Whole Foods to Grow NYC Footprint with New East Village Outpost as Manhattan Real Estate Remains in Flux

Whole Foods signed a lease for a new store in the East Village in a space that has been vacant since before the pandemic, Realty Check has learned.

The Amazon-owned market will open at 409 E. 14th St., which went dark after an Associated supermarket closed in December 2019, as the company opens a line of smaller-format Whole Foods Market Daily stores in the city.

The first of those is slated to open later this year at 1175 Third Ave. on East 69th Street.

However, it was not known exactly what type the East 14th Street location will be. It has 10,000 square feet at street level and 10,000 square feet in the basement.

The space is part of Stuyvesant City owned by Blackstone.

Whole Foods currently has 17 stores in the city.

The block of 14th Street has had problems with crime and vagrancy, including a recent homicide at the corner of Avenue A. But a nearby Trader Joe's has thrived despite the lawlessness.

Meanwhile, a new Trader Joe's opened in the new Urban League Empowerment Center office building at 123 W. 125th St. last week, representing a 17,800-square-foot bet on the rising fortunes of central Harlem. A new 44,000-square-foot Target store is also coming there soon.

At the same time, a large, 15,000-square-foot JPMorgan Chase branch at 1251 Sixth Ave. on West 49th Street is slated to close in September — leaving a void on the packed boulevard where most employees have returned to their offices.

The circumstances reflect a Manhattan retail scene that remains in turbulent flux, struggling to regain its fluidity after the pandemic and — perhaps more critically — the online shopping boom that cut brick-and-mortar demand well ahead of the year. 2020.

In light of the damage from home shopping — and the acres of space thrown up by banks and the likes of Duane Reade, Walgreen's, CVS and Rite Aid — it's remarkable that storefronts are as busy as they are.

Reliable retail sales statistics are significantly harder to come by than for offices. An "availability" can mean a 600 square foot vacancy or a 60,000 square foot vacancy. The most significant rents – those on the ground floor – are difficult to determine for multi-level space with "mixed" rents.

New data from the Real Estate Board of New York and CBRE found reason for optimism, tempered by the fact that rents remain 20% to 30% below pre-2020 peak levels.

REBNY found strong but "uneven" demand across Manhattan's 16 major corridors, most of which was driven by users in the food and beverage and apparel sectors. Rents in 10 of them increased during the first half of 2023.

The report by REBNY's director of market data and policy, Keith DeCoster, noted that some roads and streets are more fully leased than they appear to passersby. Some sites appear vacant due to delays in licensing and permitting, elevated construction costs and limited lending.

"Long construction times sometimes increase the feeling that the streets are filled with vacancies," REBNY said. Stores that are leased but look empty can take eight months to more than a year before tenants open.

The report noted that a new Mermaid Inn is coming to 336 Columbus Ave. "It has been in the works for more than a year", but delayed due to construction problems.

Among the biggest new leases of late, REBNY cited luxury tenant deals in upper Madison, the Grand Central area and almost everywhere in Soho.

CBRE's second-quarter data reflects similarly mixed findings.

He said leasing paradoxically slowed because of a lack of prime inventory — the kinds of spaces most high-end, large retailers want. Overall, the number of direct lease ground floor availabilities fell by 19% year-on-year, CBRE found.

Corridors with the most empty storefronts were Broadway below Chambers Street (22); 34th Street between Fifth and Seventh Streets (20); and Broadway from West 72nd to West 86th Street (16).

CBRE's Matt Chmielicki commented: "Counting vacant storefronts is not the most scientific way to understand the market." Like REBNY, he cited increasingly long times between lease signing and opening due to permitting and construction issues.

"It could take forever," Chmielicki said bitterly.

CBRE found that new sellers in the market signed up for 163,000 square feet in the second quarter, a third of all leasing volume.

Notable among them was arts and crafts retailer Hotel Lobby, which took 70,000 square feet for its first Manhattan location at 270 Greenwich St., formerly home to Bed Bath and Beyond and Barnes & Noble.