Brookfield Plans “Testing Ground” for West Village Retail Corridor

When you think of Brookfield and retail, thoughts logically turn to large regional malls. The company has owned Rouse Properties since 2016, and more recently acquired the shares of GGP it didn’t already own. However, in a lower-profile deal that closed last month, the Toronto-based asset management giant became a landlord on Bleecker Street in New York City’s West Village.

Specifically, the company paid $31.5 million to acquire four retail properties with seven storefronts, totaling about 24,000 square feet, along what has become a showcase for the pressures brought on by escalating rents and declining store traffic. A fair number of those seven Bleecker Street storefronts, which once housed the likes of Michael Kors, are currently vacant.

Which evidently is just the way Brookfield wants it. “On Bleecker Street, we have a prime opportunity to help repopulate one of New York City’s most distinct retail corridors with new, innovative brands,” said Michael Goldban, head of retail leasing at Brookfield. “The architecture, energy and authenticity of Bleecker Street and the West Village make for a special and unique destination, and we are committed to embracing and capitalizing on those attributes.”

Or, as Goldban told the Wall Street Journal, “There’s a lot of vacancy, and we love that. We want this to be a testing ground.” He added that Brookfield also planned to reach out to other owners on the street to come up with a vision for revitalizing the street, and bring cultural events and art installations to its Bleecker Street retail spaces through its Arts Brookfield team.

In its most recent biannual survey of Manhattan retail rents, from last November—the spring 2018 edition hadn’t been issued as this was written—the Real Estate Board of New York reported that of all the retail corridors it tracks, Bleecker Street had the biggest average asking rent reduction compared to a year ago. Average asking rents slid 25% to $351 per square foot. “Our Manhattan Retail Report Advisory Group noted that asking rents in this corridor greatly overshot their viable range due to a lack of weekday foot traffic and being better suited to cater to local neighborhood needs,” REBNY reported.

The report’s analysis appeared to anticipate the course of action that Brookfield would take on Bleecker Street a few months hence. “There are significant transformations underway in the role that physical retail plays in a company’s overall sales strategy,” the report stated. “When demand is low for traditional spaces and long-term leases, an owner can experiment with tenants who are trying new ideas in presenting their retail concepts, brands, and products.” If these new ideas eventually become the norm, “the owner will be in an early and advantageous position to provide the right space solutions for retail tenants.”

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