Retailers Shifting Focus In Evolving Manhattan Market
Manhattan’s evolving retail market has been attracting new retailers and nurturing cutting-edge concepts—and innovation will be in the spotlight during this year’s ICSC New York National Deal Making conference. Retailers, CRE professionals and exhibitors worldwide are gathering for the second largest global deal-making event at the Javits Center today and tomorrow to conduct business and discuss trends.
Retail, especially in New York, is trending away from promotion solely through traditional stores. Retailers are innovating with experiential concepts, pop-up shops and collaborations that cover fashion, food, fitness and entertainment. They see New York City not only as a place to sell products, but also to promote their brands through interactive experiences and lifestyle engagement.
Athleisure brands, like Lululemon, Nike, Athleta, North Face and Reebok now offer in-store fitness classes free of charge in Manhattan to draw potential customers to stores.
Times Square has seen a surge of activity in experiential retail. The NFL and Cirque du Soleil are partnering to create a four-story exhibit that will capture fans’ passion for football through a truly immersive experience. Set to open in fall 2017, the concept plans to feature high-tech, high-touch exhibits and activities, access to players, on-site retail, stadium-style food and beverages, and special artifacts on display.
Hershey will be joining the NFL and Cirque du Soleil at 20 Times Square, relocating from West 48th Street, as part of efforts to enhance its brand experience at the point of sale.
“If you look at all the stores now [in Times Square], it’s not traditional retail being done in the old format way,” CBRE vice chairman Andrew Goldberg, a member of the 20 Times Square leasing team, says. “Everyone is looking at how to keep the customers engaged longer and having them stay and be more involved in the store.”
In a unique twist on the typical car showroom, Lexus created its “Intersect” concept—its new space in the Meatpacking District and in cities around the world—which functions as an art gallery, café, event space and showroom, promoting a lifestyle versus just selling a car. Creative concepts fuel foot traffic and brand interest, as New Yorkers and tourists try to stay on top of the trendiest places to see and be seen.
Following average asking rents surging by 92% between 2010 and 2014, evidence of retail rent moderation has been seen throughout Manhattan. However, rents aren’t too far from historic highs, indicating a return to equilibrium rather than an actual downturn in the market. Several brands that delayed their foray into Manhattan due to sky-high rents are now making their debut, allowing for retailer diversification throughout the city.
Tenants are experiencing greater leverage in negotiating, with landlords becoming more flexible with retail lease structures—from generous concession packages to increased free rent to smaller escalations.
Strong population growth, increasing household income, a diverse employment base and record numbers of tourists—combined with lower rents and unique branding opportunities—indicate that New York retail will remain strong in the near future.
Interested in learning more about retail trends and opportunities? Stop by CBRE’s booth #1102 at ICSC New York!
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