Commercial Real Estate & Advisory

Meat and Greet

By Steve Viuker | May 23, 2006

The Meatpacking District is feeding New Yorkers’ constant appetite for good restaurants
Food is king in NYC. According to Faith Consolo, Chairman, Retail Leasing and Sales Division at Prudential Douglas Elliman, “Food concepts – and the crop of new three and four-star restaurants calling the Meatpacking District home – have added overall to a rising market.”

Rents are at an all-time high, which has made the market more competitive for retailers, she said.

“Remember, food is fashion. We are a city of foodies, always in search of the newest freshest and most trendy.”

Read ‘trendy’ as expensive. Recently, Tom Colicchio opened Craftsteak, his Meatpacking District steakhouse and the latest in a string of successful eateries.

The soaring room is a glass-enclosed two-story and has soaring prices to match – $42 to $66 for the signature steaks. It also boasts a wine storage area and a 136-seat dining room.

“It’s crazy pricing. If this keeps up, I wonder if we’ll find people aging steak instead of hoarding gold for their savings,” laughs Chris Owles, Managing Director of Sinvin Realty.

“Restaurants make the emerging neighborhoods into destinations,” says Owles. “They are attracted by the cheap rents, because in general they have such high labor and materials costs.

“They generally sign long leases to protect themselves and amortize the extensive improvements they make to space. A 15-year lease is not unheard of.”

In places like the Meatpacking District, where rents have more than doubled in the last five years, that’s important, he said.
“Sometimes restaurants will come in early to add cachet to a new or redeveloped building and are given some relief in the rent. Jean-Georges got a deal slightly under market at the time to open Spice Market on West 13th Street.”

This paved the way for other big restaurants like Pastis and Spice Market. Market is paying $29 a square foot, a miniscule amount compared to what rents in the area are today.

Fashion companies, design firms and others have followed into the area, but are paying up for being Johnny come latelies with higher rents.

But these new tenants can pay more because their costs are so low compared to restaurants.

“They are the ones that are forcing out the restaurants that first made the Meatpacking District a destination,” says Owles.