Harlem's 125th Street has a promising future

Real Estate Weekly, Oct 26, 2005 by Robert Khodadadian

Many thoughts come to mind when speaking about the 125th Street corridor in Harlem. For years, this area of Northern Manhattan was seen as an economic void, isolated from the business cycle of Manhattan.

But in the past decade, the perception has shifted. Rents in the area have skyrocketed, and are contributing to a new Harlem Renaissance.

Since 1993, overall crime in Harlem has dropped 60%. More than $1.2 billion has been invested in rehabilitating housing, in turn, stimulating a retail revolution of sorts on 125th Street.

The corridor--which spans from the Hudson River on the west side of Manhattan, all the way to the Harlem River on the east side--is currently the hub of Harlem's retail market.

With its easy access to the 1,2,3 subway line at Lenox Avenue, the 4,5,6 subway line at Lexington Avenue and the Metro North Railroad on Park Avenue, 125th Street is now home to stores such as Starbucks, Block buster, Dunkin' Doughnuts, Staples, Footlocker, Marshall's, Old Navy Pathmark, H&M and The Body Shop.

The Real Estate Board of New York's Retail Report from Spring 2005 states that average rents in the 125th Street corridor (river to river) climbed 54% to $90/sf, while overall, the average asking rents in Manhattan for retail space rose 6% to $103/sf.

This increase in Harlem is the largest boost in retail rents since REBNY started tracking the corridor. Some officials say Harlem has even surpassed the Empire State Building as New York's No. 1 destination for foreign tourists.

The future of the 125th Street corridor is promising. Current zoning allows for a floor-to-area (FAR) ratio of 3.44, with some high density areas that currently have 6.0 and 10.0 FAR. With the Marriot Hotel development site coming into play, there are proposed zoning changes for 125th Street currently being looked into by the city.

"It's obviously in need of change," said City Council member Bill Perkins, whose district includes parts of 125th Street.

The study of the corridor began in December 2003, and is finally near completion.

The Marriot Hotel site is Harlem's most widely publicized development project. This 34-story, 550,000 s/ f project, located on the northeast corner of 125th Street between Park and Madison Avenues, will soon put Harlem's skyline on the map. The project features 185,000 s/f of Class A office space, 57,000 s/f of retail space and an 800 s/f conference center, all at its base.

Its tower will house 80,000 s/f of luxury residential units, with 14 floors dedicated to a 204-room Marriott Courtyard Hotel.

The developers are also hoping to announce a deal with Brand Jordan, a division of Nike, for the building's valuable ground floor retail space.

According to Mayor Michael Bloomberg, "Harlem's Renaissance is moving forward at full-speed."

Interest from developers has some residents worried that the street will become a valley of towers and alter Harlem's 125th Street corridor tremendously. However, there are certain regulations the city has in place for the heights of taller buildings.

According to the New York City Zoning Workshop, taller buildings may be allowed on the north side of 125th Street between Morningside Avenue and Frederick Douglas Boulevard, and the north side of 125th and 126th between Park and First Avenues only.

They decided to place taller buildings on the north side of the street so they wouldn't block sunlight and views.

The 125th Street corridor is the backbone of Harlem's retail market. With retail rents going up more than 50% this past year alone, we can be sure to see many more downtown Manhattan retail shops opening branch stores on the corridor.

ROBERT KHODADADIAN, ASSOCIATE, MASSEY KNAKAL REALTY SERVICES