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A new look for Port Authority retail

Liana Grey for Real Estate Weekly

By Liana Grey

Several weeks ago, Paris Hilton celebrated her 30th birthday at the last place you might expect to find a socialite: the second floor of the Port Authority Bus Terminal.

Flanked by police officers, the hotel heiress made her way to a luncheon hosted by the United Service Organization, a nonprofit with an office in the North Wing of the terminal, which sits a block west of Times Square.

Hilton didn’t stick around afterwards to go bowling and dancing at Frames — an entertainment center that’s become a popular party spot among tourists and corporate types in recent years – or grab drinks at the Heartland Brewery, another recent addition to the 60-year-old terminal’s bourgeoning retail scene.

But her visit is nonetheless a hopeful sign for the Port Authority, which has struggled to shake a reputation as a crime-ridden commuter hub, and attract a wider range of shoppers to its cafes, electronics stores, and discount clothing outlets like Strawberry and Bolton’s.

“The area around the Port Authority has gotten so much better,” said Faith Hope Consolo, chair of Prudential Douglas Elliman’s retail division. “It had a bad rap.”

During its worst years, hundreds of pan-handlers and drug addicts camped out by gates and stairwells, and “phone hustlers” took over payphones, selling illegal international calls at cheap rates, according to a Rutgers University report on efforts to clean up the terminal.

In the nineties, retail outlets — particularly national chains like Duane Reade and Au Bon Pain — were introduced to fill the nooks and crannies where cocaine dealers and prostitutes carried out their business.

A prime example is the 41st Street entrance to the North Wing, which had a vacant alcove that encouraged loitering. “The Port Authority brought Timothy’s Coffee, a high-quality coffee-shop chain, into the same area with a back wall of glass,” the Rutgers report, titled Redesigning Hell, explained. “The recessed wall was filled in by brick. This entry now had no hiding places and plenty of quiet and natural supervision from Timothy’s.”

Existing stores, which were magnets for shoplifters due to poor layout and obstructed windows, underwent a major overhaul. The terminal became relatively clean and safe. But it never transformed into an upscale shopping destination like, say, Grand Central, the architecturally appealing Metro North hub across town.

“It’s so hard to compare Grand Central and the Port Authority,” said Jacqueline Klinger, a partner at Northwest Atlantic and a member of the team that introduced luxury retail to Grand Central back in the nineties. “The demographics are different.”

The train station’s boutiques, such as MAC cosmetics and TOTO, and iconic restaurants, like the Oyster Bar and Cipriani Dolci, attract not only Westchester and Connecticut commuters — half of whom earn an annual income of over $100,000 — but tourists stopping by to photograph the building’s cavernous main concourse, and well-off residents of Midtown East, where the average income is $69,000 and where 11% earn over $200,000.

Retail in the Port Authority, on the other hand, is geared largely towards one kind of shopper: harried commuters served by three dozen bus lines to New Jersey, many of whom work at midtown offices.

To serve office workers and the residents of Midtown West — a neighborhood lacking the affluence and cachet of the blocks surrounding Grand Central — an eclectic mix of independent shops cropped up along Eighth Avenue, including delis, hole-in-the-wall ethnic restaurants, book stores, liquor shops, and dive bars. “It’s never going to be luxury,” Consolo said.

Still, with parts of Midtown West redeveloping, the Port Authority area is at least poised for an upgrade.

A handful of strip clubs and porn shops on Eighth Avenue — remnants of the area’s seedier days — have been condemned, said Consolo, and will likely shut down within the year. And the block has benefitted from the retail boom in nearby Times Square, where rents were the second highest in the city last quarter, according to a report by Cushman and Wakefield.

“Retail sales driven by substantial tourist foot traffic in this area make it highly desirable to retailers to open locations here, prompting average ground floor asking rents to reach over $1,000 psf,” according to the report.

Swanky new office buildings along West 42nd Street also boast desirable ground-floor retail space.

Over the summer, the brokerage firm RKF was tapped to lease storefronts at Eleven Times Square, Steve Pozycki’s gleaming new 40-story tower just across from the Port Authority on Eighth Avenue. “We’re looking for a few of our clients,” said Klinger of Northwest Atlantic, who predicts that a major retailer will ultimately lease the space. “You can’t not look there.”

Apart from its location on a bustling street corner near the Crossroads of the World, the tower is benefiting from the rise of luxury rental complexes in the historically commercial and industrial neighborhood, Klinger added. “There’s a huge opportunity for Eighth Avenue, the Port Authority, and Eleven Times Square to capitalize on residential development,” she said.

At a recent panel discussion on the evolution of Times Square and Midtown West, Steve Siegel, chairman of global brokerage at CBRE, predicted that “Eighth will become the new Sixth” as storefronts at the base of new developments fill up. “I remember when people didn’t want to go west of Fifth Avenue,” he said.

That was about 25 years ago, when the developer Larry Silverstein took a gamble on Midtown West and bought an industrial parcel on 42nd Street between 11th and 12th Avenues for $20 million. “I had a belief that 42nd Street could have enormous value,” he told attendees at the panel discussion, which was hosted by Bisnow on the 34th floor of Pozycki’s tower.

After convincing former mayor Ed Koch to rezone the parcel from industrial to mixed use, and battling a lawsuit in court accusing Silverstein and City Hall of engaging in illegal spot zoning, Silverstein built River Place and Silver Towers, a cluster of sleek glass rental buildings that are home, he said, to a total of 2,200 families.

“They drew attention to 42nd Street and the immediate west side,” he said. “There’s been a massive influx of development activity.”

Following in Silverstein’s footsteps, Joe Moinian opened his Atelier and,just this month, Related Companies opened MiMA, a mixed use development with rentals, retail space, and an Off-Broadway theater designed by Frank Gehry. “One MiMa Tower at 42nd and 10th should bring in a very affluent market,” said Consolo. “The rents are astronomical.” (Many studios are in the $3,000 range.)

But given that incomes in Midtown West vary drastically (the average is $42,000, with about 18% of residents living below the poverty line and five percent earning more than $200,000), and that a large portion of foot traffic on Eighth Avenue is still generated by office workers and commuters in a hurry, what’s most likely to thrive near the Port Authority is affordable to mid-range retail, Consolo explained.

“You have to really think about consumers,” she said, and how much time and money they have to spend. Montenapo, a high-end Italian restaurant at the base of the New York Times Building, another prominent new office building near the terminal, shut down not long after opening. But Schnipper, a trendy burger shop next door, appears to be booming.

As for the Port Authority itself, which has about 2,437 s/f of available retail space on the ground floor right now, a more finely-tuned aesthetic makeover might be a good idea now that safety concerns have been addressed. “They have to beautify it, the key being the lighting,” said Consolo.

And to reflect the improving retail scene on Eighth Avenue, run-of-the-mill chain stores could be swapped out for classier ones. The terminal might benefit, for instance, if Hudson News were replaced with Papyrus (which has a store in Grand Central) and a nice wine shop was introduced, Consolo mused.

Pret A Manger, she added, might make a good addition to a food scene largely dominated by pizza and fast-food chains, with the exception of a farmer’s market that now opens every Thursday.

“People will come in there to dine if there’s something good,” said Consolo. “It doesn’t necessarily need to be a three-star restaurant.”

Several weeks ago, Paris Hilton celebrated her 30th birthday at the last place you might expect to find a socialite: the second floor of the Port Authority Bus Terminal.

Flanked by police officers, the hotel heiress made her way to a luncheon hosted by the United Service Organization, a nonprofit with an office in the North Wing of the terminal, which sits a block west of Times Square.

Hilton didn’t stick around afterwards to go bowling and dancing at Frames — an entertainment center that’s become a popular party spot among tourists and corporate types in recent years – or grab drinks at the Heartland Brewery, another recent addition to the 60-year-old terminal’s bourgeoning retail scene.

But her visit is nonetheless a hopeful sign for the Port Authority, which has struggled to shake a reputation as a crime-ridden commuter hub, and attract a wider range of shoppers to its cafes, electronics stores, and discount clothing outlets like Strawberry and Bolton’s.

“The area around the Port Authority has gotten so much better,” said Faith Hope Consolo, chair of Prudential Douglas Elliman’s retail division. “It had a bad rap.”

During its worst years, hundreds of pan-handlers and drug addicts camped out by gates and stairwells, and “phone hustlers” took over payphones, selling illegal international calls at cheap rates, according to a Rutgers University report on efforts to clean up the terminal.

In the nineties, retail outlets — particularly national chains like Duane Reade and Au Bon Pain — were introduced to fill the nooks and crannies where cocaine dealers and prostitutes carried out their business.

A prime example is the 41st Street entrance to the North Wing, which had a vacant alcove that encouraged loitering. “The Port Authority brought Timothy’s Coffee, a high-quality coffee-shop chain, into the same area with a back wall of glass,” the Rutgers report, titled Redesigning Hell, explained. “The recessed wall was filled in by brick. This entry now had no hiding places and plenty of quiet and natural supervision from Timothy’s.”

Existing stores, which were magnets for shoplifters due to poor layout and obstructed windows, underwent a major overhaul. The terminal became relatively clean and safe. But it never transformed into an upscale shopping destination like, say, Grand Central, the architecturally appealing Metro North hub across town.

“It’s so hard to compare Grand Central and the Port Authority,” said Jacqueline Klinger, a partner at Northwest Atlantic and a member of the team that introduced luxury retail to Grand Central back in the nineties. “The demographics are different.”

The train station’s boutiques, such as MAC cosmetics and TOTO, and iconic restaurants, like the Oyster Bar and Cipriani Dolci, attract not only Westchester and Connecticut commuters — half of whom earn an annual income of over $100,000 — but tourists stopping by to photograph the building’s cavernous main concourse, and well-off residents of Midtown East, where the average income is $69,000 and where 11% earn over $200,000.

Retail in the Port Authority, on the other hand, is geared largely towards one kind of shopper: harried commuters served by three dozen bus lines to New Jersey, many of whom work at midtown offices.

To serve office workers and the residents of Midtown West — a neighborhood lacking the affluence and cachet of the blocks surrounding Grand Central — an eclectic mix of independent shops cropped up along Eighth Avenue, including delis, hole-in-the-wall ethnic restaurants, book stores, liquor shops, and dive bars. “It’s never going to be luxury,” Consolo said.

Still, with parts of Midtown West redeveloping, the Port Authority area is at least poised for an upgrade.

A handful of strip clubs and porn shops on Eighth Avenue — remnants of the area’s seedier days — have been condemned, said Consolo, and will likely shut down within the year. And the block has benefitted from the retail boom in nearby Times Square, where rents were the second highest in the city last quarter, according to a report by Cushman and Wakefield.

“Retail sales driven by substantial tourist foot traffic in this area make it highly desirable to retailers to open locations here, prompting average ground floor asking rents to reach over $1,000 psf,” according to the report.

Swanky new office buildings along West 42nd Street also boast desirable ground-floor retail space.

Over the summer, the brokerage firm RKF was tapped to lease storefronts at Eleven Times Square, Steve Pozycki’s gleaming new 40-story tower just across from the Port Authority on Eighth Avenue. “We’re looking for a few of our clients,” said Klinger of Northwest Atlantic, who predicts that a major retailer will ultimately lease the space. “You can’t not look there.”

Apart from its location on a bustling street corner near the Crossroads of the World, the tower is benefiting from the rise of luxury rental complexes in the historically commercial and industrial neighborhood, Klinger added. “There’s a huge opportunity for Eighth Avenue, the Port Authority, and Eleven Times Square to capitalize on residential development,” she said.

At a recent panel discussion on the evolution of Times Square and Midtown West, Stephen Siegel, chairman of global brokerage at CBRE, predicted that “Eighth will become the new Sixth” as storefronts at the base of new developments fill up. “I remember when people didn’t want to go west of Fifth Avenue,” he said.

That was about 25 years ago, when the developer Larry Silverstein took a gamble on Midtown West and bought an industrial parcel on 42nd Street between 11th and 12th Avenues for $20 million. “I had a belief that 42nd Street could have enormous value,” he told attendees at the panel discussion, which was hosted by Bisnow on the 34th floor of Pozycki’s tower.

After convincing former mayor Ed Koch to rezone the parcel from industrial to mixed use, and battling a lawsuit in court accusing Silverstein and City Hall of engaging in illegal spot zoning, Silverstein built River Place and Silver Towers, a cluster of sleek glass rental buildings that are home, he said, to a total of 2,200 families.

“They drew attention to 42nd Street and the immediate west side,” he said. “There’s been a massive influx of development activity.”

Following in Silverstein’s footsteps, Joe Moinian opened his Atelier and,just this month, Related Companies opened MiMA, a mixed use development with rentals, retail space, and an Off-Broadway theater designed by Frank Gehry. “One MiMa Tower at 42nd and 10th should bring in a very affluent market,” said Consolo. “The rents are astronomical.” (Many studios are in the $3,000 range.)

But given that incomes in Midtown West vary drastically (the average is $42,000, with about 18% of residents living below the poverty line and five percent earning more than $200,000), and that a large portion of foot traffic on Eighth Avenue is still generated by office workers and commuters in a hurry, what’s most likely to thrive near the Port Authority is affordable to mid-range retail, Consolo explained.

“You have to really think about consumers,” she said, and how much time and money they have to spend. Montenapo, a high-end Italian restaurant at the base of the New York Times Building, another prominent new office building near the terminal, shut down not long after opening. But Schnipper, a trendy burger shop next door, appears to be booming.

As for the Port Authority itself, which has about 2,437 s/f of available retail space on the ground floor right now, a more finely-tuned aesthetic makeover might be a good idea now that safety concerns have been addressed. “They have to beautify it, the key being the lighting,” said Consolo.

And to reflect the improving retail scene on Eighth Avenue, run-of-the-mill chain stores could be swapped out for classier ones. The terminal might benefit, for instance, if Hudson News were replaced with Papyrus (which has a store in Grand Central) and a nice wine shop was introduced, Consolo mused.

Pret A Manger, she added, might make a good addition to a food scene largely dominated by pizza and fast-food chains, with the exception of a farmer’s market that now opens every Thursday.

“People will come in there to dine if there’s something good,” said Consolo. “It doesn’t necessarily need to be a three-star restaurant.”

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