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Faith Hope Consolo
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In the News

Catch-22 slows retail expansion

Catch-22 slows retail expansion; Despite big-box influx, stores play wait-and-see to fill new spaces; hope for Williamsburg

The appearance of big-box stores in Brooklyn over the past few years was a signal to many that the borough was undergoing a renaissance. Retail action seemed to be matching a pace of residential development so breathless that people sometimes called Brooklyn the new Manhattan.

But other merchants have failed to follow the big-box stores. This is particularly noticeable in areas like downtown Brooklyn, Greenpoint, Red Hook and Williamsburg, where new mixed-use residential buildings have created an abundance of street-level retail space. Brokers admit that while clients have expressed significant interest in these areas, most are taking a wait-and-see approach.

In some neighborhood, even the promised big boxes have yet to arrive.

“At the moment, this is all talk,” says Pat Breslin, president of the GVA Williams retail group. “The developers are creating the buzz that they will have a Wal-Mart or a Target.”

Williamsburg is the area believed to have the most retail potential. Ben Fox, executive vice president of Newmark Knight Frank Retail, says nearly 4,000 apartments will become available there in the next couple of years; the majority of the new buildings will have retail space at street level. Representatives from health and beauty aid stores, banks, supermarkets and health clubs have consulted him about leasing space, but there are no commitments yet.

SCOPING OUT THE SCENE“Many [national] retailers are walking around and kicking the tires and negotiating, but nothing has been finalized,” says Barry Fishbach, an executive vice president with Robert K. Futterman & Associates.

Abe Gross, a senior associate at CB Richard Ellis, says he has had more success with smaller retailers on the edge of Williamsburg.

He's leasing a newly built mixed residential and retail property at 522 Bushwick Ave., with 20,000 square feet of street-level store space. He says that a Family Dollar store has staked a claim for half the space, and he's hoping that a supermarket will take another 5,000 square feet. A medical office will move into the remaining 5,000 square feet.

Asking rents in the area are $30 a square foot, Mr. Gross says, up from $20 a square foot in 2005.

Brokers at Prudential Douglas Elliman are trying to lease 100,000 square feet of retail space at 101 Willoughby St., a new mixed-use condominium development in downtown Brooklyn. Asking retail rates for the building are about $100 per square foot. Brokers have talked to officials at medical offices, a private school, food markets and banks, but so far, they have no signed leases.

LET'S MAKE A DEAL“We are just taking it to the market now,” says Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman. She adds that brokers in Brooklyn are offering rent reductions and store build-outs as ways to lure tenants.Some real estate firms, like Kalmon Dolgin Affiliates Inc., are trying to be realistic about the potential for luring big-name tenants.

The company, primarily a broker, is constructing a 70,000-square-foot, mixed-use building in Greenpoint, with about 8,000 square feet of retail space. Executive Vice President Neil Dolgin says the $20 million development at 510 Driggs Ave., expected to be completed by 2008, will likely have specialty retailers, including one-of-kind upscale clothing shops and trendy boutiques.

“I don't think the area is going in the direction of national retailers, though we would like to attract them,” he concedes.

Other brokers think the newly built retail spaces may stand empty for some time. “There is a lot of vacancy, and I think we are in the very early stages of what people hope will be a major change,” says Robin Abrams, executive vice president of The Lansco Corp., a brokerage.

She adds that many mixed-use residential buildings have not yet been built, leaving potential retail tenants uncertain about moving in.

“These neighborhoods are spread out, and smaller retailers want to be near other retail tenants,” Ms. Abrams says.

 

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