New York Times
January 8, 2013
By Alison Gregor
The owner of Chelsea Market, a popular food marketplace in West Chelsea, recently ignited a public furor when the city approved plans to add office towers to the squat structure. But before construction on the towers begins, the market now plans to expand by adding eight new spaces for vendors — all without changing the exterior of the neighborhood landmark.
A collection of industrial buildings that once housed the National Biscuit Company, or Nabisco, Chelsea Market will require no new space to house the new tenants, said Michael Phillips, a chief operating officer of Jamestown Properties, an acquisition and management firm based in Cologne, Germany, and Atlanta.
Instead, the space for the new stores was created when Amy’s Bread moved most of its baking operations off-site, leaving thousands of square feet open that, along with the conversion of a loading dock and an office, amounted to about 5,700 square feet of space, he said. Construction on the project has already begun and will not disrupt the approximately 35 current tenants of Chelsea Market.
In November, Jamestown received city approval to add two office towers to Chelsea Marketplace, one of them eight stories and the other seven stories, for a total of 300,000 square feet of space that could bring hundreds of new workers to the area, but construction on that project has not yet begun. The market fills the entire block between Ninth and 10th Avenues and West 15th and 16th Streets.
Leases are currently being negotiated for the eight new retail outlets, and though no leases have been signed yet, Mr. Phillips said he expected that the stores would be up and running by mid-February.
“We’re very focused on ethnic food and spices, and the whole beer growler, homemade beers and wine and spirits business, as well as local, New York-produced products,” he said.
Currently, the market carries everything from fine foods and baked goods to prime meats and fresh lobster, along with a smattering of books, flowers and kitchen and home décor goods.
Under the terms negotiated with the city for approval of the office towers, 75 percent of the vendors at Chelsea Market must remain food purveyors. All the tenants in space converted from Amy’s Bread will involve food products, Mr. Phillips said. A map of the project’s floor plan shows a possible bicycle shop and barbershop in the original loading dock and office space.
Amy’s Bread continues to have a presence at Chelsea Market in its reduced space, where it has a cafe, along with a small baking operation behind a glass panel so shoppers can watch baking demonstrations.
The area formerly occupied by Amy’s Bread is being built into small kiosks, much like an existing wing of the market where tenants like The Filling Station, Tuck Shop and Lucy’s Whey operate. In the new wing, however, the emphasis will be on cooking and food preparation. Two spaces will have food counters where people can sit and watch chefs cook while they dine.
“They’re really sort of fitted-out modern versions of a diner food counter with exhibition kitchens,” Mr. Phillips said.
Spaces will lease for about $200 to $400 a square foot, which is substantially more than typical rents in Chelsea, but the spaces are being delivered as almost completely turnkey, he said.
“They include power supply, water supply, hood systems for cooking, kitchen equipment where there’s cooking, so they’re basically plug-and-play spaces,” Mr. Phillips said. “The natural reaction would be, ‘Wow that’s a high rate,’ but when you look at what comes with it, it makes a lot of sense.”
The spaces are being set up to incubate start-up and smaller, less established businesses, Mr. Phillips said, companies that otherwise might find it hard to get a foothold in a neighborhood where retail rents have grown rapidly in recent years.
Commercial rents in Chelsea currently can range from $175 to $275 a foot, levels that are 10 to 12 percent higher than at the real estate market’s height in 2007, said Faith Hope Consolo, chairwoman of the retail leasing and sales division at the brokerage Douglas Elliman.
Chelsea Market’s added emphasis on food is coming at a fortunate time for the market, which has become more of a destination for shoppers from outside of Chelsea, particularly with the draw of the High Line, an elevated park that runs along the western side of the market at 10th Avenue.
“Food has become fashion, and it’s a foodie world,” Ms. Consolo said. “At the same time, we’re also seeing the rise of people gifting with consumables, whether it’s wine or pastries or chocolates. ”
Chelsea Market, which attracts about 120,000 visitors a week, will also have potential customers in the 1,000 office workers at the companies that are expected to lease space in the two new office towers, where Jamestown is not building any kind of cafeteria. Construction on those towers is scheduled to begin in 2015 and should take 18 months, Mr. Phillips said.
That built-in customer base may end up being crucial to Chelsea Market, depending on how its businesses react to a second large shopping center, the almost 300,000-square-foot Pier 57, which will be constructed one block to the west and is scheduled to open in the spring of 2015, said Alexander E. Hill, an associate broker and associate director with the Winick Realty Group.
“I think they’ll compete,” he said. “They’re going to have restaurants at Pier 57.”
Other factors will also affect Chelsea Market, including the extension of the High Line up to Hudson Yards, a 26-acre commercial and residential district taking shape west of Eighth Avenue between 30th and 43rd Streets, Mr. Hill said.
“There are tons of new residential developments planned for the Hudson Yards area, and people who live in Midtown West could potentially work in Chelsea Market and walk all the way down the High Line to work,” he said. “So all those traffic patterns are going to completely change.”
In fact, it’s possible that Pier 57, which is an effort on the part of developers to create a one-of-a-kind retail experience that will attract locals and tourists from all over, will draw enough additional traffic to the area that it ends up benefiting Chelsea Market, much as the High Line did, brokers said.
“The pier is going to be just another reason to go north of 14th Street and/or around that entire vicinity,” said Robin Abrams, an executive vice president with the real estate firm, the Lansco Corporation.
“If you have just one thing that somebody is visiting, grabbing a bite to eat maybe, you’re limited in terms of the draw,” she said. “But if you’ve got all these exciting things going on in the neighborhood now, the more people will go there because there are lots of things to do.”
Increased traffic, both pedestrian and vehicular, was one of the main concerns for those who opposed Chelsea Market’s plan to build the two office towers. Andrew Berman, the executive director of the Greenwich Village Society for Historic Preservation, said that retailers might not envision it now, but the traffic created by all the new retail development in West Chelsea may well become a hindrance rather than a benefit.
“West Chelsea has gone from one of the least congested parts of Manhattan to one of the most congested parts of Manhattan, which is a pretty dramatic transformation in less than a decade,” he said. “I think at a certain point you can have too much of a good thing.”