(For more retail coverage, click GlobeSt.com/RETAIL.)
NEW YORK CITY-The lease size may not be large, but Starbucks' 1,800-sf deal at 485 Fifth Ave. is notable in what it represents--a shift down Fifth Avenue by retailers. It is also the first retail lease signed for the property since Belfonti Capital Partners acquired the property.
Starbucks' lease is for 10 years, and although the exact rental rate was not released, John Brod, principal at PBS Realty Advisors, puts the asking rate at $350 per sf. PBS Realty Advisors represented Belfonti in the transaction. Brod and Laura Pomerantz, principal, continue to market the remaining retail space for the owner. David Firestein of Northwest Atlantic repped Starbucks.
Over the past few years, retail rental rates have inched up in the neighborhood surrounding Bryant Park. Brod notes that the area of Fifth Avenue from 42nd Street to approximately five blocks south ranges between $300 and $350 per sf. "Quality retail is moving south," Brod tells GlobeSt.com. "Up until a year ago, from 57th Street to Saks was known as the DMZ line. That DMZ line is moving south. You have better retail along Fifth Avenue from 48th to 34th streets."
He notes that the retail shift follows an increase of development, both office and residential, around Bryant Park. "The development is pushing the quality of retail up," Brod explains. "There are a number of upgrades, whether office or residential, converging around Bryant Park."
Last fall, Belfonti joined with the Carlyle Group to acquire the 185,000-sf office asset from Tri-Realty Management Corp. for approximately $88 million, as GlobeSt.com previously reported. At the time, Belfonti explained it planned to invest a total $160 million to convert the site into condominiums, with multilevel retail space.
"The developers had the foresight to purchase the building and run some numbers," Brod tells GlobeSt.com. "They figured out that if it were residential it would bring greater value to the building." He adds the building is now empty of office tenants, with a few older retail tenants still remaining, and is now being gutted for redevelopment. Brod did not reveal a timeline for the opening of the condominiums; however, he does expect retail tenants to start moving in by April 2007. He and his team are in negotiations with other prospective retail tenants, but no other deals have been inked yet.
"On the southeast corner you have the Sean John store that is reportedly doing in excess of $1,000 per foot of business," Brod explains. "From a retailer's point of view, that is excellent volume." In addition, the area draws tourist traffic, with 20,000 daily visitors to Bryant Park and its close proximity to Port Authority and Grand Central Station, he adds.
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