New York City’s historic meatpacking district, on Manhattan’s West Side, is today much less of a workplace for packers, loaders and truck drivers and more of a playground for the patrons of boutique hotels, luxury shops and chic nightclubs. As recently as two or three decades ago, the neighborhood had become associated with seedy activities and was a place most people preferred to avoid. Not developer Irwin Cohen, though, who went there in 1993, plunked down about $10 million to buy the National Biscuit Co. factory complex — birthplace of the Oreo cookie — and rebuilt it as a complex of manufacturing, office and retail space he named Chelsea Market.
The upper floors of Cohen’s mixed-use project soon drew some high-profile media companies as tenants, while the ground-floor concourse began assuming the ambience of a gourmet food court. The concourse houses such specialty eateries as Tuck Shop, a purveyor of Australian meat pies that co-exists there with a butcher, a kitchen supply store, some seafood and produce sellers and a few bakeries. Of the handful of nonfood retailers on the concourse level, the only chain is apparel and home-wares retailer Anthropologie.
Meanwhile, the Oxygen and Food television networks are among those upstairs media tenants, and the latter has been known to tap its neighbors below for such things as filming locations and, of course, raw materials.
“One of the fundamental components of Chelsea Market is the interplay between the office and retail tenants,” said Michael Phillips, managing director for Jamestown Properties, the Atlanta fund management firm that now owns the property. “Also, being willing to say no to concepts that aren’t accretive to our business plan. Curating the environment is what has made it so compelling.”
Asking rents in the retail portion are today about four times what they were when the market opened in 1997, but demand has grown at an even greater rate. “I don’t think there’s a new concept that is coming to New York that we don’t get a call about,” Phillips said.
Jamestown bought out Cohen and his partners — Angelo, Gordon & Co. and Belvedere Capital — for $225 million this year in a deal that valued the property at about $800 million. “They needed to exit,” Phillips said. “We were accommodating their desire.” Pending city approval, the company hopes to build a 90,000-square-foot hotel and a 250,000-square-foot office tower atop the 98-year-old factory structure.
Jamestown is adopting aspects of Chelsea Market at some of its projects elsewhere. “I think other markets — certainly Washington, D.C., San Francisco and Boston offer this opportunity as well,” Phillips said. At its White Provision, in Atlanta, and Warehouse Row, in Chattanooga, Tenn., former industrial properties have been redeveloped into lively mixed-used properties with apartments, boutiques and gourmet food.
“Each market has its own prime drivers and sensibilities,” Phillips said, “and you need to figure out what’s appropriate in adapting a concept.”
From the September 2011 issue of Shopping Centers Today.