Today's Paper Obits Crime Razorback Sports JOHN BRUMMETT: It comes down to money Our Town Today's Photos Puzzles
ADVERTISEMENT
ADVERTISEMENT
story.lead_photo.caption A pedestrian crosses Broadway in the SoHo neighborhood of Manhattan last week.

NEW YORK -- Dusty windows on Madison Avenue. Ghostly traces of signs on Columbus Avenue. Graffiti on a shop in SoHo.

Manhattan's top retail strips, some of which are among the world's priciest shopping districts, appear to have seen better days.

Once-packed streets are being hit by competition from emerging neighborhoods, and deep discounting from online retailers, according to community officials, landlords and brokers.

"Retailers are experiencing painful adjustments right now, there's no doubt about it," said Rafe Evans, a longtime broker with the firm Walker, Malloy and Co. He added that he had struggled to fill some Upper West Side buildings with tenants that last more than a few years.

While middle-class neighborhoods may be enjoying healthy vacancy levels, generally defined as about 5 percent, the rate in more affluent areas is as much as 20 percent, according to a survey of major streets that brokers later confirmed.

"It's like what's going on with luxury condos -- foreign money is taking a breather because of what's happening with our politics," said Charles Arnold, an agent seeking a tenant for a 2,200-square-foot store at 605 Madison Ave., a brick building with gold filigree near East 58th Street. It is being listed at $1,200 a square foot annually, or $220,000 a month.

The space has been available for a year, after Mulberry, a British company that sells leather handbags, closed after a nine-year run, said Arnold, a managing member of the Misra Group of Cos. Two retail floors upstairs, which formerly housed a hair salon and fitness studio run by celebrity stylist Julian Farel, are also empty.

Excess supply, of course, tends to soften prices. And the heart of Madison's shopping district, from East 57th to East 77th Street, where boutiques feature jewelry, suits and stiletto boots, is not immune. In late February, the street had 37 vacancies or stores for rent.

As recently as 2016, annual retail rents averaged $1,800 a square foot, said Faith Hope Consolo, the chairman of the retail leasing division at Douglas Elliman Real Estate. Now the average is $1,100, she said.

Consolo is marketing 901 Madison, a store that until last month was leased by Bardith, an antiques store that had been there for more than four decades. The store, near East 72nd Street, is asking $775 a square foot.

"There is just too much space coming to the market at the same time, and owners are all vying for the same retailers," Consolo said. She added that places like Hudson Yards, a neighborhood that barely existed a few years ago and that is still under development, had pulled tenants away.

When spaces do get filled on the street, it can feel like a game of musical chairs, Consolo noted. Bottega Veneta, the Italian leather company, is set to open a new store at 740 Madison this year, though its current store, at 650 Madison, will close at that point, pouring more square footage onto the market.

Similar moves have taken place in Herald Square, which is pocked with vacancies despite being near the Empire State Building, a huge tourist draw. In 2015, the apparel chain H&M moved across the street, to 1293 Broadway, from its 59,500-square-foot multilevel home at 1328 Broadway.

If commercial rents are too high for mom-and-pop shops, deep-pocketed national retailers also seem unable, or unwilling, to afford them. Consider the state of Bleecker Street in the West Village, near Seventh Avenue South, a decadelong fashion hub.

One afternoon last month, for-rent signs could be seen in front of more than a dozen spaces, including buildings once occupied by marquee fashion companies like Jimmy Choo (No. 407), Marc Jacobs (No. 385) and Ralph Lauren (Nos. 381 and 383).

"It's a difficult time for all retailers," said Dean Valentino, a managing director at ABS Partners Real Estate, which is listing 381 Bleecker for about $500 a square foot, or $50,000 a month.

Over a 10-year span, Valentino said, some rents on the street swelled to $32,000 a month from $20,000 a month, or a 60 percent jump, although stores resisted passing along those extra costs to customers.

"They couldn't escalate the price of their goods as much," he said.

High levels of pedestrian traffic also don't seem to guarantee retail success, as is the case along Broadway in SoHo, which may be Manhattan's hardest-hit area. About 20 of the 100 storefronts between Houston and Canal streets sat empty on a recent afternoon, while throngs of people passed outside.

Some of the empty storefronts, on Broadway and elsewhere, may be targeted for development, explaining why they are unoccupied. But the vacancy totals would be even higher if one includes buildings where signs announce incoming retailers but that are still not open for business.

Prices in SoHo, unsurprisingly, are in decline. Last fall, the average asking rent on Broadway was $755 a square foot, down from $824 last spring, or about an 8 percent drop, according to the Real Estate Board of New York, the trade group known as Rebny.

If examples are numerous, solutions can seem limited. The Small Business Jobs Survival Act, which would give retail tenants the right to renew any lease so they cannot be evicted on the whim of the landlord, has not made much progress in New York's City Council since being introduced in 2014.

While critics have questioned the legality of getting involved in rent negotiations, advocates of the bill say landlords are lobbying behind the scenes to kill it.

Other steps taken by city officials include an effort to exempt retailers from a rent tax, which applies to Manhattan businesses that spend more than $250,000 in rent a year. A Council bill introduced in February would raise that amount to $500,000.

Others rattled by the increase in vacancies are just trying to get a handle on how many there are, a tricky thing to figure out when brown paper covers windows, brokers don't return calls and landlords, shielded by limited liability companies, can't be found.

Justin Levinson, a former reporter who became frustrated by the high turnover in the East Village, decided the best way to call attention to the issue was visually, with a map.

The result, Vacant New York, which he introduced in September, is more a snapshot in time than a dynamic database. But its findings have led him to a meeting with city officials, he said, as well as talks with a real estate brokerage.

"It's really easy to point fingers, to say it's someone's fault, like greedy landlords," Levinson said. "But no one is really talking about solutions." For his part, Levinson would like to see a law creating a registry for all stores that have been vacant for a year.

SundayMonday Business on 03/12/2017

Print Headline: Luxury retailers' shop sites emptying

Sponsor Content

Comments

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT