From the NY Post: Luxury brands lead NYC retail leasing boom, rents ramp up

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By Lois Weiss, NY Post, Published Oct. 27, 2023, 8:57 a.m. ET

Side by side of office buildings in NUC.
Storefronts from Soho to the Upper East Side dazzle as tenants race to gobble up space around Gotham.iStockphoto/AFP/Getty Images

Not only has the retail apocalypse caused by the pandemic passed, Manhattan has rebounded so fast that prime locations are becoming hard to find.

“Retail is on fire,” said Eric Le Goff of Retail by Mona. “From Meatpacking to Williamsburg, all these areas are on fire.”

In recent years, rents on upper Madison Avenue between 59th Street and 86th Street had fallen into the $600s per foot. Now, a bevy of 75 transactions have pushed rents back toward $1,000 per foot.

The most recent lease was with Dolce & Gabbana which snagged a 23,338-square-foot former Hermès women’s store at 693 Madison Ave. after the other retailer moved down the block to the larger 706 Madison Ave. last year.

Additionally, Sotheby’s will take over the former Whitney Museum in the Breuer building at 945 Madison, adding new life to that stretch.

“There is a reduced amount of inventory,” said Matthew Krell of Alvarez & Marsal Property Advisor

Both Madison and Fifth avenues are going through many store changes

Exterior of Dolce & Gabbana.
Dolce & Gabbana will move to the former Hermès space on Madison.

The opening of Tiffany & Co.’s redevelopment will allow its sister LVMH brand, Louis Vuitton, to move into the former Nike space to its east that Tiffany had occupied during its renovation.

Louis Vuitton will develop a new tower at 1 E. 57th St. and engulf 743 Fifth Ave., now occupied by brand cousin Hublot, sending it into the market to seek a new spot.

Gucci has renewed its large store on the Fifth Avenue base of Trump Tower. Swarovski is opening soon at 680 Fifth. Rolex is building its own tower at 665 Fifth Ave., while Marc Jacobs will take over the former Armani X on the north corner of East 51 Street at 645 Fifth Ave.

Exterior of the Gucci store on Fifth Avenue.
The Gucci store at the base of Trump Tower on Fifth.

The area closer to 42nd Street is lagging, however, due to numerous big-box storefronts.

One problem for the entire retail market is that it takes so long to get deals done.

“You may have an agreed-upon term sheet, but you are not getting someone swinging hammers for a year,” said Matthew Chmielecki of CBRE. “The least scientific way to measure a market is to count empty storefronts.”

Interior of female guests at Electric Shuffleboard.
Fun new spaces like Electric Shuffle are opening.

For instance, a new 10,000-square-foot deal in the base of the Virgin Hotel will bring Electric Shuffleboard to the city next spring.

John Few, of SRS Real Estate Partners, represented the concept.

“It has a very well-thought-out food and beverage program and will be good for dates and corporate events,” said Adam Weinblatt of Newmark who, along with Richard Tang of the Lam Group, represented the hotel, which has already scored a winner with Swingers minigolf.

In Noho, the 32,400-square-foot former Showfields space on Lafayette Street is up for grabs with Retail by Mona. Its asking rent is $3.5 million.

Across Lafayette, hip sneaker company Kith expanded into a big footprint.

“It’s madness with tons of people,” said Brandon Singer of Retail by Mona. “It’s like an upscale Times Square as it’s slammed and they’re not just looking, but shopping.”

On Broadway and on other Soho streets, many shops are preparing for their openings next spring while Meatpacking continues to see commitments by both luxury automakers and luxury retailers.

Exterior of Gansevoort Row.
A revived five-building retail corridor is luring top brands to Gansevoort Row.

Saint Laurent, for instance, signed a 13,000-square-foot lease at 70 Gansevoort St., part of the Aurora Capital Associates and William Gottlieb Real Estate street revival.

“It’s full of energy and that neighborhood has transformed over the last five years,” said Adam Henick of Current Real Estate. “Gansevoort Row is beautiful with busy restaurants and popular retailers.” However, Times Square is still suffering despite lots of foot traffic.

“Not only have some of the large boxes sat vacant because it’s hard to find the right user, but the challenges the city has undergone the last few years have not helped,” said Henick.

The 245,000-square-foot retail in the base of the former New York Times building is in receivership, although the huge Bowlmor on West 44th St. is open, as is Los Tacos No. 1.

“Larger tenants are looking at it,” said Chmielecki, the agent for the block. “It’s hard to overstate the excitement in the retail market.”

This article appeared in the NY Post.

New York Slows Down in Construction Starts of Industrial Properties

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The construction landscape in New York is slowing, with fewer construction starts taking place in 2023 compared with recent years.

This year, developers already have completed 8.3 million square feet across the first three quarters and are on pace to finish less than 10 million square feet, considering construction starts have declined in the past two quarters.

The projected year-end total is a notable drop, compared with the nearly 16 million built in 2022, and the 11 million built in both 2021 and 202

Adrian Ponsen, CoStar’s national director of industrial analytics, said the root cause of the slowdown is “the series of interest rate increases initiated by the Federal Reserve in early 2022, which has helped curtail the record wave of new distribution center development that was underway. Throughout the summer of 2023, industrial tenant demand softened and the pullback in groundbreakings grew more extreme.”

The slowdown in construction starts is occurring as completions are rising. About 11.7 million square feet has been completed so far in 2023. This figure is forecast to rise to nearly 17 million square feet by year’s end.

The completion of these newer industrial properties has played a part in the rise in industrial availability, as supply outpaced demand, with leasing activity underwhelming over the past 12 months. The availability rate in New York stands at 8.2%, a notable increase from the 5.7% measured at the start of 2022. The relative slowdown in leasing demand, the completion of more than 18 million square feet of new industrial space since 2022, and the negative 2.8 million square feet of annual negative absorption — or change in occupancy over a given period of time — driven by home goods retailers vacating distribution centers have been the main causes behind the rise in availability.

About 19.1 million square feet of industrial space is still under construction, which is a figure not far from the high of 22.6 million square feet during last year’s third quarter. This bevy of future supply is the driving force behind the continued vacancy increase forecast over the next 12 months. However, if the rate of new construction starts were to continue moderating, vacancy levels may begin tightening again by 2025 once the bulk of new buildings now under construction have been completed.

From Costar, Victor Rodriguez, CoStar Analytics

New York opens its marijuana market to larger competitors as retailers fear being squeezed out

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From Euronews:

The US state promised the first retail licenses to previously convicted marijuana sellers. In most cases, it didn’t happen.

Only about two dozen marijuana dispensaries formerly convicted by New York authorities have opened their doors since legal recreational cannabis sales were launched in the state in December last year.

Officials promised many of the first retail licences to sellers with past drug convictions, hoping to give them a chance to succeed before competitors crowded in.

However, legal challenges over the state’s permitting process have left more than 400 provisional licensees in limbo. Marijuana farmers are also staggering because there are too few stores to sell their harvest.

Amid these troubles, New York regulators are now expanding the market. They recently opened up a 60-day general application window to grow, process, distribute or sell marijuana, expecting to issue more than 1,000 new licenses.

The move should boost the number of legal dispensaries in a market now dominated by illegal sellers who simply opened retail stores without permission.

New rules also will allow companies licensed to grow and sell medical marijuana in the state to get into the recreational market.

But the prospect of competing with medical providers worries some farmers and retailers who fear being squashed by deeper-pocketed companies.

“My concern is that they have all the money to bleed us out,” said Coss Marte, who is opening a dispensary in Manhattan next week, after it was pushed back by a lawsuit against New York regulators.

“They’re vertically integrated. So, they could grow their own product at the cheapest price and basically outbid all the farmers, all our products and all our pricing,” he added.

CONBUD, Marte’s shop, was among those temporarily blocked by a judge from opening after a group sued on behalf of disabled veterans, saying they were wrongly excluded from applying for a licence. So Marte, who has a past drug arrest, was left paying rent on a store he could not open.

A judge recently ruled that CONBUD and several other shops could open. But they didn’t all get the same luck.

Balancing equity and competition

Like many other provisional licence holders, after months of delays in opening his store, Carson Grant was debating whether to reapply for a licence again in this 60-day general round. “It’s very difficult,” he said.

Reginald Fluellen, senior consultant to the Cannabis Social Equity Coalition, accused the state of a botched rollout.

“They’ve failed miserably in providing the justice-involved individuals the kind of head start in the market that they promised,” Fluellen said.

To guard against monopolies, the medical providers will be limited to three retail outlets. And in a nod to farmers, their shops will initially have to devote half their shelf space to products grown and processed by independent businesses.

Still, critics say regulators should have allowed more time for economically and socially diverse entrepreneurs to succeed before letting in larger competitors.

Office of Cannabis Management executive director Chris Alexander said the new regulations maintain New York’s commitment to social and economic equity, while making the market more competitive.

Alexander acknowledged there was some “frustration” in getting retail stores open, but added that the state has shown that a market supplied by small farmers can work.

“We’ve got some of the top-performing dispensaries in the country right here in New York,” he said.

And there’s still room to grow. Regulators have estimated New York will eventually require at least 2,000 dispensaries to meet demand.