Fulton St. seeks fulfillment
Hard-luck strip needs a future right now
John Kimelman
With its shabby discount department stores, T-shirt shops, pizza parlors and vacant storefronts, Fulton Street has a deserved reputation as a second-rate commercial strip.
That could change over the next five years. Fulton Street is expected to undergo a radical face-lift as part of the widely publicized efforts to rebuild lower Manhattan.
Plans call for extending the street westward so that it runs all the way through the redeveloped World Trade Center site. There are also plans for a new subway and commuter rail center at the intersection of Fulton Street and Broadway.
But this vision is years away.
"It's getting over this hump of the next few years that will be the challenge," says Marc Shapses, a senior managing director with Julien J. Studley Inc., a commercial real estate brokerage.
Area businesses have made great strides to get beyond the nightmarish conditions after the destruction of the trade center.
In the weeks that followed, many office tenants and retailers abandoned the area, which had become overcome by thick dust and the noxious odors of burning building materials.
Many businesses have since returned, helped by tax breaks and other economic incentives, as well as the gradual pickup of foot traffic. (See box on Page 29.)
Fred Bass, the owner of Strand Book Store at Fulton and William streets, says that his business fell off by 80% or more in the weeks following the trade center attack, but it has rebounded to pre-Sept. 11 levels.
Low rents, high vacancies
However, many other retailers and landlords admit that the street is far from recovered. Vacancy rates are higher than they were before the WTC catastrophe, especially in office spaces on upper floors-despite rents that are an estimated 20% cheaper.
"A lot of buildings have substantial office vacancy problems," says Jerry Brownstein, general manager of Small Commercial Property Owners Group, which owns one of the world's largest cast-iron buildings, at the corner of Fulton and Nassau streets. "The sight of the open space where the Twin Towers used to be is not conducive to renting space."
Mr. Brownstein considers himself fortunate. He lost only three tenants directly following Sept. 11, and today, his building is almost fully occupied.
"If it weren't for the incentive programs and tax credits, we'd be in bad shape ourselves, with over 50% vacancy," he says.
Some of the vacancies along Fulton Street are the landlords' choice. At least three buildings that housed small offices on their upper floors are being converted into more valuable residential space, says Guy Plush, president of Plush Realty, a commercial real estate brokerage firm.
Mr. Plush represents the owner of 102 Fulton St., located between Dutch and William streets. The landlord wants to replace the upstairs offices with residential condo units; he will resume renting the ground floor to retailers once the renovation is completed.
Condos do double duty
"The landlord would have gotten about $15 to $20 a square foot for office space," Mr. Plush says. "But by creating condo units, he will be able to get $30 to $40 a square foot."
The proposed changes in the years ahead are sure to lift real estate values on Fulton Street, especially if national retailers move onto the street. But some longtime tenants say that the upgrading may not necessarily be good news for them. Strand's owner worries that a more fashionable Fulton Street will lead to higher rents when his lease expires in about five years.
"If the rent doubles or triples, there go your profits," Mr. Bass says.
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