Signs of life in the retail industry in midtown Manhattan, after two real estate deals that are among the largest that have been in the city since the onset of the plague.
Paramount Group, a real estate investment group, has agreed to pay (along with a partner) more than $ 190 million for space on Broadway 1600 that houses M & M’s flagship store, according to sources familiar with the matter. The store, which covers 2,320 square meters Across three floors, sweets and gifts are sold, and it allows customers to order customized sweets. The company will remain the lessee under the existing contract until 2036.
This deal is an encouraging signal for Times Square. The plague completely emptied the office buildings and tourism disappeared, so the bustling quarter became quiet. The neighborhood was particularly affected by the sharp decline in the number of tourists from abroad.
The deal was made by the Cushman & Wakefield team, led by Doug Harmon and Adam Spice, who were also responsible for another recent deal, for the sale of commercial space on Pipette Avenue 530, in a deal that was also signed for $ 190 million.
Although the deal at Pipette Avenue 530 was relatively high for the area today, it is $ 100 million lower than the amount the current owners paid in 2014, which is a testament to how much property prices in the area have dropped in recent years.
And yet, says Harmon, retail deals on Broadway and Pipette Avenue prove the confidence that investors have in the three most challenging sectors in Midtown – retail, tourism and Times Square – on a recovery path.
“All three have been hit hard by the plague, and they are all recovering faster than even the most optimistic,” says Harmon.
Pedestrian traffic in Times Square is improving, but has not yet reached its pre-plague level, say the Times Square Alliance, an organization that works for the neighborhood and its businesses. More than 300,000 people visited Times Square the day after Thanksgiving, the most since the plague began, but still 20% less than pedestrian traffic that day in 2019. Tom Harris, president of the association, says retail is recovering, and that 77 percent of stores are now open, up from 50 percent in May.
But like other areas that depend on tourism and office workers, retailers in Times Square are still in much worse shape than they were before the plague, while housing is recovering much faster. A recent REBNY study found that the price of retail rent in Times Square dropped below $ 1,000 per square foot this fall, for the first time since 2008.
The price drop is not just bad news. Keith Decoster, information and policy director at REBNY, says several food companies that previously could not afford to rent a place in Times Square have signed contracts this year. “I think it’s going in the right direction,” says Dicoster.
“Not back to the days before the plague, but in that direction.”
The deal on Broadway 1600 was rejected because of the plague. The owner, Sherwood Equities, put the property on the shelf two years ago. The private real estate company bought the 1600 Broadway, then an office building, in 1987. The company demolished it in 2004 and then built a 25-year-old tower that includes residential apartments and a commercial unit inhabited by M & M’s World.