If retail landlords didn't have enough problems already

David Goldsmith

All Powerful Moderator
Staff member

NYC retail has hit bottom: Roth​

Recovery will take years and sector may never return to peak, Vornado CEO admits​

New York City retail has bottomed out and will recover, but may never get back to where it was, according to Vornado’s Steven Roth.
The market is building a base from which to climb out of its worst crisis in recent memory, Vornado’s chairman and CEO said Tuesday on the company’s third-quarter earnings call.
“This is not going to be a rapid, V-shaped rebound,” Roth said. “It’s going to take years for this market to recover, and it may never recover to the peak of 5 or 7 years ago.”
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In the meantime, Vornado remains a buyer of New York City retail real estate.
“We will buy the highest quality at very attractive prices, [but] there hasn’t been that kind of availability or offering yet,” Roth said. In fact, Vornado recently sold some retail space at a loss.
Executives on the call spoke of renewed business activity in the city’s retail corridors. Tenants that were “in a shell” for more than a year are back looking for space, even in tourist-dependent submarkets such as Times Square, president and CFO Michael Franco said. International tourism around the holidays will be “another shot in the arm for the city,” he offered.

“Now the transaction machine is working again,” Franco said, later adding, “We don’t expect it to snap back to 60 million [tourists per year] immediately. But the trendline from the city opening, and the attendance at sporting events and Broadway shows and other things is quite good and quite indicative of what we think is going to happen.”

Commercial rent increases are likely on the distant horizon, however.
“Activity has to happen before you start getting rental movement, and it’s going to take, I think, a decent amount of activity before that happens,” Franco said.
Vornado reported third-quarter adjusted funds from operations, plus assumed conversions, of $136.2 million, or 71 cents per share, up from $116.7 million, or 61 cents per share, from a year ago.

The company leased 111,000 square feet of New York retail space during the quarter at an average initial rent of $109.61 per square foot annually, bringing this year’s to 176,000 square feet at an average initial rent of $142.70.
Vornado sold five underperforming retail assets earlier this year, including two in Soho and three on the Upper East Side. The company expects to recognize a gain of $1.5 million from the Soho sales and a $7.9 million non-cash impairment loss on the Upper East Side sales.
 

David Goldsmith

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"Vornado sold a 9,000-square-foot retail condo at 501 Broadway, also listed as 72 Mercer Street, in Soho for $27.5 million. The buyer was Crane Partners, the Commercial Observer reported. James Nelson and Brent Glodowski of Avison Young brokered the sale.

Vornado acquired the unit in 2012 for $31 million, making it one of several retail properties the REIT has recently sold at a loss."
 

David Goldsmith

All Powerful Moderator
Staff member
I'm not sure I expected this based on a lot of the rosey press, but here it is.

Manhattan retail rents fell without tourists, office workers​

Average asking rents declined in 13 of borough’s retail corridors: REBNY​


As Manhattan misses office workers and international tourists, retail rents in the borough are struggling to meet pre-pandemic levels.
Average asking rents in 13 of Manhattan’s retail corridors registered year-over-year declines, according to a Fall 2021 report by the Real Estate Board of New York. Nine corridors experienced either an increase or no change in average asking price per square foot since spring 2021.

“While there are some encouraging signs in the current Manhattan retail data, continued progress is contingent on key economic and public health factors over the coming months,” REBNY President James Whelan said in a statement.

It may be good news to retailers on the hunt for a new space. At 43 percent, there are twice as many spaces with an average rent under $300 per square foot from the 28 percent recorded in Fall 2019.

Times Square registered its lowest rent in more than a decade, with an average asking price per square foot of $998. That’s a 29 percent decline from Spring 2021 and a 39 percent decline year-over-year.

On the other hand, Fifth Avenue between 49th and 59th streets saw an average asking price per square foot of $2,628, a 12 percent decrease from Spring 2021. That number is unchanged year-over-year.
Herald Square has also been hit hard. Average asking price per square foot reached $390, a 20 percent decrease from spring 2021, and an 11 percent decline year-over-year.

For those corridors that did see a jump in asking prices, the increase was slim.
In the case of 3rd Avenue between 60th and 72nd streets, the corridor saw average asking price hit $214, a 15 percent increase from Spring 2021, but just a 1 percent increase year-over-year. Bleecker Street between 7th Avenue South and Hudson Street similarly had a 4 percent incline from Spring 2021 and a 1 percent decrease year-over-year.

However, there’s some indication of hope. Cushman & Wakefield reported 1.1 million square feet of leasing in the first two quarters of 2021 — the first time transaction volume reached 1 million square feet since the last two quarters of 2019.
Visitors in Times Square remained below 2019 levels, but reached 200,000 per day in July 2021. NYC & Company estimates tourism will reach 34.6 million visitors in 2021, with 2.8 million visiting from other countries. That forecast is still down from the 66.6 million tourists total and 13.5 million from other countries recorded in 2019.

Still, corridors that rely on office workers continue to struggle with little foot traffic. According to an October REBNY report, just under 30 percent of retail storefronts in the Grand Central and Midtown East business districts — home to 15 percent of the city’s office stock — remained vacant this summer, more than double the 10 to 15 percent vacancy rates seen before the pandemic.
 

David Goldsmith

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Staff member

After disastrous 2020, retail chains stage modest NYC comeback​

Reopenings drove 3% increase in number of locations this year, still 10% below pre-pandemic presence​


The number of chain stores and restaurants in New York City increased this year in a welcome sign for retail landlords after four straight years of declines.
The bar was set pretty low. The 2.7 percent year-over-year increase pales in comparison to last year’s 12.8 percent decline, according to a report by the Center for an Urban Future.

Chains added 190 locations across the five boroughs as the pace of commercial activity picked up following 2020, the most challenging year on record, when one in every seven chain stores was forced to close. Chain stores were on a downward trajectory even before the pandemic, with the city seeing a 3.7 percent decline in locations in 2019 and a 0.3 percent dip in 2018.

But in addition to the 190 new store and restaurant openings, more than a quarter (260) of the 1,021 locations that shuttered in 2020 reopened this year.
Several chains now exceed their pre-pandemic store count, including Pret A Manger, Shake Shack, Insomnia Cookies, Papa Johns and Kiehl’s. Those with the most openings included streetwear brand Jimmy Jazz (with 31 new stores), Taco Bell (28), Pret A Manger (23), Le Pain Quotidien (23), Pizza Hut (22), Subway (21), Enterprise (20), Soul Cycle (19) and Popeye’s (18).

Additionally, fewer national retailers shut down altogether this past year, with just eight chains exiting the city entirely, compared to 27 last year. Among them were Century21 — which filed for Chapter 11 bankruptcy and shuttered all of its stores last year, including its five New York City locations — Kenneth Cole, French Connection and Fossil.

Though the number of chain store locations increased from 6,970 at the end of 2020 to 7,160 this year, that figure is still 10 percent below the 7,948 chain stores in 2019 and 12 percent below the 8,136 chain stores in 2018.
Staten Island saw the fastest rate of increase this year, with its chain store footprint jumping by 4.5 percent, or 19 stores. Brooklyn added 43 stores, Queens added 31 and the Bronx added 11. After accounting for more than half of all closures in 2020, Manhattan represented 45 percent of the growth in 2021. None of the boroughs, however, were able to return to 2019 levels.
 

David Goldsmith

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Staff member
Deepening Doldrums For NYC Restaurants Renew Calls For Relief
Restaurants in New York City have been operating without capacity restrictions for months now, but customer visits have plummeted since the omicron spike, returning chefs and operators to an unpleasant but familiar refrain: desperately asking their landlords to be flexible.
In New York City, restaurant bookings were down 68% at the start of this week when compared to January 2019, according to OpenTable reservation data. Though many hoped 2022 would bring better business — with widespread vaccinations and the reopening of many of the city’s attractions — the high rate of breakthrough infections, combined with winter weather, is keeping diners home in big numbers.
Restaurateurs are holding out hope that the federal government will provide more aid to the exhausted Restaurant Revitalization Fund. Others are putting their faith in landlords continuing to be understanding, even though government mandates allow full operations — and commercial evictions are now legal after the moratorium lifted last week.
“I think everybody thinks restaurants are fine now,” said Susannah Koteen, who owns Harlem restaurants Lido, Bixi and Fox. “Because we're not mandated to be at 50% or 25% [capacity], your landlord doesn't necessarily understand that sales are down so much because nobody realizes, unless they're in the restaurant industry.”
Just before Christmas, the booking cancellations began, Koteen said — business is down 35% off her projections.
“It's been a very, very painful time,” Koteen said.
While there were nearly 9,000 cases over the weekend in New York City, a major drop from a week earlier, officials are warning that coronavirus case numbers are still extremely high. Those sliding cases have done nothing to bring people back to hospitality in great numbers so far.
“People, unfortunately, are afraid to go out, and I completely understand it,” said Gloribelle Perez, the co-owner of Barcha on First Avenue.
Koteen said she has had to close her Asian fusion restaurant Bixi two days a week because it's too quiet to stay open. One of her landlords agreed to let her avoid paying rent for the first three months of the year in exchange for paying double rent at the end of 2022. She said she is still negotiating rent payments with her other landlord.

“It's like, 'The governor didn't say you have to be closed so, why aren't you fine?'" she said. "Well, people are afraid to fight to go out, because they don't want to get Covid."
She said she is praying — without much hope — that the federal Restaurant Revitalization Fund is replenished. The restaurant industry is ramping up the pressure on Congress to add more funds, but legislation drawn up has gone nowhere so far.
Mayor Eric Adams is one of 72 mayors across the country who wrote to federal lawmakers to push them to refill the funding, after the program ran out last July. Many operators, like Koteen, missed out altogether, and the New York City Comptroller released data this month showing only 28% of the 5,500 grants in the city went to restaurants in low- or moderate-income areas.
“There's still hope, but it's going to take a real fight, which is very unfortunate because there's such dire need,” New York City Hospitality Alliance Executive Director Andrew Rigie said of the federal support.
There are some state and city programs available to restaurants, but Rigie said they are unlikely to turn things around for a restaurant in major distress.
“Every dollar is going to help, but if you need half a million dollars to pay off rent and payroll, that $5K grant from the city is great, but it's not going to be the difference between you staying open or shuttering,” he said.
Even amid this challenging atmosphere, activity from food and beverage tenants has been picking up. While only 24K SF of food and beverage space was leased on Manhattan's major retailers in the last quarter of 2021, according to CBRE, it was still the most active retail category of the year.
This year has started strong, said Meridian Capital Group President of Retail Leasing James Famularo, who added he has locked down 14 leases for F&B tenants in January already.
He said many landlords have been waiting for the commercial eviction moratorium to end. Though it has now expired, he said most landlords are more likely to try and reach an agreement with their tenants who are behind on rent.
“The courts are so backed up, they may be three to four years behind in cases,” he said. “My recommendation to all my clients is if you can agree, you know, negotiate and agree [that] somebody exit amicably, that's always your best bet.”
Restaurants that haven't been paying rent in their spaces don’t have as much bargaining leverage as they did earlier in the pandemic, he said, because there are abundant tenants in the market looking for that kind of space.
“If I can pick one category out of all categories of commercial space is the second-gen restaurant space, that is most desirable,” he said. “People feel like now is the time to jump in, and there's not going to be another time like this.”

For Perez — who runs Barcha, a Latin-Mediterranean-inspired restaurant and cocktail bar in East Harlem with her husband — government support hasn’t been an option.
They opened their restaurant in late 2019, and they weren't able to show a 25% drop year-over-year, meaning she couldn’t access the revitalization fund. Negotiations with her landlord have been delicate, she said, and she is hoping to reach an agreement regarding rent obligations amid the ongoing crisis.
“If you've ever been on a roller coaster without any harnesses, I would imagine that’s what it’s like,” Perez said. “I had hope all along, and I still do, but hope is not a plan. We have finally got to a point where we had to accept that nobody was going to save us.”
She said they pivoted as fast as they could, building an online platform for takeaway, making and selling honey and then operating at reduced capacity.
Through the pandemic, Perez said they worked to help feed healthcare worker locals who were food insecure, trying to secure donations on social media for help providing meals. She is now focusing on making the restaurant feel warm, welcoming and intimate — but still makes guests feel safe.
“People really want a cozy atmosphere where people aren't on top of them — so how do we create value and, you know, a really cool, chill vibe, without being the cause of increased anxiety of our guests,” she said. “We're still here, right? But that's not to say that we're not bruised, that we're not hurting.”
 

David Goldsmith

All Powerful Moderator
Staff member
Over the past 2 decades restaurants have increasingly shifted towards tourists and become way less affordable as options for everyday New Yorker's. So of course now there is a huge downturn in tourism they are going to be hurting. And no amount of making life more miserable for the rest of us by taking away parking, causing congestion, supporting a burgeoning rat population, etc. is going to change that. We have too many restaurants to support the number of people who can afford to patronize them at the current price levels. This is exacerbated by the high rents restaurants pay, so subsidies to restaurants are really subsidies to Real Estate.

What we need is rents and restaurant prices to come down to make dining out affordable to New Yorkers again and then we will see more people taking the option.


Restaurants in New York state say challenges are mounting​

Nearly two years after the COVID-19 pandemic began, New York restaurant owners are facing deepening challenges to their business and bottom lines, a survey released this weekend by the New York State Restaurant Association found.
There's been a decline in customer demand for many restaurants, while sales have also decreased. Costs, meanwhile, have increased over the last year. Reduced hours of operation have become the norm for many operators.
The most recent winter surge of the omicron variant of COVID-19 has made life even more complicated for restaurant owners as the industry is seeking additional aid for struggling businesses this year.
But it also comes as New York state lawmakers are once again considering allowing alcohol to go — seen as a key lifeline for the industry during the early stages of the pandemic — which is now backed by Gov. Kathy Hochul.
“It has been nearly two years
since we entered this devastating pandemic and still the restaurant industry continues to grasp for consistent aid. The results of this survey are a mere reflection of the restaurants that are suffering with no promise of better days," said Melissa Fleischut, the president and CEO of the New York State Restaurant Association. Actions need to be taken. Replenishing the Restaurant Relief Fund will keep restaurant operators and businesses afloat and new revenue streams from alcohol-to-go will go a long way to help restaurants continue service.”

The group's survey found 86% of the 335 responding restaurant operators see business conditions worse now than they were three months ago, while 74% have seen declining sales volume compared to 2019. Total costs are up compared to December 2020, according to 81% of respondents.

A large majority, 95%, said they sought Restaurant Revitalization Fund grants in order to hire back workers, but did not receive the money. A similar number of operators, 96% of those surveyed, agreed that grant funding would make it more likely for them to stay in business during the crisis.

It's estimated an initial round of funding from the grants is estimated to have saved 95,000 jobs in the industry.

“Facts and numbers only paint part of the picture. But the reality is clear—New York restaurants are at the end of their line and unraveling quickly," Fleischut said. "We need help and we need it now. We call on Congress and our elected officials to consider the beloved restaurants in their communities and those across the state. The Restaurant Revitalization Fund, in addition to efforts like alcohol-to-go, will give businesses a chance at making a successful recovery. As New York forges ahead our leaders must consider the industries that drive it."
 

David Goldsmith

All Powerful Moderator
Staff member
Have we moved on to stage 3 yet?
Steve Roth: NYC retail might never fully recover

As retail surges nationwide, prime urban corridors lag, Vornado head says​

New York’s high-street retail landlords might never again collect the astronomical rents of the pre-pandemic era, Vornado Realty Trust’s Steven Roth said Tuesday.
Roth and other Vornado executives on an earnings call described a “startling” retail recovery across the country that has included malls and shopping centers. But big cities, including New York, have been laggards, despite a “booming” luxury segment where brick-and-mortar sales outnumber online ones.

Retailers on Fifth Avenue and Times Square have only begun to “nibble” at new locations, Roth said.
“We expect that, over time, street retail will recover,” Roth said. “We do not expect it to recover to the unbelievable highs of the top rents of four or five years ago. But it will recover from today’s levels very aggressively.”
Vornado Realty Trust’s shares surged more than 6 percent Tuesday after the Manhattan office and retail landlord reported 2021 fourth quarter results ahead of Wall Street estimates. The company recorded funds from operations, a key metric of REIT operating performance, of 81 cents per share — a 7-cent beat.
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Vornado’s stock still hasn’t recovered to its pre-pandemic level, however. On Valentine’s Day two years ago it stood at $67.89 per share but plunged to $29.66 on March 20 of that year. It was trading at around $43.50 Tuesday afternoon and is down by more than half in the past five years.

Net operating income for the company’s New York business increased 11.3 percent over the year-ago quarter, and 10.1 percent company-wide.

Vornado forecast “double-digit” growth in FFO per share in 2022, driven primarily by office and retail leasing.
So-called necessity retail has been a more positive story for New York and the company, with major thoroughfares such as Union Square having recovered in that category “robustly,” Haim Chera, head of retail for Vornado, said on the call.
“We need our international tourists back. We need our workers back in the office to fill the streets. And that’s a little behind the curve,” Chera said.
In 2019, about 10 months before the pandemic arrived, Vornado sold a 45 percent stake in its New York City retail portfolio to several investors including Crown Acquisitions, which was founded by Chera’s late father and is run by his brothers.

Vornado has tweaked its New York retail footprint In recent months, offloading a handful of properties “high on Madison Avenue” and some “less important” ones Downtown, Roth said. “The rest of our assets we’re pretty happy to very happy with,” Roth said.
Last summer, the company sold, at a loss of about $7 million, five struggling retail buildings in Soho and the Upper East Side, citing “negative income” and low occupancy.
Vornado leased 954,000 square feet of New York office space to tenants in the fourth quarter alone, bringing the year’s total for the market to more than 2.2 million. The company’s office properties were 92 percent leased at year-end but only about 30 percent occupied, according to Roth, who described a “universal” desire among the company’s tenants to return to the office.

“It’s going to happen,” Roth said. “Whether it happens three months from now or nine months from now, we don’t know. But the one thing that we do know is all of our clients — our tenants and their CEOs — they basically want to be office-centric operations.”
 

David Goldsmith

All Powerful Moderator
Staff member
If Amazon is shutting down retail operations I'm not sure I believe some of the "retail is coming back stronger" predictions.

Amazon to shut its bookstores and other shops as its grocery chain expands​

Amazon.com Inc said on Wednesday it plans to close all 68 of its brick-and-mortar bookstores, pop-ups and shops carrying toys and home goods in the United States and United Kingdom, ending some of its longest-running retail experiments.
The news, which Reuters was first to report, marks a turning point for a company that began as an online bookseller and helped drive established rivals such as Borders to bankruptcy. Amazon said it would focus more on its grocery markets and a department store concept going forward.

After opening its first book shop in Seattle in 2015, Amazon has tried out an array of ideas in retail: convenience stores without cashiers, supermarkets, and a format called "4-star" in which it sells toys, household items and other goods with high customer ratings.

Amazon had aimed to reach shoppers in more places and bring its online touch into the real world. Its bookstores would pull from its vast data trove and showcase what people were reading, even the reviews they left on Amazon's website.

Amazon to shut its bookstores and other shops as its grocery chain expands
- Amazon.com Inc said on Wednesday it plans to close all 68 of its brick-and-mortar bookstores, pop-ups and shops carrying toys and home goods in the United States and United Kingdom, ending some of its longest-running retail experiments.

The news, which Reuters was first to report, marks a turning point for a company that began as an online bookseller and helped drive established rivals such as Borders to bankruptcy. Amazon said it would focus more on its grocery markets and a department store concept going forward.

After opening its first book shop in Seattle in 2015, Amazon has tried out an array of ideas in retail: convenience stores without cashiers, supermarkets, and a format called "4-star" in which it sells toys, household items and other goods with high customer ratings.

Amazon had aimed to reach shoppers in more places and bring its online touch into the real world. Its bookstores would pull from its vast data trove and showcase what people were reading, even the reviews they left on Amazon's website.

But the company's innovations were not enough to counter the march toward online shopping that Amazon itself had set off. Its "physical stores" revenue - a mere 3% of Amazon's $137 billion in sales last quarter, largely reflective of consumer spending at its Whole Foods subsidiary - has often failed to keep pace with growth in the retailer's other businesses.

Michael Pachter, an analyst at Wedbush Securities, said internet-savvy Amazon was right to forgo the niche market of brick-and-mortar book shoppers, as bad a match as electric car maker Tesla Inc (TSLA.O) opening gas stations.

Pachter said Andy Jassy, Amazon's new chief executive, likely made this call as he reviewed the retailer's myriad businesses since taking the top job in July. "Retail is hard, and they're discovering that," he said.

The company's vice president of physical retail, Cameron Janes, departed Amazon after 14 years in November, he said in a LinkedIn post. Now chief commercial officer at retailer REI, he did not immediately return a request for comment.

Amazon will close its 4-star, pop-up and bookstore locations on various dates and notify customers via signage. Workers will receive severance or can receive help finding jobs at any company stores nearby, such as more than a dozen Amazon Fresh grocery locations it has announced, the retailer said.

Amazon declined to specify how many jobs would be cut.
 

David Goldsmith

All Powerful Moderator
Staff member

Joe Sitt loses West Side retail space to foreclosure​

Paramount Group takes retail condo valued at 30% below previous sale price​

In the latest sign of how far retail values have fallen, Joe Sitt’s Thor Equities lost a commercial condo at the base of Midtown’s Row NYC Hotel, which was valued at a big writedown.
Thor lost the roughly 27,000-square-foot property at 700 Eighth Avenue through foreclosure to a debt fund controlled by Albert Behler’s Paramount Group, which had lent $80 million against the property, a source familiar with the transaction told The Real Deal.

The retail condo was valued at a little more than $45 million, property records filed with the city Wednesday show.

That’s a markdown of nearly 30 percent from the $64 million Sitt shelled out for the property in 2014. And it’s less than half of the roughly $100 million Thor was asking for the condo when it put it up for sale a year later.
Representatives for Thor and Paramount did not immediately respond to requests for comment.

Thor bought the retail at the base of the Row (then known as Milford Plaza) eight years ago from Highgate Hotels and Rockpoint Group, which had just completed a two-year, $140 million renovation of one of the city’s largest hotels.

It was a different time for the city’s retail market: Tenants were signing leases at prices that seemed like they would never stop climbing, and investors were writing equally eye-popping checks to get in on the action.
Just 13 months after buying the property, Sitt put it up for sale, asking north of 50 percent more than what he had paid the year before. His major tenant was the City Kitchen food court, which positioned itself to draw in hungry tourists and commuters shuffling around the Theater District and the Port Authority Bus Terminal.

But retail rents had actually peaked in 2014, and the market slipped into a deep correction that was compounded by a broader shift toward e-commerce.
The fallout from the market drop is being felt now, as major properties are trading at big discounts to previous prices. Brookfield Property Partners last year sold its retail condo at 530 Fifth Avenue to a partnership between Aurora Capital Associates and hedge funder Edmond M. Safra for $192 million — roughly a quarter less than the $250 million it paid in 2014.

Also last year, Vornado Realty Trust sold off a group of five struggling retail properties for about $185 million, roughly half what it paid to acquire the properties between 2004 and 2006.
 

David Goldsmith

All Powerful Moderator
Staff member

Joe Sitt loses West Side retail space to foreclosure​

Paramount Group takes retail condo valued at 30% below previous sale price​

In the latest sign of how far retail values have fallen, Joe Sitt’s Thor Equities lost a commercial condo at the base of Midtown’s Row NYC Hotel, which was valued at a big writedown.
Thor lost the roughly 27,000-square-foot property at 700 Eighth Avenue through foreclosure to a debt fund controlled by Albert Behler’s Paramount Group, which had lent $80 million against the property, a source familiar with the transaction told The Real Deal.

The retail condo was valued at a little more than $45 million, property records filed with the city Wednesday show.

That’s a markdown of nearly 30 percent from the $64 million Sitt shelled out for the property in 2014. And it’s less than half of the roughly $100 million Thor was asking for the condo when it put it up for sale a year later.
Representatives for Thor and Paramount did not immediately respond to requests for comment.

Thor bought the retail at the base of the Row (then known as Milford Plaza) eight years ago from Highgate Hotels and Rockpoint Group, which had just completed a two-year, $140 million renovation of one of the city’s largest hotels.

It was a different time for the city’s retail market: Tenants were signing leases at prices that seemed like they would never stop climbing, and investors were writing equally eye-popping checks to get in on the action.
Just 13 months after buying the property, Sitt put it up for sale, asking north of 50 percent more than what he had paid the year before. His major tenant was the City Kitchen food court, which positioned itself to draw in hungry tourists and commuters shuffling around the Theater District and the Port Authority Bus Terminal.

But retail rents had actually peaked in 2014, and the market slipped into a deep correction that was compounded by a broader shift toward e-commerce.
The fallout from the market drop is being felt now, as major properties are trading at big discounts to previous prices. Brookfield Property Partners last year sold its retail condo at 530 Fifth Avenue to a partnership between Aurora Capital Associates and hedge funder Edmond M. Safra for $192 million — roughly a quarter less than the $250 million it paid in 2014.

Also last year, Vornado Realty Trust sold off a group of five struggling retail properties for about $185 million, roughly half what it paid to acquire the properties between 2004 and 2006.
 

David Goldsmith

All Powerful Moderator
Staff member


As rents drop, Manhattan retail spaces are filling up​

Leasing activity increased as asking rents fell for 18th consecutive quarter​

Following years of challenges, Manhattan’s retail corridors are enjoying a resurgence.
The market had a 23 percent year-over-year increase in leasing in the first quarter of 2022, according to a report by CBRE. Direct ground floor availability across Manhattan’s 16 premier shopping corridors decreased for the third consecutive quarter, with availability dropping from 266 storefronts to 247, a 7 percent quarter-over-quarter decline.

“Despite feeling some of the impact from the Covid omicron variant and other stressors, New York City saw many bright spots in Q1 2022, including declining availabilities and strong leasing velocity, which totaled 2.1 million square feet in Q1,” CBRE analyst Nicole LaRusso said in a statement.
The rise in leasing came in part as landlords reduced their pricing to levels that retailers are willing to pay. Asking rents have fallen by 5 percent in the past year.

The Plaza District led the surge, recording the highest leasing velocity among the 16 corridors with over 83,000 square feet leased across nine transactions. The largest deal in the neighborhood was a 15-year, 26,000-square-foot lease signed by the California-based, Michelin-starred Taiwanese eatery Din Tai Fung, which committed to its first New York City location at Paramount Group’s 1633 Broadway.

Also in the district, a new high-end Italian chophouse, Maribella, announced plans to take over the 17,000-square-foot former New York Yankees Steakhouse space at 7 West 51st Street.

Flatiron/Union Square also recorded significant activity in the first quarter with over 74,000 square feet leased across six transactions. The biggest deal was signed by Petco Animal Supplies, which took nearly 30,000 square feet at 44 Union Square East — the historic Tammany Hall building. Food52, a new kitchen and home improvement brand, also committed to more than 26,000 square feet of retail space at 902 Broadway.

Upper Madison Avenue had the largest drop in availability among the 16 corridors. Availability declined nearly 9 percent quarter-over-quarter and 21 percent year-over-year to 42 spaces in the first three months of 2022.
The Downtown Broadway corridor also improved. Availability dropped 23 percent from the previous quarter and 26 percent from the previous year to 20 spaces in the first quarter.

But filling more spaces required some sacrifice by landlords, the CBRE report showed. Average asking rent across Manhattan’s retail corridors declined for the 18th consecutive quarter, falling to $591 per square foot, down 1 percent from the fourth quarter and 5 percent year-over-year.

Rent declines were pronounced in some shopping corridors. Average asking rent in Downtown Broadway fell to $316 per square foot, down 14 percent from the previous quarter and 22 percent from last year — the largest year-over-year decline among the 16 corridors.
Similarly, average asking rents along Fifth Avenue in the Plaza District fell to $2,524 per square foot, a 5 percent quarterly drop and 16 percent year-over-year decline. It was the first time since 2012 that average pricing on the posh corridor fell below $2,600.
 

David Goldsmith

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Staff member

Manhattan retail rents tick up as recovery slogs along​

Nine of 17 corridors saw asking rents rise as tenants face supply chain, labor issues​

Manhattan retail rents are on the rise, but remain below pre-pandemic peaks.
Of the 17 major Manhattan retail corridors analyzed for a report by the Real Estate Board of New York, nine had average asking rent per square foot grow from Fall 2021.

In the wake of the pandemic, supply chain issues, soaring prices and staffing shortages have kept retail tenants stuck in a slow recovery. The report also said major concessions and accommodations scored by tenants in 2020 and 2021 are largely no longer.

The sector’s battered recovery is uneven across the borough’s neighborhoods and retailers. Harlem is the closest to its pre-recession peak, falling short by just 5 percent. At the other end of the spectrum, SoHo is more than 60 percent below its prior highwater mark.
“In early 2021, food and beverage, fitness and local services dominated activity in Manhattan,” Keith DeCoster, director of market data and policy at REBNY, said. “We were just starting to see a return of international retailers along with first-time entrants previously priced out of the borough.”

Demand is now coming from multiple other sources like luxury fashion and accessories retailers on Madison Avenue and in SoHo, according to DeCoster, whose comments come after Canada Goose signed a 8,100-square-foot lease at 689 Fifth Avenue and Versace’s 5,300-square-foot lease at 747 Madison Avenue.

Other major Manhattan retail leases signed over the last six months include Petco’s nearly 30,000-square-foot lease at 44 Union Square, Din Tai Fung’s 26,400-square-foot lease at 1633 Broadway Avenue in Midtown and Food 52’s 26,000-square-foot lease at 902 Broadway Avenue in Flatiron.

Fifth Avenue between 49th Street and 59th Street had average asking price per square foot hit $2,775, a 6 percent increase from Fall 2021, but a 8 percent decrease year over year.
Downtown — on Bleecker Street between 7th Ave South and Hudson Street — asking price per square foot hit $226, a 10 percent decrease from Fall 2021, and a 6 percent decrease year over year. Farther uptown — Madison Ave between 57th Street and 72nd Street — asking price per square foot reached $769, a 3 percent increase from Fall 2021, but a 1 percent decrease year over year.

Leasing is still lagging in Times Square and on Fifth Avenue, according to the report, even as the corridors saw noteworthy transactions like the return of Planet Hollywood to Times Square and Swarovski’s planned flagship at 711 Fifth Avenue. Seven new retailers, including City Winery, signed leases at Grand Central Station, which was encouraging for office-dependent districts like Midtown East.
 

David Goldsmith

All Powerful Moderator
Staff member
Seems like a scene out of "The Big Short."
"Jack Terzi, founder of embattled New York retail landlord JTRE, nursed a Coors Light and cigar under the main cabana as creditors 2,500 miles away were trying to foreclose on several of his properties."
 
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