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Faith Hope Consolo
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In the News

Retail Rates on the Rise

Retail Rates on the RiseCommercial Real Estate BY MICHAEL STOLEROctober 6, 2005URL: http://www.nysun.com/article/21064If you think office and residential rental buildings are selling at record prices, you might be surprised to learn that investors are paying more than $2,500 a square foot for some retail properties.

Last week, the UJA-Federation of New York followed the long lead of nonprofits including the Anti-Defamation League, American Jewish Congress, YMCA, and American Red Cross in shedding real estate assets to capitalize on record prices. The UJA-Federation agreed to sell a 38,000-square-foot retail condo unit in its headquarters on 59th Street and Lexington Avenue. The retail space is leased to Gap Incorporated, which next month will open new Banana Republic and Gap stores. An affiliate of the Spanish-owned real estate holding company Ponte Gadea, S.L., is paying $107.475 million, or $2,828 a square foot, for the space.

Two weeks ago, Bloomingdale Road Investors, which is controlled by UBS Realty Investors LLC, paid $153 million, or $588 a square foot, for the Source at White Plains, a 260,000-square-foot shopping center anchored by a 180,000-square-foot Fortunoff Department Store. Other retail tenants include Whole Foods Market, Cheesecake Factory, and Morton's Steakhouse. The property is off I-287 and across the street from the Westchester Mall. The seller was a partnership of R Squared LLC, the Fortunoff family, and Edge Partners that developed the property for $96 million less than three years ago.

In June, Vornado Realty Trust completed the acquisition of property at Madison Avenue and 66th Street for $158 million. The property contains 37 residential rental apartments with a total of 85,000 square feet, 9,100 of which is prime retail space. Retail tenants include Dennis Basso, Jean Paul Gaultier, and Krizia. In May, Vornado completed the acquisition of the retail condo of the former Westbury Hotel. This property occupies the entire Madison Avenue block between 69th and 70th streets and contains about 17,000 square feet. The retail space is fully occupied by such luxury retailers as Cartier, Chloe, and Gucci. It paid $113 million, or $6,647 a square foot, the highest price ever paid per square foot for retail space in America.

***In April, German fund operator TMW Property Funds AG agreed to sell the landmarked five-story, 28,000-square-foot Rhinelander Mansion, home of the Polo Ralph Lauren flagship store, at 867 Madison Ave. and 72nd Street. It sold for $78.2 million, or $2,793 a square foot, to investment partners of Ireland based Sloane Capital.

NorthStar Realty Finance Corporation is marketing for sale its single-tenant retail space at Times Square. The four-story, 12,100-square-foot building at 1522 Broadway, at the northeast corner of West 46th Street, is leased to National Restaurant Management, which operates a TGI Friday's in most of the space. One-third of the rental income is derived from advertising space, which is leased to Clearchannel/Spectacolor. According to industry sources, the building may fetch $50 million, or $4,132 a square foot.

In June, Ikea closed on the purchase of a 48-acre parcel in Red Hook, Brooklyn. The furniture-retailing company paid $31.25 million to the U.S. Dredging Corporation. It plans to build its largest superstore in America at a cost of $100 million. Plans include a 346,000-square-foot store with 1,400 parking spots, a waterfront esplanade, and ferry service to and from Manhattan. The store is expected to open in the summer of 2006. Another project in the neighborhood is the Red Hook Stores at the end of Van Brunt Street. The bottom two floors will house a 52,000-square-foot Fairway grocery store. The upper floors are planned for affordable housing.

***This August, the official topping-off ceremony was held by Atco Properties & Management Incorporated for its Shops at Atlas Park in Glendale, Queens. The site will feature 60 stores and restaurants in 300,000 square feet of space and 1,600 parking spaces. The site will be developed into eight buildings of retail and office space. A grand opening is scheduled for the coming spring. Tenants include Regal Cinemas, Coldwater Creek, California Pizza Kitchen, and the Bombay Company. The chairman of retail leasing at Prudential Douglas Elliman Real Estate, Faith Hope Consolo, said, "The Shops at Atlas Park is going to permanently transform that neighborhood to the best of national retail shopping in all of the boroughs."

A few weeks ago, Alexander Incorporated, a real estate investment trust whose majority shareholder is Vornado Realty Trust, received approval for its mixed-use development, Rego Park II Queens. The property is at the intersection of the Long Island Expressway and Junction Boulevard. The trust plans to build about 600,000 square feet of retail space on four levels, 450 apartments in two towers, and about 1,400 spaces on a parking deck. The Century 21 Department Store company has entered into a long-term lease for 122,000 square feet of space.

Next month, Lester Petracca's Triangle Equities is expected to begin construction on a 300,000-square-foot retail center occupying the second and third floors at the Junction, at the intersection of Flatbush and Nostrand avenues in the Midwood section of Brooklyn. Anchored by Target, it includes a 515-car parking garage. A major portion of the center is being built using air rights from Long Island Railroad. The projected cost is more than $100 million, and it is expected to be finished in May 2007.

Five years ago, Octagon Properties bought the former IBM manufacturing plant in the Bedford-Stuyvesant section of Brooklyn. The property is at 585 DeKalb Ave., at the intersection of Nostrand Avenue. Octagon redeveloped the five-acre property and in August an 110,000-square-foot Home Depot opened to its first customers.

One of the largest retail developments in Lower Manhattan will be built later this year by Edward Minskoff. Construction is scheduled to begin on the 1.1 million-square-foot residential complex bounded by Warren, Murray, Greenwich, and West streets. When completed in 2007, the project will include 230 condominiums and 162 rental apartments. The retail component will include a 55,000-squarefoot Whole Foods Market, the first major supermarket in the area.

Major retail developments are in various stages of planning in Harlem, the Bronx, Queens, and Long Island. If demand for retail space is an indicator, the future is bright indeed.

 

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