The stretch of Sixth Avenue from 23rd to 34th Streets has long been home to a mix of Flower District merchants and wholesale dealers selling items like pocketbooks and wigs. But now, as the wave of residential towers that started construction a few years ago moves into the final phase of completion, more ground-floor retail spaces are opening up.
In a Webcast interview last month, The Real Deal’s Jill Gardiner spoke to two retail brokers to find out whether the 23rd Street retail barrier dividing the eleven-block stretch from more upscale stores in Chelsea is finally coming down. High-end retailer Gracious Home is set to open its doors next month at the Chelsea Landmark on Sixth Avenue between 25th and 26th streets, and across the street at the Chelsea Stratus, David’s Bridal, T-Mobile and a new spa have signed deals for new retail space.
And with new projects at 855 Sixth Avenue and 885 Sixth Avenue, thousands of feet of new retail space is coming down the pike.
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First, The Real Deal speaks to Bruce Spiegel, head of commercial leasing at Rose Associates.
The Real Deal: You signed a deal with Gracious Home a couple of months back. Tell us a little bit about the challenge in signing them above 23rd Street on this stretch of Sixth Avenue, which really didn’t see this caliber of retailer until now.
Bruce Spiegel: Gracious Home, as you know, has stores on the Upper East Side and the Upper West Side, and they had been in the market for some time looking for a third location. I think they recognized the fact that many of their competitors were below 23rd Street here on Sixth Avenue. They recognized that there was an opportunity for them here.
TRD: It’s interesting that you got Gracious Home here given that they’re a home furnishings store. Home furnishings stores are struggling, at least nationwide — some of them have filed for bankruptcy, and some of them are closing in New York. What’s different about Gracious Home? How were they able to sustain another space this size and expand during this economic downturn?
BS: Gracious Home is truly a New York institution as far as a retail tenant is concerned. With all due respect to the national tenants, [which are] a little more formulistic.
TRD: [The location’s size of] 17,000 square feet wasn’t large enough, so you were able to get them additional space next door. Tell us about that.
BS: We reached out to a contiguous building, and we were able to conclude a second transaction with them where they’ll be opening up a design center at 45 West 25th Street.
TRD: What do you really see for the future of this strip? Do you really feel that a barrier has been broken?
BS: Unquestionably, the retail will change here; retail follows residential.
Next, The Real Deal catches up with Ariel Schuster, senior vice president and partner at Robert K. Futterman & Associates.
TRD: You have about 18,000 square feet of retail space [at the Chelsea Stratus]. You’ve signed a lease with David’s Bridal, T-Mobile and a spa. Tell us a little bit about that. What’s the status, when are they moving in, and how much remaining space do you have?
Ariel Schuster: All three tenants including the first Manhattan David’s Bridal will be taking possession in about a month. Hopefully, they’ll be rushing to get open for the holiday season.
TRD: Tell us a little bit about the challenges in luring some of these tenants in, especially restaurants. There really aren’t that many around here.
AS: Part of the challenge is to educate retailers and the restaurateurs about the area north of 23rd. Historically, 23rd Street was a physical and psychological barrier.
TRD: Talk a little bit about the ballpark of rents you’re getting now, and compare that to a couple of years ago.
AS: If you compare the deals that were done today to the first wave, which are in some of the earlier buildings, the rents have certainly tripled. The earlier deals were done in the $60 to $80 range. We’re now well north of that.
TRD: How much of a role did the fact that Gracious Home had already signed across the street impact your ability to convince tenants to sign here?
AS: Convincing the tenants to come here wasn’t the hard part; Gracious Home’s effect was to get the rents even higher.
TRD: What kinds of retailers do you expect to creep up Sixth Avenue toward 34th Street, [and what’s next for this area?
AS: Sixth Avenue is converging from both ways. It’s going from Herald Square down, [but] it’ll take a little while for it to completely connect. It’s pretty established from 23rd to 28th. Most of the blocks have been developed, with a few exceptions. The real void is between 28th and 32nd Streets. Hopefully, as all those projects come online, it will be one continuous stretch.