from brick-and-mortar to online purchases. New assets on the
market such as Hudson Yards or Lower Manhattan’s Financial
District are luring tenants from older product. Landlords are
charging rents that are too high, and holding out for tenants,
like chain stores or bank branches. In some cases they have
caved, lowering rents. Indeed, in its Q2 report, asking rents
decreased in 12 of the 16 corridors that CBRE tracks, by 12.1%
to $658 per square foot.
Attitudes have changed, especially with millennials desiring
experiential retail and not particularly wanting to shop at their
parents’ department store. Nostalgia aside, was the decision to not
just shrink but to close the Lord & Taylor on Fifth Avenue really all
Or as Garrick Brown, a VP and Americas head of retail research
at Cushman & Wakefield put it, today’s retail challenges are not
cyclical. “They are not about the economy. The economy is going
on all four cylinders. The challenges are structural,” Brown says.
“The real hurdle is finding your way in this environment where it’s
either about experience or value. Concepts that are in the middle
that don’t offer a lot of either, they need to reposition themselves
as value-oriented retailers or they need to boost their experiential
Not surprisingly in the least, with landlords lowering asking
rents there have been pricing corrections. Marcus & Millichap’s
H2 2018 Retail Research Market Report found that well perform-
ing assets are receiving multiple offers, while highly discounted
offers are coming in for the struggling centers.
Much has to do with whether the property is appropriately
priced, says Fishman, who adds that as much as people read about
the demise of retail, there has been an incredible influx of capital
looking for retail assets. Fishman, who among other assignments
was recently tasked with selling off New York REIT’s Manhattan
retail portfolio, says that his firm has been inundated with buyers
interested in looking at retail properties. “When everything is hot
it attracts a certain kind of buyer and this type of market attracts a
different type of investment analysis,” he explains.
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Let’s start the conversation.
Alexander S Beaumariage, Affordable Housing at 214-540-9129
Carolyn Nazdin, Seniors Housing and Care at 202-452-4912