By Orlando Lee Rodriguez
In the northeast, as with most states where the weather turns cold, the open air mall is something that conjures up images of South Florida, California, the Gulf Coast and Hawaii. Different from indoor mall spaces, outdoor malls have their own unique set of nuances that require brokers with a specialized area of expertise.
Cohen Real Estate, although headquartered in New York City, has done most of its business outside of the Big Apple, making the sale of space in the open air mall their specialty.
Recently though, the 22-year old company decided to make a push into their home territory, as the market is just too big to ignore.
“We understand the retail markets very well from dealing with shopping centers,” said Michael Cleeman, vice president of the Cohen Real Estate (CRE) team. “It made sense to start dealing with retail and other types of asset classes here in our backyard of New York City.”
Cleeman, who holds an MBA in Finance from NYU, is a New York City native whose father was involved in real estate while he was growing up. After college, he became a securities trader on Wall Street before deciding, in 2002, to follow his family’s legacy.
“It was the right time to move over into the real estate biz,” he said of the timing. “Ability with numbers is always helpful and the pressure that the stock market puts on you to be able to make quick decisions always serves someone well. But the ability to be patient is a great characteristic.”
In the short time that they have been investing in the northeast, Cleeman has been successful in closing two deals in Manhattan.
“Now that we’re dealing with properties here in the city, sometimes [retail] is a component,” he said. “With the deal on Bleeker and Bowery that I sold in November, there were a few apartments upstairs that the owner wanted to sell but not separate out the retail. So the buyer bought everything together. Sometimes it’s a function of the property.”
“There is a strong demand for retail right now. I’ve seen a trend of people separating out the retail from the residential upstairs. There are new multifamily developments where the seller will try and separate the retail out, either to pay down the construction loan or to help them with their returns for the multifamily upstairs,” he said.
Cleeman said that he does not fear that the market will suffer from over-saturation because of the shear size of New York and such high demand from investors for so many new areas. The high income of residents and the influx of tourists makes New York a must-have destination for retailers who want more than one location to serve different neighborhoods.
“Every retailer from all around the globe is trying to get into New York City,” he said.“There is just so much disposable income here as well as 52 million visitors who came here last year. We are seeing a big trend of higher end retailers coming downtown. If you look at Bleeker Street, it is somewhat like a little Madison Avenue. You’ve got Ralph Lauren, Burberry, Joe Malone and Tommy Hilfiger all lined up within a few blocks.”
The fact that high end retailers once exclusive to the Upper East Side now can fan out across Manhattan has upped demand for space and, in turn, upped asking prices.
Landlords, Cleeman said, are taking full advantage of this good fortune.
“There is so much money chasing these deals right now that the cap rates are being compressed very quickly,” he said. “That’s a function of the retail rents people are getting now. As these older retail spaces turn over, landlords are taking advantage of the current rental rates that they can get.”
