Prime Commercial Real Estate On West 42nd Street Gets A Facelift
Tishman plans to ask just $800 per square foot for the project’s prime ground floor retail space.
Madison Avenue, 5th Avenue, West 42nd Street—New York’s most iconic retail areas. At least, the latter will be, once landlord Tishman Realty gives the street a facelift.
Tishman is planning a $65 million renovation of the 400-foot long shopping strip of storefronts located between 7th and 8th Avenues. In an unprecedented move, Tishman plans to ask just $800 per square foot for the project’s prime ground floor retail space. This is just a mere third of what top end retail spaces can fetch in nearby neighborhoods. Planning to clean up the existing jumbled facade, Tishman aims to begin the renovations in 2018. It expects to complete and welcome new tenants in 2019.
Considering that new tenants will receive billboard signage in the area as part of their lease—a perk which would usually cost millions of dollars—and the eminence of the project’s locale, these rents seem like the deal of the century. Patrick Smith, retail leasing broker at JLL, firmly agrees. “There really aren’t opportunities other than this to be in 30,000 square foot or 50,000 square foot right now in Times Square,” he says.
Indeed, the areas around Times Square and Midtown are notoriously pricey, with top-end rents fetching over and above a staggering $1,000 per square foot. Which makes Tishman’s $800 per square foot 42nd Street rents seem perfectly reasonable. So why are the landlords asking so little for what promises to be prime commercial real estate?
Well, for a start, West 42nd Street, in spite of heavy foot traffic (in the region of 34 million people annually), doesn’t have quite the pull of Times Square or Chelsea. And while these new prices might initially seem low, they are still high for West 42nd Street.
In fact, they’re the highest rents to date for the street. According to Agorafy data, the average retail rental price in the neighborhood is $429 per square foot, with 3,000 square foot units fetching a hefty $658,958 per month.
Built in the late 1990’s, the current strip plays host to 240,000 square feet of prime retail space, and over the years, as tenants have come and gone, the facade has become jumbled and lacking unity. The new renovation plans aim to give the strip a total overhaul to look more like the city’s other powerhouse shopping areas, like 5th Avenue, and while some existing tenants will remain along the street—current tenants include Cold Stone Creamery, Regal Cinemas, and Starbucks—many new tenants will be sought out for the updated units. Other current tenants will simply relocate to smaller or larger stores.
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