11/21/08

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Upper West Side Retail Creeps Upward

Once upon a time, Morningside Heights, near the 116th Street campus of Columbia University, was part of the great beyond, at least from a retail broker's perspective. But today, the character of the Upper West Side is creeping upwards, past the traditional 96th Street boundary, while Morningside Heights is moving down.

With the addition of large new condo buildings in between, the area "is becoming one big stretch," says Andrew Goldberg, an executive vice president at CB Richard Ellis.

The result? A rapidly changing retail climate.

Neighborhood supermarkets are the unlikely but illustrative nexus of the two areas, says Scott Edlitz, managing director of Robert K. Futterman & Associates. In recent months, there has been an exodus of traditional grocers, as high-end natural food purveyors have moved onto Broadway north of 96th Street.

"There's been a lot of shuffling around," he says.

Across the street from the Columbia gates, a swanky Morton Edwards opened its doors, while the West Side Market down the street closed its doors. Gourmet Garage has also opened for business on Broadway and 97th Street.

One factor prompting a retail upgrade is that new condo buildings offer big retail spaces on the ground floors, Goldberg says.

"Out go some of the older tenants and in come the nationals," he says.

Edlitz says retail rents in the neighborhood have not skyrocketed, but have risen at a rate consistent with other parts of the city, and are now in the range of $110 to $140 per square foot.

"But the quality and the credit of the tenants has gone up," he says.

One example: Two years ago, the New York Sports Club, Starbucks and Symphony Space moved into a large new space on Broadway and 94th that would have once been considered simply the edge of the Upper West Side. Now it's seen as mainstream, despite its northern location, brokers say.

Still, no one seems to be expecting the stretch of Broadway between 96th Street and Columbia to look like it does in the 70s and low 80s, dotted with stores such as The Gap, Victoria's Secret and Ann Taylor.

At this point, there doesn't seem to be a need for the fashion retailers that have set up shop farther south, Edlitz says. "You see more service types of businesses," he says.

But as Broadway becomes stronger, some destination retail tenants are considering spaces on Columbus Avenue past 96th Street, a territory that only recently was considered desirable, Edlitz says.

"There are fewer and fewer spaces on Broadway," he says. "It's a continuation of growth."