Wednesday, April 18, 2007

The Harlem Revival Brings in the Shops

Square Feet

The Harlem Revival Brings in the Shops

Tina Fineberg for The New York Times
A three-story retail complex next to the Apollo Theater is planned.

Published: April 18, 2007

An increasingly vigorous retail scene on Harlem’s main commercial street is likely to gain further headway in the next five years as four parcels are set for development into offices and shops geared to a residential population that is becoming more prosperous.

Tina Fineberg for The New York Times
Carol’s Daughter is one retailer
marketing to more prosperous
Harlem customers.

Scattered along the bustling 125th Street corridor from Second Avenue to Amsterdam Avenue in northern Manhattan, each of the projects includes two or more floors of retailing aimed to attract high-profile and high-fashion national chains that historically have been absent from the mix in Harlem. Real estate professionals say they understand that a prominent department store is also looking at the street.

“Retailers are getting the message,” said Eric S. Yarbro, senior vice president of CB Richard Ellis, a commercial brokerage firm. “They are looking at the market and wondering how they can tap into the existing density and those higher-income families that now have to go south of 96th Street to get the basic services they need.”

The projects that are on the books include a 30,000-square-foot three-story retail complex at 261 West 125th Street next to the Apollo Theater. It is being developed by Grid Properties in partnership with the Gotham Organization, according to Drew Greenwald, the president of Grid Properties. The site had been a vacant lot since the mid-1980s, when fire destroyed a small office building.

On the corner of West 125th Street and Lenox Avenue, Wharton Realty is developing a 33,000-square-foot parcel into 230,000 square feet of space that includes three stories of retailing and either a community facility or residential units on upper floors. The shops could open as early as next spring. A five-story building with about a dozen stores at ground level formerly occupied the site.

Vornado Realty Trust will be developing the southwest corner of Park Avenue and East 125th Street. According to a spokeswoman, the project is expected to be in excess of 600,000 square feet with several levels of retailing capped by numerous floors of office space. Formerly a parking lot owned by the New York College of Podiatric Medicine, it is adjacent to the Metro-North train station.

On East 125th Street between Second and Third Avenues, a proposed development involves three contiguous parcels owned by New York City. From October to January, the city’s Economic Development Corporation solicited bids for the six-acre site, where the plans include 300,000 square feet of retail space. A portion of that is expected to be taken by national chains while other space is earmarked for local retailers, restaurants, a movie theater, nonprofit cultural groups and 1,000 units of affordable housing. According to the development corporation, a hotel is also a possibility. In the late 1990s, there were plans to develop the site into an outlet mall, but community opposition quashed that idea.

The final size and scope of the new projects will not be determined until a river-to-river rezoning plan currently in the works is passed by the City Planning Department; no date has been set for approval.

Business is brisk, meanwhile, along the corridor. FedEx Kinkos signed its first lease in the area last month, joining a roster that includes Staples, Starbucks, Marshall’s, Pathmark, Children’s Place, Old Navy and H&M.

A Chase bank branch is moving to a larger 6,000-square-foot location adjacent to its original in Harlem USA, a multilevel urban retail complex, where other tenants are also expanding. Open only since December, Chuck E. Cheese, the Texas-based family entertainment and restaurant chain, is adding 5,000 square feet to its original 15,000 square feet of space. The New York Sports Clubs, one of the charter tenants in the complex when it opened in 2003, is expanding for the second time.

According to Mr. Greenwald, the developer with the Gotham Organization of Harlem USA, his lessees on this swath of 125th Street report that average sales in January were 30 percent ahead of sales one year earlier.

Among locally owned businesses that are specifically aimed at more sophisticated customers are Citarella, the specialized grocery chain; the high-end MAC makeup line; and Carol’s Daughter, a bath-and-skin-care products company. Others include the restaurant Mo-Bay, which serves Southern and Jamaican specialties; the Harlem Lanes bowling alley and restaurant; the Triple Candie gallery exhibition space; and farther afield, a brunch spot called the Settepani Bakery.

According to Barbara Askins, president and chief executive of the 125th Street Business Improvement District, the vacancy rate has hovered between 2 and 3 percent for some time.
Despite that, and the street’s status as a transportation hub with subways, buses and a Metro-North station, rents have remained much lower than in comparable shopping corridors around the city.

Rates are now $150 to $200 on prime blocks between Lenox Avenue and St. Nicholas Avenue, according to figures provided by RKF & Associates. This compares with $400 a square foot for comparable property on East 86th Street and Lexington Avenue or $275 a square foot on Broadway in the West 80s and West 90s. Both of those areas are relatively near to Harlem and are already frequented by residents of the neighborhood.

Prices on 125th Street have increased by only 50 percent over the last five years, said Barry Fishbach, executive vice president for RKF. Prices in the two neighborhoods farther south have doubled in that time.

Prices on 125th Street vary greatly according to location and age of the buildings, which range from 100-year-old low-rise structures to gleaming complexes like the Harlem Center.

Eugene Fata, principal in the Fata Organization, who owns a number of buildings on West 125th Street, as well as a vacant parcel at 350 West 125th Street, says the spread among his leases is from $30 a square foot to “$200 in select corner locations.”

Scott Auster, a broker with the Ripco Real Estate Corporation, said rents on East 125th Street are much lower than those on the busier West 125th Street. “Rents range from about $100 per square foot to $125 per square foot on East 125th Street,” he said. “It’s less developed. There’s less retail over all and less traffic.”

But, over all, the continued vigor of the housing market from 96th Street to 145th Street and the planned expansion of Columbia University are giving the area the critical mass of consumers that attract retailers.

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