TRD’s ranking of top retail leasing brokerages in four major markets shows that a few thriving chains are offering bright spots in gloomy markets
New York City
Updated May Property owners seem to be willing to get a bit unconventional these days to keep rent payments rolling in amid the ongoing waves of store closures.
Indoor amusement parks, doctors’ offices, movie theaters, gyms and even discount stores — once considered undesirably downmarket — are plugging holes in vacancy-riddled shopping centers and storefronts as rents decline, leases shorten and concessions spike, brokers and owners say.
The Real Deal’s ranking of the top leasing deals and brokerages in major markets in the U.S. reveals that, despite efforts by national firms to boost their retail teams in recent years, the marketing of stores is still largely a local game outside of Los Angeles and New York City. “We’re all trying to do the best we can,” said Marty Shelton, an L.A.-based broker with NAI Capital, the second most active retail leasing brokerage in L.A. County, with 718,825 square feet rented over the past 12 months, according to TRD’s analysis.
To rank the top brokerages in leasing for Chicago, Miami, L.A. and New York, TRD examined data provided by commercial real estate services firm Lee Associates NYC on new retail leases and renewals in those markets from April 2017 to March 2018. Brokerage leasing totals and deals were shared with the firms, which were given the option to submit additional information.
The country’s most populous city, which is also a major draw for tourists on shopping sprees, has not been insulated from the retail collapse. Once-vibrant shopping districts in Manhattan — like Fifth Avenue, Madison Avenue, Soho and Bleecker Street — continue to be pocked with empty storefronts.
As in other U.S. markets, the list of top New York leases over the past year includes many tenants in the business of offering “experiences,” a heavy-in-rotation retail buzzword.
To wit: The largest deal of the last 12 months was Equinox Fitness’ renewal of its nearly 66,000-square-foot, two-level space at Midtown’s One Park Avenue, a 22-story, full-block office building at East 32nd Street majority-owned by Vornado Realty Trust. The deal, which was handled in-house by Vornado, closed last spring.
Similarly, Chelsea Piers, the vast Manhattan sports complex, leased a 52,000-square-foot, two-level space at 33 Bond Street, a new 25-story rental in Brooklyn from developer TF Cornerstone. A 25-yard pool, yoga studios and a cafe will be included the property, which earned a fourth-place finish. In the transaction, the landlord was represented by Winick Realty Group, the fourth most active retail brokerage in New York, with 547,000 square feet under its belt.
Even though New York sees tens of millions of visitors a year, retail in tourism-rich districts like Times Square — including restaurant concepts that are performing well in other markets — has also struggled, brokers say.
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At 11 Times Square, an office tower developed by SJP Properties on West 42nd Street, two high-profile restaurants collapsed after about only a year: an offering from Señor Frog’s, a national restaurant chain; and Urbo, a farm-to-table eatery.
“Times Square is actually under-restaurant-ed,” said Joshua Strauss, an executive vice president with RKF, which markets the tower. “But if you don’t have an offering that’s compelling, no one is going to come.”
Now 11 Times Square will serve up a 48,000-square-foot, three-level virtual-reality-themed indoor amusement park from the film studio Lionsgate. The first of many planned across the country, the attraction will draw on movies and TV shows like “The Hunger Games” and “Mad Men.”
The asking rent on the 20-year lease, which includes options to renew, was $8 million a year, “and we got close to it,” Strauss said.
SJP is offering an unspecified amount of free rent while Lionsgate and its operator, Parques Reunidos Group, extensively renovate the location, which will open in 2019. “Experience is driving retail,” Strauss added. “It’s not just a fad. It’s the wave of the future.”
In terms of the present, RKF is New York’s busiest retail brokerage, with more than 1 million square feet leased in the last 12 months, according to TRD’s analysis of data, which was provided by Henry Abramov from Lee Associates NYC. RKF seems to be that rare national firm with regional dominance, even though the 20-year-old company’s roots are in Manhattan.
Other national players with similar clout in New York include Cushman Wakefield (No. 5 with 523,000 square feet) and Newmark Knight Frank (No. 6 with 431,000 square feet).
But local firms have also finished strong, like Winick, as well as Ripco Real Estate (No. 2 with about 872,700 square feet).
Ripco had a hand in the city’s second-largest retail deal, the lease of about 57,000 square feet in the Hub section of the Bronx by Burlington Coat Factory, now known as just Burlington after an early-2017 rebranding. Located in a bustling shopping district, the store is owned by A H Acquisitions, a retail-focused developer helmed by longtime retail investor Alex Adjmi. Ripco repped A CNS Real Estate was the agent for Burlington.
“It’s in a terrific transportation hub, close to the subway and buses,” Cliff Simon of CNS told TRD last summer about the deal. “It’s an old historic shopping street with great density.”
Burlington, a rapidly expanding discount apparel chain with about 640 stores in 45 states, also took 55,000 square feet in Kings Plaza Shopping Center, a mall in Mill Basin, Brooklyn, owned by Macerich. Other tenants at the mall, which opened in 1970, include Old Navy and H M. The Brooklyn Burlington lease, which is for 10 years and has three options for extensions, was the third-biggest transaction last year.
L.A. County is tightly focused on making sure the bottom doesn’t fall out of the retail leasing market.
To accomplish this, the sprawling metropolis is thinking small. Tenants continue to experiment with pop-up stores, flocking to small spaces of less than 10,000 square feet that come with leases of just a few months. These short-term deals are trending at the same time that there’s an increase in calls to brokers from tenants asking how they might lower their rents, though those efforts are usually unsuccessful, brokers said.
Large-scale retailers are also shrinking footprints to appeal to the tastes of millennials — who reportedly dislike cavernous stores — and to save on real estate costs, which are of particular concern in booming L.A.
As large retailers see upticks in their e-tailing businesses, vast brick-and-mortar locations are less important anyway, said Shelton of NAI Capital, citing the example of Target, which usually occupies 150,000-square-foot stores and as of press time was still looking for a 22,000-square-foot berth in the Hollywood neighborhood.
Similarly, Kohl’s, a department store chain, closed several locations across L.A. in the last two years, in part, according to news reports, to save on expensive leases.
One of Kohl’s closed locations in San Gabriel will welcome what appears to be the first California outpost of the British grocery chain Asda in what was the fourth-largest lease in the county over the last 12 months. Asda entered into an 80,000-square-foot sublease deal brokered by Colliers International, the fourth most active L.A. County retail leasing brokerage, according to TRD’s ranking, with nearly 345,000 square feet rented.
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Like Colliers, CBRE — which is No. 1 in L.A. with nearly 1.6 million square feet leased — is a national firm. But West Coast agencies are also active, like NAI Capital, in second place, and Centers Business Management, which is focused on shopping centers and t上海贵族宝贝交流区