Special to Real Estate Weekly
Commercial Sales and Leasing Issue
It was just five years ago that people began talking about the transformation of the Meatpacking District into New York’s newest hot spot. In one of the surest signs of successful gentrification, debate more recently has surged over what to call the area located west of the West Village and south of Chelsea, with the old-time appellation “Gansevoort Market” bandied about as a substitute for “the Meatpacking District” and “the Meat Market”.
The impact of the recession and the tragedy of September 11th have failed to halt the positive changes in the neighborhood. Today, newly renovated loft buildings and unimproved structures provide a range of rents and tenants from artists to high-end advertising agencies, giving the area an appealing and vibrant diversity.
Despite the deflation of rents citywide, rents in the Meatpacking District have continued to increase. However, the rate of increase and the low base point at which rents started still allow tenants to make affordable leases.
Retail tenants, for example, pay an average of $50 per square foot to $60 per square foot for new leases. Compare that to $500 on Fifth and Madison Avenues, or $250 in Soho. By comparison, the Meatpacking District is relatively affordable.
Retailers who move into the neighborhood now do so at that happy median point. They are midway between the risk-taking pioneers on one hand, and on the other the trend followers who only rent in fully established areas, and pay a price for that strategy.
Commercial rents have also risen significantly from their lows $12-$14 per sq. ft. in 1995. Even so, tenants today can benefit from a slight softening in rents, which hovered around $40.00 per square foot for quality space a year ago. Today, the same space can be had for rents in the low thirties per square foot.
As the Meatpacking District becomes a center of gravity in its own right, a long-hidden secret is being let out. The area that was at one time considered isolated is actually quite easy to access, bordering large parts of both the Village and Chelsea.
Soho is often held out as a model for the Meatpacking District. Every New Yorker is familiar with the 30-year evolution of the cast iron neighborhood. Earlier in the century, it barely escaped being demolished and paved over with a cross-Manhattan expressway. Then it began its long transformation that slowly saw its warehouses covert to residential, office, gallery and retail uses.
The Meat Packing District has been evolving at relative hyperspeed. Its process began in earnest five years ago, accelerated during the past three years and is currently moving into high gear. It benefits from the spillover of art galleries and trendy restaurants from Soho and Chelsea. Within a few weeks, I will be able to announce the arrival of at least two major arts-oriented tenants on West 13th Street.
In fact, a series of recent leases, openings and planned developments have given the area the critical mass it needs to complete its evolution. At the same time, businesses and residents have begun to take necessary steps to protect the area’s essential character, so that future growth does not undermine its appeal.
Also, several new development projects are proposed for the area. Sinvin is the exclusive leasing agent for one of the largest building in the Meatpacking District, the dramatic speculative redevelopment at 29 Ninth Avenue. When complete, the loft building will have been completely transformed into a first-class office building with new mechanical systems, a new lobby, two new passenger elevators, new bathrooms and HVAC for each tenant, high-speed Internet services and 24-hour, seven-day access. The windows at 29 Ninth Avenue have been enlarged to allow in abundant natural light to flood into the loft spaces. Classic architectural details have been preserved, such as exposed wood beams, brick walls and high ceilings.
The first tenant to sign on at 29 Ninth Avenue is Jean-Georges Vongerichten, whose 15,000 square-foot restaurant will open as early as 2002. The Swiss furniture manufacturer, Vitra taking over 12,000 sq. ft., is relocating its showroom and opening its first New York store on the ground and second floors of the building, as well.
Developer, Landmark Development Company LLC, is planning a three-building project that will include an unprecedented 32-story residential condominium tower at 848 Washington Street, at the West Side Highway. The design was put forward by Jean Nouvel, one of the more heralded architects in the world and the winner of Japan Art Association’s 2001 Award for Lifetime Achievement in Architecture.
Bodum, the Danish producer of stylish kitchen and coffee accessories, has opened its first U.S. store in the Meatpacking District. Alexander McQueen, now part of Gucci, has a store under construction that will be Bodum’s new neighbor on 14th Street. Agns B and Stella McCartney are also reportedly close to signing for retail space in the neighborhood. Nearby, Philips Auction House is believed to be taking approximately 20,000 square feet at 450 West 15th Street, between Ninth and Tenth Avenues.
In one of the neighborhood’s most exciting projects, Richard Born and Ira Drucker are planning a hotel in the portholed former Covenant House building, on the East side of 88 Ninth Avenue, between 16th and 17th Streets.
As a necessary corollary to the encouraging growth in the neighborhood, efforts are underway to protect the cobblestone streets and low-rise former meatpacking plants and other buildings that make the neighborhood so unique, and attractive to diners, shoppers and businesses.
The Save Gansevoort Market campaign is the most important organization to come out of this effort. In The New York Times recently, one of its representatives said the group’s goal is “to preserve the unique character of the place.”