A WHOLE NEW HARLEM
Can a new Whole Foods boost uptown’s real estate?
HARLEM residents, consider yourself warned! That Whole Foods opening early next year at 125th Street and Lenox Avenue won’t just offer upscale groceries. It will likely bring a boost to the neighborhood’s real estate market, too.
It’s hardly news that a robust retail scene can improve an area’s home values. But rarely has this relationship been so clearly spelled out as in the case of the “Whole Foods effect.” In January, real estate listings site Zillow released a study finding that homes within a mile of an outpost of the posh grocery chain appreciated an average of 4.5 percent more than properties outside this radius. What’s more, the analysis found that prior to Whole Food’s arrival, these homes had actually been appreciating more slowly than the area’s average.
It’s unclear from the study the extent to which Whole Foods — and its ripple effect — actually drives up real estate values as opposed to merely riding already rising markets, says Zillow chief economist Svenja Gudell. But the firm’s data suggests that Harlem housing will see a price bump once Whole Foods debuts.
Many Harlem real estate insiders are already building that “bump” into their future pricing. Citi Habitats agent Chyann Sapp, for instance, says that several landlords she works with are considering upping rents when the store opens.
“There’s a one-bedroom two blocks away for $1,800,” she says. “And the owner said that once Whole Foods opens he thinks he could easily get $2,000, $2,100 for it.”
Prices have already inflated thanks to its mere construction. Harlem Properties President John McGuinness says he’s seen the store boost area real estate since the moment it was announced in 2012. “After it opens, prices will probably increase even further,” he says.
McGuinness suggests the new Whole Foods is part of a larger shift in interest toward Central Harlem. It’s a trend that’s already welcoming other notable commercial developments such as celebmagnate Red Rooster Harlem and Sottocasa Pizzeria on Lenox Avenue along with a future WeWork branch in the heart of the 125th Street corridor.
“Normally [demand] had been more focused in West Harlem — Frederick Douglass Boulevard, Morningside Avenue,” he says. “Now it’s really picked up... around 125th Street from Fifth Avenue to Seventh and Eighth avenues.”
Bohemia Realty Group broker Sarah Saltzberg recalls how her company leveraged the coming Whole Foods to sell apartments at G4 Development’s 88-unit condo project at 48-54 W.138th St. “Even then [in 2012], we knew about the Whole Foods coming in, and we used that in our marketing,” she says. “It was exciting to people because they felt they were on the cusp of something.”
Today, Harlem is less on the verge and more in the trenches of a transformation. According to numbers from appraisal firm Miller Samuel, average area prices per square foot have risen from $594 in 2012 to $839 in 2015. Over the same period, McGuinness says, prices for neighborhood townhouses have jumped from around $2 million to $3.5 or $4 million.
There’s still room to grow, though, says Faith Hope Consolo, chairman of Douglas Elliman’s retail leasing, marketing and sales, who predicts the store’s arrival will set off a domino effect bringing additional retail to the area.
“This is the biggest game changer for Harlem that we have seen in a very long time,” she says, adding that she is working with several other parties, including a major fashion retailer, who want to come to the neighborhood. “It makes Harlem a competitor to other parts of the city.”
Of course, not everyone wants the game to change. New retail and rising home values are a boon for landlords and developers, but for renters and small-business owners, the blessings can seem more mixed.
“It’s a huge brand coming uptown for the first time,” says Citi Habitats’ Sapp, who grew up in Harlem. “But then some people are like, ‘We don’t need Whole Foods: it’s going to attract more people; prices are going to go up for real estate; surrounding businesses will close because they can’t compete.’ ”
The store could even be viewed as a threat. “Communities can see this as a signal,” adds Rachel Meltzer, an assistant professor of urban policy at the New School. “‘Whole Foods is here now, I am really losing my neighborhood.’ ”
Long-time residents may also fear that a large national chain will push out smaller, local businesses. Meltzer says, even though her research suggests this might not actually happen. “I don’t see on average a higher displacement effect in gentrifying neighborhoods,” she explains.
One Harlem resident looking forward to the store’s arrival is Tren’ness Woods-Black, granddaughter of Sylvia Woods, founder of the famous neighborhood restaurant Sylvia’s.
“I think Whole Foods coming to 125th is definitely going to provide the area with a lot more variety and healthy options than some other local groceries,” she says.
It’ll also be positive for Sylvia’s because store will carry its prodduct lines. Thatat move is part of what Whole Foods spokesperson Michael Sinatra describes as the chain designing its stores to suit local audiences.
“We build all of our stores custom, with everything from the products on our shelves to the size of our departments to the types of prepared food that we offer — all based on the neighborhood we are in,” he says. In Harlem, this means offerings that reflect the neighborhood’s African-American heritage and diversity.
Whole Foods has part- nered with Harlem Park to Park, a local community development organization, to source goods from neighborhood vendors for the store. When the store opens, it will feature products from 15 to 20 Harlem businesses, says Nikoa EvansHendHendricks, the groupgroup’s executive diredirector. She notes tthat while the store may accelerate changes in the neighborhood, HHarlem was alralready in flux. “TThe communitynity is nnot naïve,” sheh says. “ThThey know rents are going up as a result of Whole Foods, but rents have already been going up for years. So no one sees Whole Foods as the enemy.”
Wood-Black agrees. “When you are dealing with a community that is going through major gentrification, there are always going to be ebbs and flows; positives and negatives,” she says. “I don’t consider this to be a catalyst so much as just in line with what has already been happening.”
“W l F ds is harl m’s bigg s gam -c a g r.” — Faith Hope Consolo (below), Elliman Retail Leasing