Brick-and-mortar vacancies often accommodate
pop-up opportunities for retailers making their
entrée into the market, and often deciding to stay.
A number of retailers, such as Jennifer Tattanelli
(right), and The Daily Edited (below) are moving from
pop-up shops to permanent locations in the city.
“Consumers’ habits have just changed. We are seeing new con-
cepts that attract shoppers. Companies are listening to the needs
of shoppers and are providing improved in-store experiences,”
says Faith Hope Consolo, the chairman of the retail group at
Douglas Elliman. “The physical store is not going anywhere.”
Consolo characterizes New York City as a place where brands
are made and demand is strong. Stores close their doors. But that
also means other doors open or reopen. For example, while Toys
“R” Us closed in Times Square last December, another celebrated
toy store, FAO Schwarz will reopen at Rockefeller Center in time
for this year’s holiday season.
In short, vacancies have allowed new retail to enter the city’s
neighborhoods. Available retail space has allowed Korean beauty
brands such as Innisfree and Peach & Lily to move into the city.
Riley Rose, Forever 21’s beauty store that’s now in Los Angeles, is
considering opening a store in New York City, Consolo says.
Brick-and-mortar vacancies mean more affordable pop-up
opportunities, notes Consolo, who is well-known for her success in
this area. She worked with AYR, The Daily Edited, Finollo and
Jennifer Tattanelli in their efforts to go from pop-up to permanent
locations. Other “pop to perm” happy endings: British tailoring
brand Thom Sweeney now at 362 W. Broadway; men’s fashion
store New & Lingwood at 970 Lexington; and SJP Collection by
Sarah Jessica Parker at 93 South St. in the Seaport District.
All of these broader trends must be overlaid on a metropolitan
retail landscape that is extremely varied by neighborhood and
even, occasionally, by the street. “Micro-markets are what attract
people,” observes Richard Rizzuto, VP of retail services at
Transwestern. ”There is 100% not one retail in New York City.”
Knowing what’s happening with the city’s retail requires close
observation and knowledge of the neighborhoods. For example,
at the moment there is weakness on Upper Madison, says Jeff
Fishman, vice chairman of the private client group at Newmark
RKF. “SoHo was decimated for a while. Now all of a sudden leasing
people in our office are getting calls from tenants they represent
about how they want to look at SoHo for $400, $500 per foot.”
They didn’t want to look at $1,400 a foot, he adds.
As another example of the dynamic market, he explains
Flatiron has become hot because its residential, office and retail
demographics comprise residents and wage earners with money in
their pockets. Meanwhile, Bleecker Street once was a cheaper
alternative to SoHo. SoHo started to fill up, then the prices on
Bleecker Street rose. He says a “follow the leader” approach often
happens. “It’s the old Burger King, McDonald’s theory. You’d see
certain retail go somewhere and another retailer would want to
follow them. You see it with H&M and Zara.”
“Times Square is as hot as can be,” says Fishman. “Tourism is
still driving the retail rents in Times Square. That’s a strong,
Brooklyn is another neighborhood that has begun to command
higher retail rents because neighborhoods are attracting tourist
traffic. Dumbo and Williamsburg are bringing in tourists during
the evenings and weekends. Smorgasburg which bills itself as “the
largest open-air food market in the US,” says it attracts 20,000 to
30,000 people to Brooklyn each weekend.
Despite New York City’s many retail strengths, empty storefronts still stick out like pockmarks on some of its most popular
retail corridors. CBRE’s Q2 2018 Manhattan Retail Report tracked
the number of availabilities in 16 corridors that it monitors. The
availabilities peaked in Q1 2018 at 208 spaces. For Q2, 2018, the
number slightly decreased to 200 direct ground-floor leases being
marketed. The report indicated that of these availabilities, 143 or
71%, had remained on the market for at least one year.
CRE professionals point to various causes behind the storefront vacancies: With the Amazon effect, consumers are shifting