banners — Lord & Taylor, Saks Off 5th and Saks Fifth Avenue — in the same location. Katz: If you go back to the Pathmark/ A&P departure around metro New York, that's a major departure from the landscape around New York. You're talking around 300 locations that were up for bid and watched at auction. You had Acme, Stop & Shop, Key Foods — all of these people, down to the low end — coming out of the woodwork. NREB: It's going to shift the grocery landscape a little bit. Campione: When were discussing supermarkets last year, we spoke about who was coming in like Whole Foods Market and Trader Joe's. Do the supermarkets that are here get it and truly understand the audience? We almost predicted that the problem was you had an operator that just did not know how to operate in New York anymore, and just lost its connection with their shoppers. Kampler: The reason omnichannel is working is because it supplements what people still want. A computer can't serve you a glass of wine. Om- nichannel still needs brick and mortar, and so as a result of that, you have a situation where there's compression on the physical space. Andy Dunn, who started Bonobos, fgured out in 1,500 square feet how to showroom. He realized that half the people visit- ing his site really wanted to try on the khakis before they purchased them, so he turned his offce into a place in the city where people could come by and try them on. He did so many millions of dollars worth of business that he quickly realized the brick and mortar would be supplemental. Now, retail- ers are realizing they can now have a small footprint where it's for trying on or for feeling products, and then em- ployees order it for you, you get it the next day or two days later, you're not schlepping around shopping bags, you don't have people unstocking and stocking and retagging and send- ing back when things are returned. Stephanou: And you can refll, be- cause now that you know what your NAIOP Building sound relationships on a solid foundation. Weiss Realty represents a broad range of private investors, retailers, property owners, and corporate clients providing: • Retail Leasing and Sales • Consulting and Property Management • Investment Property Services 250 Moonachie Road, Moonachie, NJ 07074 p. 201.814.1800 f: 201.814.1811 FOR MORE INFORMATION OR TO ARRANGE A MEETING AT ICSC NEW YORK PLEASE CONTACT: Jaime M. Weiss 201-615-0474 or Matthew B. Weiss 917-309-7861 The reason omnichannel is working is because it supplements what people still want. — Nina Kampler, President, Kampler Advisory Group

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