By Patrick Hedlund
Lower East reality A six-story residential/retail loft building on the Lower East Side hit the market for $23.25 million last week, featuring 18 renovated units and four ground-floor storefronts.
The fully occupied property, at 126-130 Orchard St., is ripe for the plucking by foreign investors, who could utilize the building’s J-51 tax abatement “while raising rents to the legal limit as fast as the market will bear,” according to Stuart Gross, executive director of building marketers Eastern Consolidated.
The rent-stabilized building, between Delancey and Rivington Sts., secured a 15-year J-51 tax abatement after renovations in 2002, and the residential units feature 20-foot ceilings, plus two penthouse units with rooftop gardens.
The property’s retail compliments are also “significantly under market,” said Eastern Consolidated senior director Deborah Gutoff, adding that prices there currently average $68 per square foot. “But since their leases all expire within the next two years, the new owner will be able to increase rates as much as 40 percent, to $115 to $125 per square foot at present market rates,” she said in the statement.
But Nadeem Waheed, owner of Daniel’s Leather in the building’s ground floor since 1992, said the turnover of tenants on his block puts every new store’s survival in question.
“It’s a bloodbath right now… We have never seen years like this,” he noted of the spate of retail tenants who open new businesses, only to close a short time later and the spaces sit vacant. “If they think a new guy can come and make it, that’s wishful thinking.”
If rents at Waheed’s space were raised even slightly, he said he’d simply pack up and leave. “People get lured into thinking there’s money here,” he added, saying business at his store has been decreasing each year. “All the time there’s moving trucks.”
Hot for retail Asking rents along retail stretches in Soho and the Financial District rose over the past six months compared to the same period last year, according to a report last week by the Real Estate Board of New York, while rents in Tribeca decreased.
Retails rents in Soho, along Broadway from Houston to Broome Sts., increased 32 percent from last year, to $424 per square foot. In the Financial District, on Broadway between Battery Park and Chambers St., rents jumped by 12 percent year over year to $198 per square foot.
In Tribeca, however, on Hudson St. between Chambers and Canal Sts., retail rents dropped by 21 percent, to $113 per square foot.
According to REBNY, five new corridors have been added to the report’s list of “Selected Major Retail Corridors,” including Bleecker St. in the West Village. The new data showed that asking rents on Bleecker St., between Seventh Ave. S. and Hudson St., were at $397 per square foot.
Overall rents Downtown — including Soho, the Financial District, Tribeca and the West Village, averaged $103 per square foot, a 5 percent increase from a year ago. Of the six areas studied — the East Side, West Side, Midtown, Midtown South, Downtown and Upper Manhattan — Downtown ranked the fourth-highest overall.
“Building owners remain optimistic that the favorable market for retail leasing will continue despite the softening economy,” stated Steven Spinola, REBNY president.
Apple to drop in FiDi? Computer giant Apple may be looking to open its newest store in the Financial District on a rich retail stretch of Wall St. near the Stock Exchange.
The company — which already operates stores in Soho, Midtown and recently the Meatpacking District, and has a penchant for innovative build-outs — has reportedly shown interest in the impressive space at 23 Wall St., near the corner of Broad St.
Owners of the currently empty, 12,500-square-foot building there, Africa Israel Investments, hired firm Robert K. Futterman & Associates to handle retail leasing for all 180,000 square feet at the address and the adjacent 15 Broad St., according to a report in the New York Post.
The immediate area has increasingly become a draw for high-end retailers, including nearby Hermes and Tiffany & Co. Mixed Use wonders whether some of these stores will welcome or scoff at the new tenant’s possible arrival, as upscale retailers in the Meatpacking District have seen Apple as too pedestrian for their preferred clientele.
Buildings boost It’s been a rough year for building in Manhattan, with a series of construction accidents and the recent resignation of the Buildings Department commissioner; so, Mayor Bloomberg announced this week more than $5 million to be put into the agency’s budget for new hires to boost enforcement and safety.
The funding, part of the mayor’s fiscal year 2009 budget, will allow D.O.B. to take on 63 new positions by injecting $5.3 million for the “Special Enforcement Plan” implemented last summer.
Fifty-six additional inspectors and administrators will be taken on to launch the third phase of the plan, a “multi-phase initiative to increase the Department’s presence on construction job sites, increase audits and unannounced inspections, and tighten oversight over the professional certification program,” read a joint statement by Bloomberg and new D.O.B. Acting Commissioner Robert LiMandri.
This phase includes the new “Construction Monitoring Program,” which will add staffers to oversee “milestone points” in new projects by auditing at different construction intervals; “Violation Re-inspection Teams,” which will conduct follow-up and surprise inspections of sites where building violations have not been corrected, and to confirm proper remediation of such violations; and the “Sidewalk Shed Electrical Safety Program,” which will ensure that the required electrical lighting of pedestrian sidewalk sheds near construction sites is safe and up to code.
“We are in the midst of a historic building boom,” Bloomberg said, “and the added development demands that we devote sufficient resources to aggressively enforce site safety.”
The investment brings the total number of inspectors to 461, up from 277 in 2002.
mixeduse@communitymediallc.com
