Shop 'Till You Drop?: LIC Retail Market Growing Despite Supply Constraints
Neighborhood will need additional commercial development to cope with residential influx
by Rey Mashayekhi
As residential development has transformed Long Island City into one of New York’s fastest-growing neighborhoods, the question of whether the area has sufficient retail offerings to match has consistently lingered. With 22,000 new apartments in the pipeline, the tens of thousands of new residents promised to arrive in LIC over the next decade will need places to eat, drink, shop and play – and while the historically industrial neighborhood has traditionally lacked such amenities, this new demand is spurring unprecedented growth in its retail market.
When it comes to retailers looking to set up shop in Long Island City, “the demand is very high,” according to Troy Allen, director of retail leasing for LIC-based brokerage Modern Spaces. “Unfortunately, the supply is very limited, because we’ve only really been established in the last 10 years as a residential neighborhood.”
“As the neighborhood is developing, the demand for retail is really growing,” Allen told Living LIC. “One of the challenges is finding space for the demand that we have.”
The good news is that there is currently 395,000 square feet of additional retail space due to arrive in Long Island City by 2020 via mixed-use developments, per the Long Island City Partnership. That is new space that, in many cases, will occupy street-level frontage at the base of the new residential, office and hotel buildings that are popping up all over the neighborhood.
“Now that you have such a tremendous amount of residential development planned and breaking ground, developers are really focused on maximizing retail [at those properties],” Winick Realty Group broker Aaron Fishbein told Living LIC.
Tishman Speyer’s planned 1.1 million-square-foot office complex on Jackson Avenue, for instance, is expected to hold 43,000 square feet of retail offerings – amenities that will likely also serve the three-building, 1,900-unit residential project the developer is putting up just across the street. Elsewhere, the first phase of the massive Hunter’s Point South waterfront development, helmed by Related Companies, features roughly 20,000 square feet of retail space accompanying a 925-unit residential complex. G&M Realty’s planned residential development, on the former site of the street art mecca known as 5Pointz, is expected to hold 40,000 square feet of retail.
These offerings will certainly benefit residents at these new developments, and have succeeded in drawing tenants ranging from local small businesses to major national retailers. CVS recently signed onto more than 11,000 square feet with Related at Hunter’s Point South, while TF Cornerstone previously has had success leasing more than 30,000 square feet of retail space accompanying its East Coast development on Center Boulevard.
But there remains the question of whether Long Island City can develop a bustling retail corridor as robust as, say, Bedford Avenue in Williamsburg, which has benefitted heavily from increased residential development and created a varied, diverse commercial epicenter in the Brooklyn neighborhood. “That’s the challenge: we don’t have continuous retail corridors here,” Modern Spaces’ Allen noted.
Certain areas in LIC, however, are beginning to gain momentum in this respect. Vernon Boulevard and its surrounding streets continue to grow in terms of offerings and feature some of the neighborhood’s most exciting restaurants, while Jackson Avenue has also proven a draw with a variety of tenants; Rockrose Development lured artisanal coffee roaster Toby’s Estate, as well as a couple of new eateries from the minds behind East Village restaurants Luzzo’s and Sapporo East, to its properties on the street earlier this year. Notably, the Jackson Avenue is also now home to LIC’s first Chipotle.
In fact, though much of Long Island City’s development has traditionally been built around the East River waterfront, the more varied growth of retail and commercial offerings recently reflects positively on the neighborhood’s prospects at large. The waterfront has given way to Court Square and Queens Plaza, which are “going to end up with way more residential density than the waterfront and, with all the transit, going to be a hotter area,” according to Winick Realty’s Aaron Fishbein. “You have a lot of residential and not too many retailers, so there’s a lot of demand and a lot of buying power.”
Naturally, this dynamic has consequently seen retail asking rents in Long Island City rise – good news for landlords, yet indicative of how the neighborhood needs more retail space. Prime locations on Vernon Boulevard and Jackson Avenue can now command more than $100 per square foot, which might not amount to much compared to asking rents for prime Bedford Avenue space, but are numbers historically unheard of in Long Island City.
At 24-20 Jackson Avenue – the former home of popular eatery Sage Roadhouse, which closed earlier this year – Modern Spaces recently leased out 1,200 square feet to a new restaurant tenant at rents around $108 per square foot, according to Allen. The space was able to fetch that number “because of the low inventory” available on Jackson Avenue, he said.
Of course, LIC’s retail market still has a long way to go; for better or worse, the neighborhood has yet to prove a draw among big-box retailers or popular grocery chains like Trader Joe’s, while fashion retailers and clothing boutiques have yet to carve a niche (as they have in Williamsburg and Greenpoint) and make the area anything resembling a shopping destination.
But if there’s one rule governing Long Island City’s real estate market at this juncture, it’s that if you build it, the people will surely follow. And as long as LIC continues to grow at this rate, developers and retailers alike will have no choice but to give the people the restaurants, bars, shops, stores and amenities they’ll need.