Cheap and cheerful street level retailers being pushed out in favor of more high-profile businesses as luxury condo buildings proliferate the city.
Fast food mecca McDonald’s recently opened a new two-story eatery right next door to its old space at 23 East 23rd Street, now home to the luxurious One Madison condo building.
“The developers knew they weren’t going to sell high-end apartments with a McDonald’s on the bottom,” said Jason Pruger, a retail specialist at Newmark Grubb Knight Frank retail who lives and works in the Flatiron neighborhood.
McDonald’s originally sold the building it called home for $3.4 million to developer Peter Fine with the caveat that the company would have a retail space in the building once the conversion to condo was complete. However, Fine later sold the building to Slazer Development, which lost it to Related Companies and HFZ who finally managed to finish the building.
A retail space adjacent to the lobby remains vacant. REW was unable to secure comment from the developer by press time.
But the McDonald’s debacle is part of a new trend in the city where, according to Pruger, residents are becoming and picky as the builders.
“New Yorkers are becoming much more in tune with health-conscious foods,” said Pruger, an executive managing director at Newmark Grubb Knight Frank Retail.
Further east on 23rd Street, between 1st and 2nd avenues, he said another McDonald’s was bought out and re-designed as a higher-end “Euro-style” café.
Pruger said it is part of an eating revolution that’s turn the Flatiron District into a cozy culinary corner of destination restaurants and cafes. After celebrity chef Mario Batali opened the 50,000 s/f Eataly high-end Italian marketplace in the former Toy Center at 200 5th Avenue three years ago, it opened the flood gates for more.
“It really laid out the whole gourmet scenario,” said Pruger. “It made Fairway want to come in, the Chop’t on 23rd.
“What you have now is a much more sophisticated residential market and upscale tenants like Credit Suisse and tech firms that want higher-end food options.”
Elsewhere in the city, diner chain Denny’s is being chased out of Tribeca.
In June, the condo board of landmarked 150 Nassau Street filed a $10 million suit to prevent the restaurant from opening in the ground floor retail space of the luxury high-rise.
In 2009, residents and board members of 111 Central Park North in Harlem, one of the neighborhood’s priciest condo buildings, considered taking action to prevent a McDonald’s from moving into the ground floor retail space, even considering buying the space, the New York Post reported.
More recently, Sony launched eviction proceedings against restaurateur Joseph Allaham, alleging his establishment at the base of its headquarters generates litter in public areas and violates lease requirement.
In March, Joseph Chetrit and other investors purchased the 37-story building in Midtown for $1.1. billion.