The New York TImes
August 1, 2004
Greenwich Village: Growing Appeal of Specialty Food Stores
By John Holusha
MURRAY'S CHEESE SHOP, a fixture in Greenwich Village for more than half a century, is planning to move this fall from its present 1,000 square feet at 257 Bleecker Street, at Cornelia Street, across the street into part of a 6,700-square-foot retail condominium in a residential building at 252 Bleecker at Leroy Street.
The larger store will provide Murray's operators with more space to spread out products that are now stacked practically to the ceiling of the single-aisle space that becomes crowded when more than a few customers are shopping. The layout of the new store has not yet been designed.
The move comes as managers of both residential and commercial buildings are increasingly receptive to renting or selling retail space to specialty food stores, as opposed to ordinary supermarkets or delis. The specialty stores sell higher-priced merchandise and can pay more in rents. And in part because landlords are writing leases more tightly, they tend to have fewer problems with the noise, garbage, odors and vermin that are associated with food markets.
"Landlords are looking for high-end, specialty food stores because they have better credit and higher-quality products," said Laura Pomerantz, a principal at PBS Realty Advisors, a commercial brokerage company. "They want stores like Whole Foods and Dean & DeLuca."
Stephen Klym, managing director of Warburg Realty Partnership, a residential brokerage, said, "Gourmet is the key word — it has to be like shopping on Madison Avenue." While grocery stores in general are not considered highly desirable, he said, the upscale Whole Foods stores in the basement of the Time-Warner Center at Columbus Circle and in the Chelsea Mercantile building on Seventh Avenue at 24th Street, part of an international chain featuring natural food, are considered desirable amenities, rather then problems.
Managers of commercial buildings like to install attractive food stores in retail spaces because they can afford higher rents than some other kinds of stores and because they are a convenient service for tenants, said Benjamin Fox, a partner in Newmark New Spectrum Retail, a brokerage company.
"Look at the new Reuters Building in Times Square," he said. "They have a Europa Cafe on the corner of 43rd Street and Broadway." He said food stores in office buildings often have arrangements to cater events held by tenants on the floors above.
To avoid cooking odors, Mr. Fox said, building operators often choose stores where the cooking is done at a central commissary and shipped to the retail outlet, where, if necessary, items can be rewarmed in microwave ovens. "That way you do not have a requirement for a vent," he said.
Indeed, Mr. Fox said, landlords in general have learned to write leases for food stores to avoid problems by limiting times when products can be delivered, requiring that garbage be refrigerated to curb vermin problems and specifying the types of signs they can post in their windows.
Typical grocery store signs advertising weekly specials seem unattractive to residents in high-end buildings, he said. "That's why a lot of co-ops tried to get rid of food stores, to enhance the value of their apartments upstairs," he said. He noted that 25 years ago most stores could be operated just about any way the owners wanted. Today, he said, "there are restrictions on things nobody thought about back then."
Still, a specialty food store, a bakery or a coffee shop can help to strengthen the appeal of a neighborhood, particularly one that was predominately commercial or industrial in the past, Ms. Pomerantz said. "The right store can be a catalyst for a neighborhood," she said. "It services the neighborhood and attracts other services."
Murray's Cheese Shop believes that its new site, which it expects to open this fall, will help to improve the area, said Julie McAskin, the store's director of marketing. Robert Kaufelt, the store's owner, paid about $3 million for the 6,700-square-food retail condominium, which was previously a grocery store, brokers said.
"We will divide the space and look for tenants," she said. There will probably be one or two separate stores in addition to Murray's, and they may be different types of specialty food. "We want to enhance the neighborhood," she said.
Gary Trock, a broker with CB Richard Ellis Retail Services, who helped to arrange the Murray's transaction, said the developers who usually control the retail space in a residential building have to balance the value of having an attractive food retailer on the site against the potential problems as they try to sell the balance of the apartments in a building. "Most condos and co-ops now allow food," he said.
Owners of office buildings particularly treasure their retail spaces, brokers report. Not only are rentals usually several times as high per square foot as office space, but the retailers foot the entire cost of building out their stores. Typically, owners give tenants a period of free rent while the interior construction takes place and they make a cash contribution to the cost of building the offices.
"With retail, the landlords do not give build-out money," Joanne Podell, a senior director of Cushman & Wakefield, a large brokerage and services company. "They may get some free time, but the space is delivered as is."
But because the first floor retail spaces are often the public face of a property, landlords tend to be more selective of their retail tenants, she added. While office space usually goes to the highest bidder, landlords will sometimes accept less than maximum rent in order to install a retail tenant considered desirable.
Indeed, retailers themselves sometimes go to great efforts to preserve an area's atmosphere. About 15 years ago, retailers on Fifth Avenue in the 40's got city zoning changes to ban bank branches and airline ticket offices, arguing that they detracted from the shopping experience, Mr. Fox noted. "There are a few banks that were grandfathered in and, as far as I know, no airline offices," he said.
Upscale speciality food stores have become "a huge draw" in a city where time is always short, Mr. Trock said. Besides Whole Foods, he said, Dean & DeLuca and Citarella are also particularly in demand.
As for Murray's, he said, it will be "a beautiful store" that will offer wine and cheese tastings to lure customers.