Brokers predict Bossert rebirth to bring new tenants, rent hikes on Montague

Real Estate Focus

May 29, 2013 By Lore Croghan Brooklyn Daily Eagle

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The Bossert, once the haunt of Dodgers and debutantes and Brooklyn’s most fabulous folk, is coming back to life as a luxury hotel, which will bring big spenders – and potentially big changes – to the Montague St. retail corridor.

Look for higher revenues for many merchants – plus rent hikes and an influx of new tenants, real estate executives predict.

“The Bossert will change the energy and create magic on Montague Street,” said Glenn Markman, a Cushman & Wakefield leasing broker with a big stake in Brooklyn Heights.

Markman owns the building at 84 Montague that houses his and his brother Greg’s restaurant Heights Café and also owns 124 Montague, which real estate brokerage Corcoran is partially vacating because it’s opening a Brooklyn headquarters office at One Pierrrepont Plaza.

The 280-room Bossert is projected to open in approximately 12 months, spokeswoman Kathleen Cudahy told the Brooklyn Daily Eagle.

Real estate investors David Bistricer and Joseph Chetrit bought the century-old property at 98 Montague, once considered “the Waldorf-Astoria of Brooklyn,” for $81 million late last year. The previous owners, the Jehovah’s Witnesses, had used it to provide free lodging for devoted church members.

On the four-block-long, landmarked retail street, businesses from restaurants to clothing shops to pharmacies can expect a revenue boost from the reopened hotel’s guests, said Brigit Pinnell, executive director of the Montague Street Business Improvement District. And there’s the potential for businesses like dry cleaners and florists to serve as vendors for the Bossert.

Montague Street is already frequented by tourists heading to the Promenade and Brooklyn Bridge Park – which they can access easily via Squibb Bridge. Having a fancy place for them to sleep over will take their spending to another level.

Around the country, a hotel opening increases nearby retail sales by 20% to 40% – and this being New York City, the revenue increase will likely be on the high end of the range, Douglas Elliman retail group chairman Faith Hope Consolo said.

Montague merchants however genteel or humble are hoping the Bossert brings cash into their coffers.

“We stay open until midnight, and night-time business is slow,” said Kheled Al Sahybi, co-owner of Heights Deli & Convenience at 89 Montague. “If I make $200 a day from hotel guests, that will really help.”

Montague Street boasts an eclectic mix of merchants, including those who own the buildings their shops are located in, like upscale clothier Tango at 145 Montague and gourmet food purveyor Lassen & Hennigs at 114 Montague. National tenants including makeup seller MAC and Banana Republic share the street with eateries from a Chipotle fast-food chain to long-time local Armando’s.

Once the Bossert’s clientele start spending money in the Heights, would-be newcomer tenants will vie for spaces on the street – and drive up rents “extremely quickly” by 25% or maybe more, said Bill Ross, director of development marketing at Brown Harris Stevens/Halstead.

Currently, Montague rents for sidewalk-levels spaces from Clinton to Hicks Streets are $100 per square foot for mid-block locations and $125 to $135 for corner spots, he said. Banks clustered between Clinton and Court Streets are likely paying higher rates.

Spaces several steps below street level or several steps above – a quirky feature of Montague’s landmarked brownstones – are priced 20% to 25% lower as a rule, though individual leases may vary. Shops that are only three steps below the sidewalk with storefront windows fully visible to the public are likely pretty close to market rate, Ross said.

In three to five years of the hotel opening, because of sharpened demand for Montague retail spaces, 50% of them will turn over, Markman predicted.

In some instances, tenants with expiring leases will be replaced, he explained. In others, merchants who own their store spaces will give them up for big dollars.

“I might be tempted to rent this space out,” said Tony Bates, who owns Bentley’s Shoes and the brownstone it’s located in, 144 Montague. “I would spend six months a year in Trinidad and six months here.”

Bates thinks some other similarly situated shopkeepers would do likewise: “Everyone has a price,” he said. “We live in a capitalistic society.”

He expects only a small number of the luxury hotel’s guests will shop at Bentley’s – which lost income when the Jehovah’s Witnesses cleared out of the Bossert and nearby housing.

So did Teresa’s Restaurant at 80 Montague.

“We had a very good relationship with the Jehovah’s Witnesses,” said owner Teresa Brzozowska. “I miss them.”

She hopes to win a share of new hotel guests’ business: “Every customer counts for us,” she said.

While most merchants are enthusiastic about the Bossert’s upscale hotel makeover, neighborhood groups that feared it would bring heavy car traffic and noise from a rooftop restaurant plan to remain vigilant.

The Board of Standards and Appeals responded to their concerns by lowering the number of hotel rooms and the capacity of the event space and limiting the use of the ground-floor event venue to hotel guests, Brooklyn Heights Association executive director Judy Stanton said.

“People will still be concerned about car traffic,” she said. “After the hotel opens, we’ll see if further measures need to be asked for.”

Demand for prime Montague store sites is already intense. Some get snapped up even before their availability is publicized – such as the first floor of 124 Montague, which Corcoran is largely vacating while keeping the building’s second floor.

A new tenant has been found for the space, sources said.

Corcoran Group expects to open its One Pierrepoint Plaza office in late fall, regional senior vice president Frank Percesepe said.

A store site that isn’t even constructed yet got an enthusiastic reception at the International Council of Shopping Centers convention in Las Vegas last week, said Timothy King of CPEX Real Estate.

He marketed the 6,000-square-foot, two-floor space, which will be ready for occupancy in about 15 months in an apartment house being built at 172 Montague.

“Montague Street is already a gem of a location for a retailer,” he said, “and the opening of the Bossert is an added incentive for them to come.”

High-end restaurateurs who focus on dinner-time diners will head the list of prospective tenants who will try to get onto Montague once the Bossert opens.

Montague restaurants now focus heavily on lunch and happy hour for office workers from downtown Brooklyn’s MetroTech and the courts.

“This will be the catalyst that changes the equation,” Ross predicted.

The Bossert’s reopening could also draw some high-end fashion boutiques to Montague.

“I don’t think it will go quite as ‘designer’ as parts of Williamsburg seem to be doing, largely because of the office workers,” Consolo said. “But certainly I could see better mid-price points to complement Banana Republic.”