Jones Lang LaSalle
A Tower Goes Up, and a Neighborhood Perks Up
By ALISON GREGOR
The Bloomberg Tower at 731 Lexington Avenue, with an upscale residential portion called One Beacon Court, is transforming the commerce of a neighborhood.
The district was once known for its battling department stores, Bloomingdale's and Alexander's. But Alexander's closed in 1992 and the area was dominated for years by the store's gloomy facade until the building was demolished in 1999.
That was followed by years of construction, when shoppers wandered along 59th Street from the Plaza Hotel, at the southeast corner of Central Park, to Bloomingdale's, three blocks to the east, but not much farther.
But with the opening in 2004 of the 1.4-million-square-foot glass skyscraper that houses the headquarters of Bloomberg L.P., the financial news company, and an office for Citigroup, on the full block where Alexander's once stood, a series of new retail outlets, from clothing shops to banks, is rejuvenating a slightly down-at-the-heel neighborhood.
The developer, Vornado Realty Trust, one of the nation's largest owners and managers of commercial real estate, has "changed a neighborhood that was somewhat of a lackluster market to more of an upscale market," said Gary Trock, a senior vice president at CB Richard Ellis and a prominent retail real estate broker. Vornado declined to be quoted for this article.
Vornado handpicked the tower's retail tenants and included the first large national chains to have stores in the neighborhood: Home Depot, the apparel store H&M and the Container Store, which sells storage and organization products.
Vornado also installed two banks, Bank of America and Wachovia, on the Third Avenue side of its skyscraper. The latest incarnation of the renowned restaurant Le Cirque is in a ground-floor location on the tower's motor court, an atrium between two connected towers where pedestrians and automobiles can move between 58th and 59th Streets.
But commercial brokers said Vornado did not stop there. The developer also acquired buildings around the Bloomberg Tower to export its retail flavor to an even larger swath of the neighborhood.
"It was a strategy by Vornado to master plan not only the block that the Bloomberg building sits on, but the neighborhood to some degree," said Josh N. Kuriloff, an executive vice president at Cushman & Wakefield. "They did this with a keen eye toward architecture. They, in my opinion, single-handedly and dramatically increased the value of the neighborhood."
Thus, Vornado built 715 Lexington Avenue, which is architecturally similar to the Bloomberg Tower and has 23,000 square feet of retail space housing the clothing store New York & Company and Zales Jewelers. Just south of that store on Lexington, a space is being renovated for the cosmetics retailer Sephora.
In 2005, Vornado also built the gleaming low building south of the tower at 968 Third Avenue, which houses a pharmacy.
Besides buildings with retail space, Vornado also owns the Architecture and Design Building at 150 East 58th Street, across 58th Street from the Bloomberg Tower. The A & D building is an integral part of a neighborhood long known as a shopping mecca for the interior design trade.
"Vornado is a smart landlord and a knowledgeable landlord, and they decided to go on a shopping spree and ended up buying as much as they could within the marketplace," Mr. Trock said.
Other real estate owners and retailers in the neighborhood are also upgrading their properties. The UJA-Federation of New York is doing a $95 million gut renovation of the building that houses its main offices at 130 East 59th Street. The clothing stores Gap and Banana Republic have leased space in the building for many years, and there will be 85,000 square feet of office space to lease. They are part of a row of apparel retailers along Lexington Avenue that includes Levi's, Nine West, Diesel, Zara and Kenneth Cole, among others.
While Lexington Avenue was always a lively shopping strip, perhaps the biggest renaissance in the area attributed to the Bloomberg Tower has been along Third Avenue.
"The true value was added on the Third Avenue corridor, because that was a less active zone originally," said Gene Spiegelman, an executive director at Cushman & Wakefield.
The potential of the avenue has not escaped real estate developers. In recent years, the developer Donald Zucker constructed a residential building at 997 Third Avenue, cater-corner to the northeast of the Bloomberg Tower, and, in December 2004, leased almost 20,000 square feet of retail space to the clothing store Urban Outfitters.
A tattered old building immediately to the south at 59th Street and Third Avenue, which once had a Pax Wholesome Foods, Dunkin' Donuts and newsstand, will soon be torn down and replaced with a glass-encased North Fork Bank, and will have 6,400 square feet of space and a storage basement, brokers said.
The retail renaissance is not confined to the blocks immediately around the tower, said Scott I. Edlitz, managing principal of ZE Realty, who is marketing 2,500 square feet of retail space in the Urban Outfitters building. Mr. Edlitz said he believed that apparel tenants were displacing the more traditional furniture and home décor vendors in the area.
Mr. Edlitz said rents were increasing because big clothing retailers were "entering the market and pushing the furniture tenants, who typically need more space, further south and east."
Some business owners, especially those who cater to the interior design industry and have showrooms on the street, said they had picked up a few clients among residents of One Beacon Court in the Bloomberg Tower, which has 105 apartments, ranging in price from just under $2 million to $27.5 million.
"Our problem was all the construction, and that's over," said Jahanshah Nazmiyal, owner of Rug & Kilim, which sells antique and decorative carpets at 204 East 59th Street.
Other retailers east of Third Avenue, an area that has traditionally had more service-oriented retailing, like restaurants, locksmiths, dry cleaners, cocktail lounges and delicatessens, said they were feeling the pinch of the Bloomberg Tower, either in the form of rising retail rents or more competition for the potential customers in the office tower and in One Beacon Court.
"I used to be the only baby store," said Stuart Sherman, president of Go To Baby at 315 East 57th off Second Avenue. "Then three years ago, two more opened. Now there's a total of five. With more traffic comes more competition, so it probably evens out."
A Tower Goes Up, and a Neighborhood Perks Up
By ALISON GREGOR
The Bloomberg Tower at 731 Lexington Avenue, with an upscale residential portion called One Beacon Court, is transforming the commerce of a neighborhood.
The district was once known for its battling department stores, Bloomingdale's and Alexander's. But Alexander's closed in 1992 and the area was dominated for years by the store's gloomy facade until the building was demolished in 1999.
That was followed by years of construction, when shoppers wandered along 59th Street from the Plaza Hotel, at the southeast corner of Central Park, to Bloomingdale's, three blocks to the east, but not much farther.
But with the opening in 2004 of the 1.4-million-square-foot glass skyscraper that houses the headquarters of Bloomberg L.P., the financial news company, and an office for Citigroup, on the full block where Alexander's once stood, a series of new retail outlets, from clothing shops to banks, is rejuvenating a slightly down-at-the-heel neighborhood.
The developer, Vornado Realty Trust, one of the nation's largest owners and managers of commercial real estate, has "changed a neighborhood that was somewhat of a lackluster market to more of an upscale market," said Gary Trock, a senior vice president at CB Richard Ellis and a prominent retail real estate broker. Vornado declined to be quoted for this article.
Vornado handpicked the tower's retail tenants and included the first large national chains to have stores in the neighborhood: Home Depot, the apparel store H&M and the Container Store, which sells storage and organization products.
Vornado also installed two banks, Bank of America and Wachovia, on the Third Avenue side of its skyscraper. The latest incarnation of the renowned restaurant Le Cirque is in a ground-floor location on the tower's motor court, an atrium between two connected towers where pedestrians and automobiles can move between 58th and 59th Streets.
But commercial brokers said Vornado did not stop there. The developer also acquired buildings around the Bloomberg Tower to export its retail flavor to an even larger swath of the neighborhood.
"It was a strategy by Vornado to master plan not only the block that the Bloomberg building sits on, but the neighborhood to some degree," said Josh N. Kuriloff, an executive vice president at Cushman & Wakefield. "They did this with a keen eye toward architecture. They, in my opinion, single-handedly and dramatically increased the value of the neighborhood."
Thus, Vornado built 715 Lexington Avenue, which is architecturally similar to the Bloomberg Tower and has 23,000 square feet of retail space housing the clothing store New York & Company and Zales Jewelers. Just south of that store on Lexington, a space is being renovated for the cosmetics retailer Sephora.
In 2005, Vornado also built the gleaming low building south of the tower at 968 Third Avenue, which houses a pharmacy.
Besides buildings with retail space, Vornado also owns the Architecture and Design Building at 150 East 58th Street, across 58th Street from the Bloomberg Tower. The A & D building is an integral part of a neighborhood long known as a shopping mecca for the interior design trade.
"Vornado is a smart landlord and a knowledgeable landlord, and they decided to go on a shopping spree and ended up buying as much as they could within the marketplace," Mr. Trock said.
Other real estate owners and retailers in the neighborhood are also upgrading their properties. The UJA-Federation of New York is doing a $95 million gut renovation of the building that houses its main offices at 130 East 59th Street. The clothing stores Gap and Banana Republic have leased space in the building for many years, and there will be 85,000 square feet of office space to lease. They are part of a row of apparel retailers along Lexington Avenue that includes Levi's, Nine West, Diesel, Zara and Kenneth Cole, among others.
While Lexington Avenue was always a lively shopping strip, perhaps the biggest renaissance in the area attributed to the Bloomberg Tower has been along Third Avenue.
"The true value was added on the Third Avenue corridor, because that was a less active zone originally," said Gene Spiegelman, an executive director at Cushman & Wakefield.
The potential of the avenue has not escaped real estate developers. In recent years, the developer Donald Zucker constructed a residential building at 997 Third Avenue, cater-corner to the northeast of the Bloomberg Tower, and, in December 2004, leased almost 20,000 square feet of retail space to the clothing store Urban Outfitters.
A tattered old building immediately to the south at 59th Street and Third Avenue, which once had a Pax Wholesome Foods, Dunkin' Donuts and newsstand, will soon be torn down and replaced with a glass-encased North Fork Bank, and will have 6,400 square feet of space and a storage basement, brokers said.
The retail renaissance is not confined to the blocks immediately around the tower, said Scott I. Edlitz, managing principal of ZE Realty, who is marketing 2,500 square feet of retail space in the Urban Outfitters building. Mr. Edlitz said he believed that apparel tenants were displacing the more traditional furniture and home décor vendors in the area.
Mr. Edlitz said rents were increasing because big clothing retailers were "entering the market and pushing the furniture tenants, who typically need more space, further south and east."
Some business owners, especially those who cater to the interior design industry and have showrooms on the street, said they had picked up a few clients among residents of One Beacon Court in the Bloomberg Tower, which has 105 apartments, ranging in price from just under $2 million to $27.5 million.
"Our problem was all the construction, and that's over," said Jahanshah Nazmiyal, owner of Rug & Kilim, which sells antique and decorative carpets at 204 East 59th Street.
Other retailers east of Third Avenue, an area that has traditionally had more service-oriented retailing, like restaurants, locksmiths, dry cleaners, cocktail lounges and delicatessens, said they were feeling the pinch of the Bloomberg Tower, either in the form of rising retail rents or more competition for the potential customers in the office tower and in One Beacon Court.
"I used to be the only baby store," said Stuart Sherman, president of Go To Baby at 315 East 57th off Second Avenue. "Then three years ago, two more opened. Now there's a total of five. With more traffic comes more competition, so it probably evens out."
posted by Jones Lang LaSalle NJ News Blog at 3:01 PM
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