Like many, I was fascinated with how the state of retail in Long Island City would have evolved and what the impact Amazon might have had, if the deal for a HQ2 had not fallen apart.
Walking the streets in Long Island City, one is struck by its diversity of the retailers, ethnicities of the people, and the wide range of food and retailing offerings. It’s remarkable how the mood and the ambience can change from block to block, storefront to storefront. There is something for everyone here (except Amazon obviously!). But how did Long Island City happen to be considered in the first place? Was it good city planning, sheer coincidence, or are we missing something bigger that other cities and municipalities can learn from?
Long Island City is as diverse with their tenant mix as it is with their retail asking rents.
Availability at 10-07 50th Ave. is being offered at $96 per square foot for 1176 square feet, while 10-09 50th Ave. next door which has between 1600 and 3600 of vacancy is being offered at $72psf (per Loopnet). Other retail availability in the area includes 20,000 s.f. of availability at 38-50 21st at $50psf. 32-05 36th Ave. has 1600 vacant being offered at $63.75 and 10-63 Jackson Ave. has vacant space being offered at $52.50.
Obviously, asking rent is only part of the analysis when determining where a retailer wants to locate. The triple net (NNN) charges, taxes, term of lease, personal guarantee (if any) and landlord contribution to the fit out and free rent period has to be factored into the decision making.
I offer the following observation on Long Island City’s potential by looking at my primary market of Stamford, CT. I often hear landlords saying “Why can’t we attract quality national retailers like Greenwich or Westport, which serve as the northern and southern borders of Stamford?” That is exactly the problem. Stamford, like so many other cities, is trying to replicate another streetscape they think will drive up property values instead of trying to establish their own identity and uniqueness. In my observation, Long Island City did not model themselves after the success of Soho or Midtown or anywhere for that matter.
It certainly appeared the retail rents were on the rise in Long Island City before Amazon was on the way. I think LIC’s landlords should however look carefully at their space and determine a fair market rent today, based on the use, credit worthiness of the tenant and the likelihood that the tenant will not just survive but make a profit. Good Landlords want their tenants to be successful. Killing them on the rent is a formula to be vacant, pay multiple brokerage fees, and have their space tainted with constant turnover that no one can make it there.
The message tenants heard was if you have something unique, untested or controversial, then Long Island City is the place for you.
I think that is exactly the right formula. Something for everyone. Jazz, Rock, country music, late at night— LIC has that. You want great Indian or Szechuan cuisine, Ethiopian, Thai, Vietnamese food (even if you don’t have a proven track record— bring it to Long Island City. Kosher deli? They have that too. If you want to shop for one of a kind items, whether it be clothing or home goods, there is something for everyone there. I defy anyone to label Long Island City.
Despite losing some of the anticipated growth of the restaurant marketplace in Long Island City, it is still vital to look at the dynamics of the market today. Among the staples of the LIC restaurant community are a pair of family operated restaurants that truly understand their customers.
Manetta’s at 10-76 Jackson Avenue, still run today by the Manetta family. Outstanding brick oven pizza made by family who truly care about quality and the dining experience. Also landmark on Jackson Avenue is Manducatis (translated to mean “you all eat”) run by the Cerbone family since 1977. There is no shortage of great history here serving outstanding cuisine coupled with owners that are still there today insuring the same exceptional dining experience that has made them the “go to” Italian place for over 40 years. It should also be noted LIC has several of the newest, eateries offering eclectic and innovative menus.
I believe that diversity is exactly what attracted Amazon to LIC in the first place. Amazon also wants to be known for its diversity of products to insure that captures as much of the market as possible. Landlords everywhere should wake up. The chances of your storefront going dark is much greater with a national chain than the hard working immigrants that have successfully assimilated into the neighborhood. They live in the neighborhoods they serve, their kids go to school there, and they have their finger on the pulse of what’s trending in their own backyard. Their spouses also are tied to the community they serve a la carpooling or shared daycare etc. They go to the same church or synagogue. They attend others life events, they network and support one another’s business. That is the formula for success for any city. Amazon spotted it and was correct to consider LIC as an ideal location.
Amazon however would NOT have been credited with reviving Long Island City.
If they had kept their HQ2 there, Amazon would just have been the beneficiary of the diversity and thriving economy that was already established by the hard working people and intuitive landlords that welcomed the diversity and hard working immigrants into their real estate. We’ll have to wait and see if another corporation tries to make it work when Amazon could not.