Is Affordable Retail Space a Thing of the Past in NYC?
Well, it depends who you ask. Lee & Associates managing principal Peter Braus, a moderator at Bisnow's 5th Annual NYC Retail Summit, says $1k/SF deals don’t even impress anymore on NYC’s main shopping corridors.
Panelists all agreed that they expect rents to stay flat a year from now. But Eastern Consolidated senior director Brad Cohen (with Peter), who we caught up with post-event, says rents may stay flat but asks won’t until all the bargains in Manhattan are exploited—and we’re still a ways from that. Brad points to places like the far West Side, where sub-$100/SF rents can still be had. “The rent gap’s widening between side streets and avenues,” Brad says, pointing out that he recently worked on a deal on 60th Street near Bloomingdale’s at around $100/SF—about a third of the typical take on busy Third Avenue.
But the relative bargains may not work in bigger footprints. Asked where she’d take a high-quality tenant in need of 25k SF for under $100/SF, Cushman & Wakefield vice chairman Joanne Podell says she’d tell the tenant Manhattan’s just not for them anymore.
H&M general counsel Henry Rouda (with Arent Fox partner Tony Lupo), who keynoted the event, says online shopping can actually drive sales, all the more so with apparel. He says “pre-shopping” online means buyers walk through the door educated and sometimes walk out with more bags slung over their arms than they’d planned. But the tectonic plates are shifting, as Acadia president Ken Bernstein points out. He says among the retail sectors making a big shift toward clicks instead of bricks are office supplies, which he says now do about 20% of business online.
But as CBRE vice chairman Richard Hodos (flanked by Joanne and Westfield WTC SVP Ron Bondy) points out, NYC's now more comparable to world-class cities like Shanghai or Paris than to any other American city—so there are a lot of exceptions to rules that apply elsewhere. Aurora Capital principal Jared Epstein notes that he’s seeing online retailers he’s never heard of that are doing booming business looking for retail space in neighborhoods like Soho.
Jake Elghanayan spoke at the event, repping TF Cornerstone, a sponsor of the event and the owner of 90-100 Gansevoort St, where it was held. He says one way he's noticed for retailers to confront high rents in NYC is by owning their space.
Goulston & Storrs director David Rabinowitz, who moderated at the event, closed by pointing to the need for NYC to make room for workers who may not be in the top income bracket as an issue NYC will need to work on to maintain a healthy retail scene.