By Josh Lipton, ONE Commercial Realty Services
Office, retail and cultural property sales and development on the horizon, coupled with demographic changes and building that’s already taken place, promise to transform the area, ONE Commercial Realty’s Josh Lipton reveals in this EXCLUSIVE commentary.
Take a stroll down the 125th Street commercial corridor, which runs through the heart of Harlem, and you could be forgiven for thinking you are on a prime retail stretch in Midtown. National brands like Starbucks, Old Navy, The Gap, Banana Republic, Red Lobster, Blink and Designer Shoe Warehouse populate the retail stretch, and many more are slated to follow in the coming months. In 2016, Whole Foods the Burlington Coat Factory, American Eagle, Olive Garden and TD Bank, will establish a presence near the 2 and 3 trains on Lenox Avenue.
Factor in the lease commitments from WeWork and Bed Bath & Beyond at Aurora Capital’s 5-15 West 125th Street, and Artimus Construction’s rehabilitation of the Corn Exchange Building—at 125th Street and Park Avenue—to office space suited both for tech startups and traditional tenants and it’s easy to see why Harlem is becoming one of the city’s most desired neighborhoods.
Hotels, eateries, movie theaters and fitness studios have dotted the streets cape. Within the last few years, the 210-room Aloft Hotel opened its doors and Grid Properties constructed a three-story building at 269 West 125th Street, anchored by Red Lobster—another first in Harlem.
Property values have benefited from Upper Manhattan’s booming retail and residential markets. Retail rents are approaching $200-per-square-foot, condo sellouts are exceeding $1,300-per-square-foot and rental developments are reaching approximately $55-per-square-foot.
Cushman & Wakefield is marketing for sale 145 East 125th Street, a commercial building with office space and ground floor retail. The 36,000-square-foot property is receiving interest from established and new buyers alike. Last June, Cushman oversaw the sale of 246-248 West 125th Street, a retail/redevelopment opportunity totaling 5,000 square feet and 27,248 buildable square feet. The property sold for $16.5 million, or $3,300-per-square-foot.
A recent rezoning of 125th Street allows developers to take advantage of flexible mixed-use zoning while an expansion effort by Columbia University will result in an influx of new students. There are seven subway lines servicing the neighborhood and 900,000 people walking 125thStreet every month. Consider increased median incomes (there’s been a 40% increase since 2000) and a rise in new residents (seven-percent increase since 2000), and one can see how the volume, pace and scale of projects being developed will transform Harlem.
Among the notable upcoming projects along the 125th Street corridor are the Taystee Project; the Victoria Theater Redevelopment and the Wharton Properties Retail development. Located between Amersterdam and Morningside Avenues, Taystee will feature over one million square feet of retail, office, not-for-profit and manufacturing space.
Approximately $150 million in public and private funding is slated to transform the Victoria Theater, which sits vacant, into a 354,000-square-foot mixed-use building with a 200-room hotel, 5,000-square-foot ballroom and approximately 200 apartments. Meanwhile, the Wharton project includes about 200,000 square feet of commercial space. Whole Foods will occupy the complex with a roughly 39,000-square-foot store.
Scaffolds on nearly every block signal the arrival of national tenants who want to be in a resurgent Harlem, an area where the residential composition and median incomes of the locals have changed dramatically in the last two decades. The new businesses will offer better quality goods for many who were denied them for way too long.
Josh Lipton is an Executive Managing Director of Investment Sales at ONE Commercial Realty. The views expressed in this column are the author’s own.
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