Sunday, December 2, 2012

Lower Manhattan Prepares for Huge Retail Growth

Four new shopping hubs are right on track as Lower Manhattan eyes a major revitalization. Despite the near-term dislocations caused by Sandy, the area will experience change in a huge way over the next three years. Already several hundred million dollars are beginning to pour into the creation of four giant retailing hubs covering more than 1 million square feet of space. 

Brookfield Place and Pier 17, as well as the new World Trade Center and in the Fulton Center shopping malls, are pinning their hopes on a growing army of tourists, and several major residential conversions.

In early October, the financial district welcomed an unusual newcomer, in the heart of a neighborhood far better known for high finance than high fashion. A three-story department store called Trinity Place—boasting trendy European-label apparel and accessories sprawled over 26,000 square feet of highly polished hardwood floors—opened at 61 Broadway.

Even Marian Rebro, the store's chief executive, acknowledges that his choice of locales might strike some as odd. "Why would I want to go where there are no good retailers or shopping?" he asked. "I look at this as an opportunity and a challenge."

Mall Mecca

The latter point is certainly true, now more so than ever in the havoc wrought by Superstorm Sandy. Nevertheless, the fact is that the storm is just one more hardship in a retail market that never recovered from the loss on 9/11 of the vast, highly successful mall in the World Trade Center. There's no real apparel retail or fashion retail; it is all food and service, so any of the major retailers have been hesitant to locate there because they do not have that synergy.

Despite the near-term dislocations caused by Sandy, that may change in a huge way in the next three years. Already several hundred million dollars are beginning to pour into the creation of four giant retailing hubs with a total of nearly 1 million square feet of space, roughly equivalent to Macy's nine-floor flagship at Herald Square.

Two of them, Brookfield Place, formerly known as the World Financial Center, and Pier 17 on the East River will be radical revamps. The other two, at the World Trade Center and the Fulton Street Transit Center, will be brand new. What their owners share is an ironclad conviction that there is a place for large-scale retailing, which once flourished in the vast lower reaches of the original World Trade Center.

They are pinning their hopes on a growing army of tourists, several looming residential conversions—including the 66-story former AIG headquarters—and four hotels expected to arrive by 2014. What's more, that is the same year that World Trade Center towers 1 and 4 will open.

New Malls Coming to Lower Manhattan 

   World Trade Center
   Developer: Westfield Group
   Location: Vesey Street
   Size: 365,000 square feet
   Opening Date: 2015

   Brookfield Place
   Developer: Brookfield Properties
   Location: 200 and 250 Vesey St., 200 and 225 Liberty St.
   Size: 200,000 square feet
   Opening Date: 2014

   Pier 17 at South Street Seaport
   Developer: Howard Hughes Corp.
   Location: 89 South St.
   Size: 195,000 square feet
   Opening Date: 2015

   Fulton Center
   Developer: Metropolitan Transportation Authority
   Location: Broadway at Fulton Street
   Size: 70,000 square feet
   Opening Date: 2014

Temporary Impact

Already there is much for retailers to work with. The Downtown Alliance estimates that lower Manhattan has about 57,000 residents, with an average annual household income of a hefty $188,000. In addition, the area's office towers house 310,000 employees, and last year's opening of the National September 11 Memorial is drawing record numbers. Last year, visitors to the area skyrocketed to 9.8 million. All of the various consumer groups are growing, and the momentum that lower Manhattan has experienced is not going to change because of the storm.

Five years ago, the arrival of luxury retailers Tiffany & Co. and Herm├Ęs seemed to herald the dawning of a new age for lower Manhattan, but the recession put such hopes on hold. Two or three stores cannot make a retail neighborhood. Meanwhile, the area's two most famous retailing stalwarts—J&R Music and Computer World and Century 21—have not only endured but have expanded.

Century 21 began renovating its flagship earlier this year, with various upgrades including more changing rooms and bathrooms. It also added 70,000 square feet to its existing 120,000-square-foot store.

Similarly, electronics institution J&R, which has been in lower Manhattan for more than four decades, recently opened a children's store, J&R Jr., to cater to the rising population of families in the neighborhood.

The new 15,000-square-foot shop, also located on Park Row, sells everything from strollers and baby gear to electronic toys.

The downtown restaurant business is also heating up.

Yet most important, the arrival of a supermarket on the east side of the area, introducing an option beyond the Whole Foods in TriBeCa, has cemented the area as livable. This fall, Key Food opened a 30,000-square-foot, three-story gourmet market at 55 Fulton Street, offering 24/7 service and free local delivery.