A sweetheart deal could spark a retail rush to Long island City, with or without Amazon.
Robert Futterman, the chairman of Newmark Knight Frank’s retail leasing division, told the Young Men’s/Women’s Real Estate Association of New York luncheon last week that the nieghborhood was a retail desert.
“Three or four years ago, retailers were not interested in the area,” he said. “The way that Long Island City is physically broken up, there’s no central business district.”
With its booming residential market, however, Futterman said just one deal with one major retailer could start a rush to the neighborhood.
“I believe it will come, but over time,” said Futterman. “Some landlord is going to have to create a sweetheart deal. Whoever is going to be first, the rest will follow.”
Futterman also discussed how retail is adapting to what consumers want and how they shop.
“The biggest issue is that tenants are trying to figure out how [they] blend both a brick and mortar presence and an online presence and make it work,” Futterman said.
While big box retailers and department stores have struggled, Futterman said the retail world has trended towards more pop-ups, fitness spaces and beauty and cosmetics outlets.
“There are three things that matter to millennials: their iPhone, Uber and you always have to be selfie-ready,” Futterman said. “Millennials will not be denied those three things and I don’t think that’ll change for a very long time.”
Physical spaces are also adapting to tenant needs, he added. Tenants either want scaled-down spaces, like Target and its mini outposts tailored to a neighborhood, or lower commitment options like pop-ups and shorter leases.
“What’s happening is the urbanization of the suburban stuff,” Futterman said. “The Walmarts and Targets and the supermarkets that are buying in the city operate scaled down spaces. Now Target can do 40,000 s/f instead of 240,000 and those opportunities are there now for tenants to take advantage of.”
While the retail world was experiencing major changes, Futterman said his company is also happy with its major acquisition. RKF was bought by NKF in September 2018 and the transition has been going well, according to Futterman.
“My assets are my brokers and my brokers are my assets,” Futterman said. “I asked where would they be comfortable and what move we could make as a firm to protect their interests going forward.
“I see life in the company, I see energy in the retail group,” Futterman said. “And I see a real positive spin on everything we’re doing.”