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BIG RIPE APPLE

Retailers and developers bet big on New York City’s outer boroughs, Harlem

BY DONNA MITCHELL

New York City is seeing retail development on an unprecedented scale, especially in its long-overlooked outer boroughs and in Harlem.

In Brooklyn, the Bronx, Queens and Staten Island, about 1.4 million square feet of new retail space either is under way or just recently opened. That’s a far cry from a few years ago, when outer-borough residents had to travel to Long Island to shop big-box stores, or hop the subway to Manhattan to shop at department and specialty stores.

So what has put the outer boroughs on the map all of a sudden? For one thing, rents for retail space which are about half what they are in Manhattan, where prices average about $150 per square foot, says Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide, a New York City-based retail brokerage. But that’s not all. “There is tremendous customer loyalty in the boroughs,” she said.

New York City (all five boroughs) currently averages about 5 square feet of retail per capita, according to real estate services firm Cushman & Wakefield. That pales next to the 20-square-foot per capita U.S. average, according to the National Research Bureau’s 2003 Shopping Center Census. Such a short supply of retail space translates into a low retail vacancy rate, about 3 percent, says Barry Fishbeck, an executive vice president at the New York City-based retail real estate brokerage company Robert K. Futterman & Associates.

Bridge & tunnel breakdown
With 2.4 million residents and a daytime population of 1.8 million, Brooklyn is seeing the most action. The borough’s racially diverse consumer base reports a median yearly household income level of $44,425, just above the national median income of $43,318, according to Troy, N.Y.-based research firm MapInfo Corp. Target opened its first store in the borough in 2002 at regional mall Gateway Center. It opened a second in July, in Fort Greene, at Forest City Ratner’s 280,000-square-foot Atlantic Terminal. Now Target is planning to open a third, to anchor Triangle Equities’ 280,000-square-foot Triangle Junction Midwood, Brooklyn. Ikea also plans to open a store in Brooklyn, and Forest City is looking to build another center there.

The king of Queens
Queens is New York’s second most populous outer borough after Brooklyn, with 1.3 million people, and it is no less diverse ethnically. Queens, where residents have a median yearly household income of $57,418, is home to The Macerich Co.’s regional Queens Center mall, which recently underwent a major renovation. In October local developer A & Co. broke ground on The Shops at Atlas Park, in Glendale, Queens, a project it is billing as New York City’s first lifestyle center.

The Bronx
Retailers are also learning not to underestimate the Bronx, where an additional 1.3 million people live. True, the Bronx has the lowest median yearly household income of all the boroughs, at $37,070. And it boasts no regional malls, just some neighborhood centers, a power center and a couple of department stores, says Fishbeck. But the Bronx does have Fordham Road, one of the city’s two most profitable retail streets outside Manhattan. Fulton Street in Brooklyn, surpasses Fordham Road, with average rents of slightly more than $200 per square foot. About 220,000 people live within a mile of the intersection of Grand Concourse and Fordham Road, where retail rents are almost $200 per square foot, says Fishbeck. Now national retailers are entering the market. The Shopco Group is planning to open a Linens ’n Things, a Levitz furniture store and a bank branch at its 1.3 million-square-foot Bay Plaza.

Staten Island, with its limited mass transit systems and only one mall, has a captive consumer base of 459,235 people and a median yearly income of $74,886 per household. That even beats Manhattan’s median household income of $65,821. National big boxes are finding that they can open stores on Staten Island without having to eliminate parking lots or drastically change their traditional formats, says Fishbeck. Burlington Coat Factory and Lowe’s recently opened stores there, and Target plans to join them with its first, in the Charleston Center, a power center project of the New York City-based Blumenfeld Development Group.

Thor Equities, a New York City-based development firm, has not had much trouble persuading retailers to take space in its projects in Brooklyn, Manhattan and several U.S. inner cities, says Joseph Sitt, Thor’s president. “We’ve seen the demand,” Sitt said. “The challenge they have is the physical structure. Here it takes creativity to deal with the big boxes and vertical construction.”

And with the numbers some retailers are reporting, more national chains are likely to give the outer boroughs another look, Consolo says. Macerich’s Queens Center continues to pull in about $920 in sales per square foot annually, while Vornado Realty’s Kings Plaza regional mall in Brooklyn posts $579 per square foot in yearly sales. Brooklyn’s Fulton Street, where Thor Equities’ Gallery at Fulton Street is located, pulls in about $825 per square foot.