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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62 • November/December 2015 • Northeast Real Estate Business AXIOM CAPITAL COMMERCIAL REAL ESTATE FINANCE & ADVISORY RECENT TRANSACTIONS ChuCk Cronin 518-472-4000 Andrew kleinberg 973-707-2358 MiChAel S. del VeCChio 518-472-4000 $24,000,000 Leasehold Mortgage Retail Portfolio 27 Stores, 11 States $17,400,000 Permanent Mortgage 179,909 SF Grocery Anchored Plaza Saratoga Springs, NY $38,000,000 Permanent Mortgage 8.9 Million Cu. Ft Cold Storage Facility Chicago, IL $10,000,000 Permanent Mortgage 51,000 SF Grocery Store Burlington, MA Menkin: It's going to be interesting to see how these new 100,000-square- foot bazaar concepts are going to af- fect the food court world in shopping centers because a lot of tenants in food courts have already suffered under the weight of common area charges that drive them completely off the chart. There's also competition out- side the mall for the food dollar that they thought they were going to cap- ture in the mall. NREB: We're seeing a lot of the malls get rid of the food court and add res- taurants, or upscale their food courts. Brad Cohen: Even outside of the mall, traditional shopping environment, look at Smorgasburg. Look at all of these amazing pop-up critical mass retailers that are thriving. [Editor's note: Smorgasburg is a food-oriented mar- ket held in conjunction with the Brooklyn Flea market.] Stephanou: Through social media people know about food trucks. It's sort of reverse chic. Brad Cohen: What we're seeing is a lot of these guys are starting in the cart or truck business and then getting attracted to these food halls. Jackson: It's evolving. It's a busi- ness I wouldn't want to be in because our palates change. You go to some of these trucks and you can spend $20 on a sandwich. As our palates evolve, we know more about food. The consumer wants the better name restaurants, they want the chef that they know, they want the districts, the Eataly. Westfeld, throughout the country, is changing the food court at the better center. Those centers doing $1,000-per-square-foot no longer have food courts; they have dining terraces; they have real plates, real silverware, better food tenants, and they're doing tremendously well. Breslin: Good food tenants are be- coming the anchor tenant. n Operating in all fve boroughs, it's safe to say that full service real estate investment frm Eastern Consolidated is keyed in to the comings and go- ings of the New York retail market. "We started with core avenue corner properties, and as we've grown so has the bandwidth of the team, and we've had the opportunity to expand into the boroughs," says Brad Cohen, senior director of retail leasing at Eastern Consolidated. "People often think that the boroughs are synonymous with cheaper and less desirable, but that's not always the case," says Cohen. "Right now in Brooklyn, for example, along the Fulton Mall, rents are over $250 per-square-foot." Cohen attributes this, and rising rents across the boroughs to big name retailers entering those markets. "We see the Whole Foods Market effect, the Apple effect — a lot of these sexy brands sign leases, forever changing the market, and that is making these rents completely explode seemingly overnight," says Cohen. "Whether it's true when a retailer wants to be near them so badly that they're willing to overpay, or if it's just the idea of the property values rising as a result of these tenants coming to market, it's really transforming these neglected pockets." One pocket seeing this transformation is Crosby Street. "Crosby Street is another $75 market that today is $250," says Cohen. "Crosby Street is behind Bloomingdale's on Broadway in SoHo, and it was always referred to as the 'backside of Bloomingdale's.'" "With Crosby Street, it started with high-end residential condomini- ums," says James Famularo, senior director of retail leasing at Eastern Consolidated. "They popped up one after the other because it's a beauti- ful, picturesque cobblestone street and the location is fantastic in SoHo. After that, a furniture store went, then Jil Sander, then Opening Ceremo- ny, Bonobos — what we wanted to do with Crosby Street is continue that, so we sat down with architects and sketched out a plan to do four micro spaces. We're getting a ton of activity there." Bleecker Street in SoHo is also noted as a transitioning pocket of the Manhattan retail landscape. "It used to be a great restaurant strip, and now you're seeing all fashion tenants," says Famularo. "It's like an out- door mall — Ralph Lauren has multiple stores on the block, Marc Jacobs must have fve or six on the block — it's really increased their price per square foot," says Cohen. As far as burgeoning market trends, specialized ftness, food halls, health conscious fast casual restaurants and medical are all booming in the New York market. "If it's an offce building, we're seeing that a lot of the time, instead of putting the highest rent and best credit tenant in, they're looking at how they can give the tenants and residents at their building what they want," says Cohen. "There's a mindset of, 'what can we give to our tenants to make it an extension of their living room?' We're seeing examples in the market, like at Gotham West, where instead of putting in a drug store to make the most rent, they're creating these interesting and eclectic food halls," says Cohen. Food halls featuring up-and-coming chefs are popping up throughout the city, from the Plaza Hotel food hall, to Urban Space on Vanderbilt. Alongside this trend, health conscious fast casual is seeing a large in- crease. "With fast casual concepts, in general, we're seeing more than ever before in the marketplace," says Cohen. "They're also becoming more health conscious." On par with the health conscious food trend comes an uptick in ftness facilities throughout the city. "Specialized ftness is a trend we're seeing a ton of — from Orange Theory to Flywheel and Soul Cycle." Medical is also becoming a very large player in the city's retail market. "We've transacted with City MD, but the idea is that there are these out- patient urgent care facilities competing with big retail rents," says Cohen. "They're located all over the city and in Brooklyn and Queens." As refected by the uptick in unique food concepts and health conscious eateries and exercise facilities throughout Manhattan and the boroughs, New York's consumers are craving experience and the retail landscape is following suit. — Katie Sloan EASTERN CONSOLIDATED TALKS TRENDS IN THE BIG APPLE

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