Empire State Building Joins Landlords With Retail Space to Fill
(Bloomberg) -- One of the world’s most famous skyscrapers is about to have a massive amount of retail space to fill.
The owners of the Empire State Building are relying on its standing as a New York icon to find tenants for about 50,000 square feet (4,600 square meters) at a time when Manhattan is swamped with empty stores. Along with the marketing effort, the tower’s observatory entrance will be moved to 34th Street from Fifth Avenue.
The skyscraper, which opened in 1931 and attracts more than 4 million visitors a year, has probably never had this much retail space available, according to Jeffrey Roseman, an executive vice president at brokerage Newmark Knight Frank. With some of New York’s heaviest pedestrian traffic, the corner would be immune to some of the problems that have plagued other landlords who are struggling with vacancies as e-commerce cuts into sales, he said.
The Empire State Building “is its own unique submarket of the city,” Roseman said.
After pushing rents to record highs, retail landlords have had to cut asking rents in some New York submarkets, including the skyscraper’s Herald Square area, according to a report last week by brokerage Cushman & Wakefield. Still, the site -- across 34th Street from one of Amazon.com Inc.’s first physical bookstores -- will be one of the most in-demand in Manhattan, said Joanne Podell, executive vice chairman for retail services at Cushman, which is marketing the space.
“Tenants that are in the market looking for a location with high density along a shopping corridor, I would think they would make this one of their priorities,” Podell said.
Landlord Empire State Realty Trust Inc. is marketing ground-floor, concourse and second-floor real estate in the tower and has started a “gut rehab of all retail space for the first time since the building opened,” said Dana O’Donnell, a marketing account executive for the company.
Through the first nine months of 2017, retail produced just $5.6 million of the $233.1 million generated by the skyscraper, down from $7.2 million in the same period the year before, according to a regulatory filing by the landlord.
About 36,000 square feet of below-grade concourse space with 19-foot (5.8-meter) ceilings should be particularly appealing to tenants, Podell said. About 24,000 square feet of that is available now, and the rest belongs to Heartland Brewery and Rotisserie, whose lease runs through 2020. Also freed up is real estate that was occupied by Bolton’s, a women’s clothing merchant that had a store-closing sale last week. Podell declined to say what rents the landlord is seeking.
New retail tenants would join chains such as Walgreens, Juice Press and Starbucks. Like those, they’ll have to forgo using their own logos: The city’s Landmarks Preservation Commission requires that store signs be in the building’s distinctive Art Deco style.
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