By Holly Dutton
When the casual dining chain Denny’s announced it wanted to open its first Manhattan restaurant at the base of the luxury condo at 150 Nassau in the Financial District, the residents went berserk.
They filed a string of complaints with their Community Board — which had been petitioned by Denny’s for support for a wine and beer license — and told the website DNAinfo: “We do not want a Denny’s in this building.
Maybe a high-end coffee shop or a restaurant, but not a Denny’s — people who live here are definitely angry about it.”
While the Denny’s lease is in limbo, the issue of what retail is right for the base on New York city’s apartment buildings is not a new one for developers, many of whom have been credited with revitalizing whole swathes of the city thanks to wise choices in mixed-use planning.
In 2011, the Chetrit Group and Stellar Management leased the ground floor retail of Upper West Side luxury rental property Columbus Square to retailers including Whole Foods, Crumbs Bakery and Sephora, the idea was that the shops were a perfect fit for the type of tenants that inhabited the building, in an area that was previously devoid of much retail.
“It’s a high-end neighborhood now. Before it was blight,” Lauren Rosenthal, a broker at Citi Habitats, told Real Estate Weekly at the time. “It’s basically a really nice mini-mall right in a residential neighborhood.”
In Long Island City, an influx of residential development has spurred a retail revolution that is seeing the once industrial stronghold transform into a trendy neighborhood of boutiques, cafes and health markets.
Rockrose announced plans in February to build a 15,000 s/f supermarket at 43-10 Crescent St., in the ground floor space of one of its planned high-rise residential buildings.
The company is also hoping to have a music venue, beer hall and high-end restaurants along a stretch of Jackson Avenue between 43rd Avenue and 44th Drive in the Court Square area of LIC.
Rockrose purchased most of the vacant buildings along the stretch, which they hope to turn into a thriving nightlife scene.
But although the issue of retail is given much consideration by home builders, New York’s brokers believe its too often an after-thought for home buyers.
“Honestly, I have never had a client ask me that, ever,” said Patrick Lilly, a veteran Corcoran broker. “That being said, certain high-end stores seem more desirable than low-end stores.”
“So much is perception and so much is ‘Not In My Back Yard (NIMBY)’,” said Lilly. “I think the Denny’s thing is as much about NIMBY as about reality.”
According to Adelaide Polsinelli, a senior director of sales at Eastern Consolidated who specializes in the sale of retail properties, “Most people are not going to pay $3,000 or $4,000 per square foot for an apartment if it’s over a restaurant.
“They don’t want to have the grit and grime and odor that come with it. That takes away from the value of the upper floors in high-end buildings.”
Developers often ban restaurants from leasing thier building’s retail space for the first few years after a condo is completed so that they don’t put off possible buyers.
“If a developer is looking to attract a certain tenancy, they will try to have a retailer that attracts tenants they want in the building,” said Polsinelli. “They may put high-end boutiques there, something that’s not a big traffic draw, like an architect or something that’s a less pedestrian-type of business.”
The most important factors to consider, however, are who the future tenants will be and the neighborhood the building is in.
“You have to look at the demographics of the building, the overall goal of the building, or if it’s a mixed-use rental building with transient tenancy or a college area,” said Polsinelli. “In certain parts of The Village, it’s acceptable, no one cares, they like having that convenience.”
One positive to a successful chain restaurant like Denny’s would be the security of a thriving business.
“It’s nice [for the landlord] to have a tenant with good credit who will always pay,” said Polsinelli.
Polsinelli is also seeing more condo associations selling the ground floor retail. “It’s such a driving factor for values,” she said. “It could pay down certain expenditures for condo associations. Like buying a new boiler, re-bricking a building, handling expenses for condos that are not manageable or predictable, and adding to the reserve fund.
“They’ve actually given people a refund of common charges because they’re so cash flow rich.
“It’s an unbelievable phenomenon that these retail spots have become so valuable.”
