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If 2014 was a year of crushing commercial real estate records, then 2015 will break those, too. In the words of WWD, which published a long-winded prediction this morning: "There will be no respite from high rents in 2015." No respite at all.
Here's everything we learned about what to expect in the next 12 months of crazy-high retail rents in NYC:
· Certain properties in prime areas could sell for more than $50,000 per square foot, according to one developer. To put it in perspective, the space that was to become the Chanel jewelry boutique on Madison Avenue sold for $31,000 per square foot, and that was just last year.
· These rising costs are already creating pushback from retailers: "Eventually, you hit a threshold for retailers where there's just so much business they can do," another developer explained. At a certain point, developers have to confront the fact that no one—especially not European retailers, who are currently dealing with a sluggish euro—will sign leases.
· And when they can't justify the costs in Soho or Fifth Avenue, retailers will flirt with "understored locations." "There's only so much prime stuff to go around," said a developer. "We'll see some flagships opening in areas you wouldn't necessarily think of as flagship material. When Apple signed a lease in the Meatpacking District, there were some raised eyebrows. Certain retailers can create a neighborhood just by planting their flag in a location."
· Speaking of Apple: Though chains like the tech company as well as Whole Foods, J. Crew and Madewell will soon all have Williamsburg stores, rents in the neighborhood are still relatively low—outside of Bedford Avenue, of course—at about $125 per square foot or less.
· Other areas to watch: Long Island City, Gowanus, the Bronx, and, interestingly, White Plains.
· Oh, and the subway. This year, the city's first "transit marketplace," Turnstyle will open at the Columbus Avenue station. "Once the Turnstyle model is proven, there will be opportunities at other hubs because this enhances the transit experience," said one real estate broker. Whether NYC will one day eschew its rising skyscrapers for all-underground shopping is still to come.