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Nordstrom Tower Plan May Be Keeping Midtown Storefronts Empty, Experts Say

By Noah Hurowitz | March 3, 2016 3:21pm | Updated on March 4, 2016 5:52pm
 At least 19 storefronts along a six-block stretch of Broadway and Seventh Avenue have gone barren.
Broadway Vacancies
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MIDTOWN — More than a dozen vacant storefronts line a six-block stretch of Broadway between Columbus Circle and Times Square in what some say is the result of property owners holding out for sky-high rents expected when the long-awaited Nordstrom Tower is completed.

There are 13 vacant storefronts along Broadway between 53rd and Central Park — some that have languished for more than two years — and another five empty storefronts on Seventh Avenue just one block west — DNAinfo has found.

The casualties include the site of the former Famous Oyster Bar, a Midtown mainstay that closed in January 2014 after 50 years in business and has yet to be replaced; Pie Face, an eatery at 53rd Street and Broadway that has been empty since the chain pulled up stakes in the fall of 2014; and a host of other shops, restaurants and even an HSBC bank branch.

Notably, nearly half of the neighborhood’s empty storefronts sit inside properties that Extell Development Company is developing as part of its three upcoming projects in the area.

Those projects include the Central Park Tower, also known as the Nordstrom Tower, a planned 1,550-foot high-rise at West 57th Street and Broadway that will have 199 condominium units and the eponymous department store on its first seven floors. 

Manhattan Borough President Gale Brewer said she's concerned that some landlords have opted to let their empty spaces remain empty in anticipation of possibly even higher rents when the Nordstrom department store moves in nearby.

“I can tell you absolutely that when you have a large store like Nordstrom coming, the owners nearby are holding out to see what could successfully compete,” she said.

But the effect it has on the neighborhood is a disaster, Brewer said, adding that if a landlord can afford it, there's nothing outsiders can do to stop them from keeping retail space empty for extended periods of time.

“Forfeiting income from commercial real estate in order to hold out is very detrimental to the neighborhood,” she said. “It’s a deterrent to pedestrian traffic on that side of the street, and it’s a killer for the businesses that remain there.”

Along with the Nordstrom Tower, Extell is also involved in a planned 61-story hotel-condo building at Broadway and West 54th Street, as well as a planned 29-story residential building at Seventh Avenue and West 54th Street, which is expected to bring hundreds of new residential units to the area.

Much has been made of the impact that the Nordstrom Tower could have on the area: One broker, Kelly Gedinsky, is already advertising rental space in 3 Columbus Circle on the corner of 57th Street and Broadway as “Across from Nordstrom.”

“I think [Nordstrom's arrival is] very exciting, and it’s going to drastically change pedestrian traffic in the area,” Gedinsky said. “People are going to flock to Nordstrom, and it’s going to elevate the whole area.”

The three projects will also bring hundreds of new residential units to the area, and with them a population boom. That means a demand for high-end retail to compete with Nordstrom, according to Andrew Mandell, a broker with the real-estate company RipCo.

“They’re building hundreds of apartments, and when you build that many apartments you’re adding to the population,” he said. “That’s going to add retail to that area, and all those people are going to congregate around there.”

None of the landlords contacted for this story returned requests for comment.

Business owners who've gone under in the area blame a combination of sky-high rent, stagnating tourist spending, and pressure from big-box stores and online retailers — as well as a lack of identity for the neighborhood, which is sandwiched between the busy high-end Columbus Circle shopping hub and the tourist buzz of Times Square.

"There's not enough business," said Jimmy Levy, an employee at Broadway Gifts, a tourist catch-all shop at Broadway and 53rd Street that had a liquidation sale before shuttering last month. "Slowly everybody's gonna close and all you'll see is banks and Starbucks."

Broadway Gifts, which had been in its current location for the past five years and in the neighborhood for about 20, was forced to close after the landlord doubled the rent when the lease was up for renewal, Levy said.

While Broadway in the 50s has three times more office buildings than residential, even the area's abundance of office workers hasn't been enough to save eateries including Europa Cafe at Broadway and 53rd Street, which closed just after Thanksgiving, and its neighbor Rendezvous, which closed before that.

The area has even been inhospitable to some big banks, maligned by Levy and small business advocates as replacing small businesses. At 5 Columbus Circle, an HSBC bank branch that occupied the corner retail space shuttered in September 2015 and still sits unoccupied.

The property manager for 5 Columbus Circle declined to discuss what might replace it.

Advocates blamed the vacancies on "high-rent blight," when rent shoots up to unaffordable rates, displacing small businesses, but landlords are unable or unwilling to rent the space to new small business owners. The problem has hit many neighborhoods across the city, according to Jeremiah Moss, small-business advocate, blogger at Jeremiah's Vanishing New York, and the driving force behind the activist group SaveNYC.

Moss said high-rent blight leaves neighborhoods feeling empty and drains the unique character from them when chain stores move in.

“We’re seeing the creation of a generic city,” Moss said. “You end up losing the specificity and the special character of the place.”