Landlords have been hoping that retailers—the kind of boutiques and flagships one finds in SoHo—with deeper pockets will fill the void. But there is no indication that this is happening. Even as the High Line
draws millions of people per year to Chelsea, the raised park has failed to generate the kind of foot traffic that retailers need to sustain their businesses.
“The trouble is that the High Line is 30 feet off the ground,” says Earl Bateman, a commercial broker with Focus Real Estate, Keller Williams NYC.
Without the foot traffic in Chelsea that would entice retailers, galleries can “drive the market,” Bateman adds. “If they’re not willing to pay it, spaces will sit empty.” The dynamic has prevented the astronomical increase of prices in recent years.
“It’s hovering, but it’s more of a tenant’s market,” says Jonathan Travis, a partner at Redwood Property Group. Like all markets, there are price variations block by block, even property by property. Costs depend on numerous factors including the bones of the building, the delivery condition, and whether the landlord has high mortgage payments. Some spaces can still be found for below $100 per square foot.
Going forward, the major question mark for Chelsea real estate is how the Hudson Yards development—which stretches from 30th Street to 34th Street and from the Hudson River to 10th Avenue—will impact rents. The project will create tens of thousands of square feet of office, residential, and retail space just north of the arts neighborhood over the coming eight years.
But Bateman is skeptical that the well-heeled residents of Hudson Yards will turn Chelsea into a destination like SoHo, which is centrally located in lower Manhattan and connected to the rest of the city by public transportation. “It wasn’t residential that drove SoHo’s prices up,” he says. “It was being surrounded by subways.”
Still, Anthony says that in the long run she expects rents to keep rising (not surprising to anyone who’s been living in New York in the past few decades). “Unless the world falls apart,” she says.
Looking to the Lower East Side
Rising rents and the razing of existing buildings for new residential construction have caused Chelsea to lose a net half-dozen galleries per year between 2011 and 2015, according to Bateman’s calculations, including CRG Gallery and Andrew Edlin Gallery. Many have relocated to the Lower East Side, even ones who could afford to stay in Chelsea.
“Going downtown felt right on a number of levels,” says Michael Gillespie of Foxy Production, which moved from a ground-floor Chelsea space to Chinatown in 2016. While the gallery could have remained in Chelsea, his team opted to move to a second-floor space in what they saw as a more dynamic neighborhood.
For them and others, the Lower East Side’s mix of character, proximity to younger galleries, and often cheaper rent is appealing. (Even before price hikes in Chelsea, galleries had made it their home.)
Compared to the big white boxes of Chelsea, the majority of locations across the Lower East Side are smaller and run by independent landlords who may only own a few properties. Galleries can still find larger spaces on the Lower East Side, mostly on the Bowery. But there, rents can start at roughly $110 and creep up to roughly $200 per square foot or above, north of Delancey. And unlike in Chelsea, landlords are able to find tenants—hotels, restaurants—willing to pay the higher-end sums to open up shop along the highly trafficked corridor.