The acceleration of the retail apocalypse under Coronavirus

David Goldsmith

All Powerful Moderator
Staff member

Tourist-magnet Soho corridor sees 37% decrease in retail rents​

Commercial rents fell across Manhattan retail corridors in the past year, with one Soho stretch down a whopping 37 percent.

That’s according to the Real Estate Board of New York’s spring 2021 retail market report, which covers March through May, previewed by The Post.

The retail rental market’s recovery depends on Manhattan office workers returning to their desks, the report said.

“Signs of a nascent recovery are tempered by the reality that traffic in most retail corridors is far from approaching pre-pandemic levels,” it noted. “Sustained momentum requires an accelerated return of employees to the office, the resurgence of tourists and the opening of cultural and entertainment venues. Over the next six months, we should see these drivers of retail growth improve.”

Retail space in tourist and commuter neighborhoods took the biggest hits according to the report.
 

David Goldsmith

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The pandemic impacted every corner of Manhattan. However, the damage to retail corridors was uneven. Local service-oriented corridors with strong residential bases held up better. For example, compared to Spring of 2019, the average asking rent dropped by less than 15% in the Upper East Side. In contrast, corridors that depend on tourists and daytime commuters – such as Madison Avenue and Fifth Avenue – posted declines of more than 25% in the same period.

SoHo’s decrease in average asking rent is nearly 40% - the recent spate of leases by international retailers suggests these firms have taken note of the opportunities.
 

David Goldsmith

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Even as restaurants are reviving in a lot of neighborhoods, the type of foot traffic it takes to support the high end shops of Madison Avenue just isn't there.
"The iconic shopping corridor, which stretches from 57th Street to 72nd Street and has historically commanded some of the priciest retail rents in the city, is only seeing 71 percent of its 2019 foot traffic, according to an estimate from location analytics firm Orbital Insight. By contrast, Upper Fifth Avenue is at 92 percent of its 2019 levels, according to the analysis, cited by Bloomberg."
 

David Goldsmith

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Starved for relief: Restaurants seek $76B, far more than budgeted

With just $29B available, controversy erupts over who gets fed first​

The Small Business Administration is dishing out rent relief to restaurants, but many figure to go hungry.
The demand for federal pandemic relief has far exceeded the amount of money available, so some restaurants, bars and other food businesses might not receive it, the New York Times reported.
Restaurants could apply for relief starting May 3, and applications closed on Monday.
The Small Business Administration received more than 372,000 requests totaling $76 billion, but the Restaurant Revitalization Fund is capped at $28.6 billion, the publication reported.

More than 208,000 applications from businesses owned by women, veterans and minorities that meet a certain income and asset limit will be funded first, the publication noted.

Rep. Jim Hagedorn of Minnesota called that discriminatory against bars and restaurants owned by white men. Rep. Angie Craig, also from Minnesota, encouraged colleagues to extend the program’s funding.
Another grant program by the Small Business Administration still has funds left: The $16 billion Shuttered Venue Operators Grant program has enough money for the live-event businesses it aims to serve, with venues asking for $11 billion so far, the Times added.
Restaurants plead for more relief as Delta variant keeps diners away

After demand for aid far outweighed supply, restaurant groups call on Congress to replenish rescue fund​

The restaurant industry is coming back for seconds.
The National Restaurant Association on Tuesday urged lawmakers to replenish the Restaurant Revitalization Fund, warning that increased costs and changes to consumer behavior amid rising caseloads has put restaurant owners under “crushing long-term debt loads.”

“The small gains that our industry has made toward financial security are in danger of being
wiped out, dashing the hopes of communities, entrepreneurs, and consumers nationwide,” the association wrote in a letter to Congressional leaders co-signed by 51 other state and local restaurant groups.
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The fund was created under the American Rescue Plan to provide grants to restaurants and bars that need Covid-19-related relief. Under the program, businesses could receive up to $10 million per business and no more than $5 million per physical location.
But demand for relief far outweighed supply. More than 370,000 restaurant owners filed applications, seeking $75 billion in assistance. But only 105,000 were approved for grants, averaging about $272,000 each, before funding ran dry in July.

In New York State alone there are nearly 18,000 pending applications, the second-highest number nationally, totaling almost $6 billion in stabilization funding that would be addressed by the $60 billion proposed replenishment bills.
“The rise of coronavirus variants, and the mandates that often follow, threaten to push these restaurants closer to permanently closing their doors,” Melissa Fleischut, CEO of the New York State Restaurant Association, said in a statement. “It’s time for Congress to step in and fulfill the promise of the RRF.”

The push comes as the Covid-19 delta variant threatens restaurants as officials once again increase restrictions on businesses. Consumers have changed their eating habits in recent weeks, according to a survey of 1,000 adults conducted by the National Restaurant Association last week.
Nine percent of adults have canceled existing plans to go out to a restaurant in recent weeks, the survey found, while 19 percent say they have stopped going out to restaurants entirely.

Additionally, one in three respondents said they would be less likely to go out to a restaurant if proof of vaccine is required to dine inside, as is now the case in New York City.
“For an industry that requires a ‘full house’ every evening to make a profit, this is a dangerous trend,” Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association, said in a statement. “These changes indicate declining consumer confidence that will make it more difficult for most restaurant owners to maintain their delicate financial stability.”
 

David Goldsmith

All Powerful Moderator
Staff member
Soho's life blood shifted almost entirely to tourists over the past 2 decades.
SoHo Catered to Free-Spending Tourists. What Happens Without Them?

SoHo Catered to Free-Spending Tourists. What Happens Without Them?​

Perhaps no commercial district in Manhattan has been hit harder by the financial havoc caused by the pandemic.
One of the world’s hottest retail districts just a few years ago, SoHo has been financially decimated by the pandemic and the loss in overseas tourists.
In the chic neighborhood of SoHo, more than 40 stores have closed during the pandemic. More than a quarter of the offices, once among the most desirable and expensive in New York City, are empty, the highest vacancy rate in Manhattan. The international tourists who fueled the area’s economy vanished a year and a half ago.
Perhaps no commercial district in the American city hardest hit by the pandemic’s financial devastation has been hurt more than the picturesque district of ornate cast-iron buildings, art galleries and designer boutiques that made it one of the country’s hippest neighborhoods.
As New York climbs out of the depths of an economic free-fall, it has notched some major milestones lately. In-person classes have resumed at the city’s schools, Broadway theaters have reopened and 300,000 municipal workers have returned to their offices for the first time in 18 months.
But on SoHo’s cobblestone streets, the economic scars have not yet healed, a sign of how vulnerable New York is to a contagious disease that has unraveled an urban economy built on face-to-face interactions in offices, restaurants and stores.

The sidewalks are bare. “For Lease” signs hang in one storefront after another. Employees far outnumber shoppers in most boutiques, and many shops have slashed their hours, opening as late as noon in some cases and closing earlier than they did before the pandemic. The neighborhood’s 8,000 residents cannot make up for the loss in tourists.
“The pandemic has affected us in a bad way,” said Connie Gharibian, the finance director at Hudson Furniture, a high-end furniture designer that decided not to renew the lease on its Wooster Street showroom after people started staying home in March 2020. “The traffic there was just not enough to keep us going.”
Just a few years ago, SoHo was one of the world’s hottest retail districts, packed with luxury brands like Chanel, Gucci, Louis Vuitton and Ralph Lauren that paid some of the highest rents in the country. Shoppers spent $3.1 billion in SoHo and neighboring NoHo in 2016, according to a report by HR & A Advisors, second only to Fifth Avenue in Midtown Manhattan in total retail revenue.
Tourists swarmed Broadway’s overflowing sidewalks and bobbed in and out of stores like Dean & Deluca, Nike and Uniqlo. Social media influencers clogged narrow side streets, snapping pictures for posting on Instagram. Shoppers lined up outside stores early on Fridays, eager to buy items on sale.

Almost overnight, the shoppers, notably those from overseas, evaporated, proving how heavily the stores relied on them.

“Without tourists, it’s dead down here,” said Carlos Garcia, the manager of Mystique Boutique, a locally owned clothing store on Broadway that now closes at 7 p.m., two hours earlier than it used to.
Starting in November, travel restrictions will be eased for international visitors who are vaccinated, but city officials say it could take until 2025 for overseas tourism to return to previous levels.
SoHo was facing challenges even before the pandemic, given the steady decline of brick-and-mortar retail. But the problems have worsened amid the recession set off by the pandemic and the accompanying explosion in online shopping.

One of the largest real estate companies in New York, Vornado Realty Trust, recently sold two properties in SoHo, along with several on Madison Avenue, at a $7 million loss. Only a third of the buildings’ storefronts were occupied, the company said.
Still, property owners and neighborhood business leaders say there is reason for optimism. Foot traffic has risen in recent months, as has the number of subway riders at SoHo stations. New retailers are moving in, including the sporting goods brand Wilson’s first flagship store, and some start-ups are leasing office space, though often for less money at shorter terms.
“Retail rents had gotten too high,” said Jeffrey Gural, the chairman of GFP Real Estate, which owns several SoHo buildings. “In some cases, they were taking the space for marketing, knowing they weren’t going to be profitable stores. Those days are over.”
Before the neighborhood’s current travails, many residents and business owners were locked in a bitter dispute with the city over a proposed rezoning that would allow for 3,200 new apartments, including hundreds of below-market-rate units. The proposal has stirred up concerns, common in SoHo for decades, that any change would disrupt the character of an area that young artists put on the map a half-century ago.

The rezoning, which was proposed by Mayor Bill de Blasio and has been under city review for months, faces an uncertain outcome with the City Council. Several members have said they oppose it and have demanded revisions, raising doubts that it will get a vote before Mr. de Blasio’s term ends in December.
Eric Adams, the Democratic mayoral nominee in New York City, has voiced his support for using rezoning to address the city’s affordable-housing challenges, including in wealthy neighborhoods in Manhattan. “We need to look at those sacred cows like SoHo,” Mr. Adams said in a recent interview on the “The Ezra Klein Show,” a podcast produced by The New York Times.
Mr. Gural said he supports the rezoning because an influx of new residents could help save the retail district. “The people living in SoHo have to suck it up and recognize that the city has changed and the artists have moved out,” he said.
No other Manhattan neighborhood saw its offices empty out faster after the pandemic began. The roughly 25 percent of office space that is available for lease, according to the real estate company Savills, is nearly triple the vacancy rate before the pandemic. Many companies have abandoned their spaces as they have decided to make remote work a permanent feature even after the pandemic eases.

Like many businesses that chose to locate in SoHo, the online retailer Boxed was drawn by the bustling streets, open lofts and industrial architecture. The company’s employees first returned to the office in September, although doing so was not mandatory.

“It’s such a shame because right before the pandemic, this was a vibrant neighborhood,” said Chieh Huang, the company’s chief executive. “It was really a wonderful time, and it really has swung in the opposite direction.”

Mr. Huang said that Boxed was committed to SoHo, but that it was also adapting to hybrid work and had begun to hire employees who live elsewhere and can work remotely full time.

“I just don’t see a world within the next five years where we snap back to five days a week at the office,” he said.
New York has some of the most coveted and recognizable retail strips anywhere. Fifth Avenue has long attracted the largest brands in the world, and Madison Avenue became a prime location for luxury retailers. The pandemic has ravaged both corridors.
For years, the biggest retailers ignored SoHo. It was a gritty area, home to factories in the early 20th century and then, starting in the 1960s, a refuge for artists of all stripes who were drawn by its cavernous lofts and cheap rents. Tourists caught on, flocking to galleries and hanging around after to marvel at the buildings’ industrial columns, pressed-tin ceilings and bare brick walls.
European designers discovered the neighborhood in the 1990s, beginning a decades-long migration downtown for high-end retailers that transformed the neighborhood into a global shopping mecca. By the early 2000s, SoHo had become unaffordable for most mom-and-pop stores as well as for residents without millions of dollars.

The retail peak probably came in February 2014, when Prada renewed the lease on its 10,000-square-foot store at Broadway and Prince Street for $1,000 a square foot. It was the first retail lease south of Midtown to reach that figure.
Prices have plummeted since then. The current asking price for SoHo storefronts is $274 a square foot, down from $350 right before the pandemic, according to the real estate services firm Cushman and Wakefield.

Nearly 27 percent of the neighborhood’s retail space was available at the end of July, according to the most recent data available; the figure was 23 percent at beginning of last year, the firm said. Brands like Victoria’s Secret, Frye and Missoni have closed their stores.
By the time Prada and Louis Vuitton arrived in the late ’90s — Prada with three stores by 1999 — Doug Cohen had been operating several boutiques in the area for years.
He eventually owned 14 stores in SoHo at a time when rent was relatively inexpensive. One, between Grand and Canal Streets, cost him $5,000 a month then, he said, before skyrocketing to $40,000 a month in recent years. He closed the store during the pandemic.
“The big guys come in, and we can’t compete with them,” he said. “It’s still a nice neighborhood, but it’s turning into any American place with brand names and none of us mom-and-pop stores.”

Mr. Cohen said that before the pandemic, his stores struggled to turn a profit as rents rose, competition increased and the threat of online shopping intensified. He now has just one store in SoHo, Mystic Boutique.
“Corona was the cherry on top,” he said.
 

David Goldsmith

All Powerful Moderator
Staff member

Lost without office workers, Midtown storefronts struggle to find tenants​

Retail vacancies approached 30% this summer, far outpacing city’s residential areas​

As resurgent Covid caseloads kept New York City’s office workers at home through the summer, retail corridors that depend on their foot traffic struggled to fill empty storefronts.
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, according to a report by the Real Estate Board of New York.
Madison Avenue also saw a jump in vacancies, with 28 percent of storefronts unoccupied, up from 19 percent in 2018.
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In comparison, residential neighborhoods in Manhattan, Brooklyn and Queens had storefront vacancies ranging from 14 percent to 20 percent — which, while still elevated, were much closer to pre-pandemic rates.
“It’s clear from these findings how critical the link is between the recovery and success of the City’s once vibrant retail sector and a full, safe return of office workers,” REBNY President James Whelan said in a statement.

It wasn’t just retail landlords who were reeling. Office asking rents fell 4.2 percent in the second quarter, while the office vacancy rate hit a 30-year high of 18.3 percent, according to a separate report by the Office of the State Comptroller.

The total market value of the city’s office buildings, estimated at $172 billion in fiscal year 2021, fell nearly 17 percent in the fiscal 2022 assessment, the first decline in total office property market values in at least two decades. Of the $1.7 billion in property tax revenue the city stands to lose in fiscal 2022, which began on July 1, more than half will be driven by the drop in office building valuations.

According to the REBNY report, the city lost 631,000 jobs last year, with leisure and hospitality accounting for 250,000 losses. The retail sector shed over 67,000 jobs.
Only 49 percent of the city’s jobs have since returned, according to the report, leaving New York well behind the national recovery rate of 90 percent.
Still, those seeking signs of recovery should look below ground: Subway ridership had returned to nearly 50 percent of its pre-pandemic levels by early September, up from 20 percent in the spring of last year.
 

David Goldsmith

All Powerful Moderator
Staff member

David Goldsmith

All Powerful Moderator
Staff member

Ben Ashkenazy dumps Midtown retail building at $6M loss​

Four-story locale sold for $12.7M; it was acquired in 2016 for $18.5M​

"Ben Ashkenazy of Ashkenazy Acquisitions sold a 4,100-square-foot retail building at 730 Lexington Avenue in Midtown for a humbling $12.7 million. Amerant Bank affiliate MCNA Properties IV bought the site; Miguel Palacios signed the sales deed. Ashkenazy acquired the four-story building in 2016 for $18.5 million. Shoe retailer Aldo closed its store there, depressing the property’s value."
 

David Goldsmith

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A new set of retail vacancies on lower 5th Avenue in Flatiron, including the last day for Ann Taylor. At 5:30PM almost all the stores from 14th St to 23rd St were closed already and almost no foot traffic. I don't think I've see it this dead at that time in almost 30 years. IMG_20220125_174015753_copy_1000x563.jpg IMG_20220125_173342012_copy_1000x563_1.jpg IMG_20220125_173809430_copy_1000x563.jpg
 

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David Goldsmith

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Remember when we heard that closing 14th Street to car traffic wouldn't affect retail businesses and I said it would? Pasta Flyer's ex-space is still vacant going on 3 1/2 years as well as a number of others shuttered within 1 block.
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David Goldsmith

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A decent number of relatively large neighborhood retail spaces have been filled by the various 15 minute delivery apps. There was some pushback by local pols claiming illegal use, but it may be a moot point now that the era of cheap money is over.
Startup Jokr Ceases Fast Delivery in US to Focus on LatAm
Jokr, a young rapid-delivery company that calls itself “the future of supermarkets,” is ceasing operations in New York and Boston and refocusing on the Latin American market, which company executives say should be more profitable.

“We have decided to stop our business activities in the U.S. for now, which have lately only accounted for about 5% of our business,” Chief Executive Ralf Wenzel said in a prepared statement Wednesday (June 15) quoted by Bloomberg News. “Latin America is particularly underpenetrated and underserved, that’s why Jokr has put its focus and emphasis on the Latin American opportunity since the beginning.”

The company also indicated it plans to close nine fulfillment centers, leaving around 190 worldwide, and cut 50 workers, or about 5% of its global workforce.

According to Jokr’s website, the company has a New York City base in addition to its headquarters in Luxemburg. Bloomberg reported that Jokr will keep some New York employees even as it stops serving customers in the city.

Bloomberg reported that Jokr also ended its delivery service in Europe previously but continues to do business in Brazil, Chile, Colombia, Mexico and Peru.

TechCrunch reported in March that Jokr raised $260 million in Series B funding at a valuation of $1.2 billion.

In May, Jokr sought to increase revenue by selling advertising on its app and on drivers' delivery bags.

Ultrafast grocery delivery companies like Jokr are struggling with the economics of their model. One report estimated these on-demand delivery services lost as much as $20 per order.

Some of the challenges online grocery services face are outlined in a May 31 PYMNTS report called, “The Tailored Shopping Experience: Meeting Consumers’ Online Expectations.”
 

David Goldsmith

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Manhattan Loses Businesses as Brooklyn Gains in Stark Tale of Two Boroughs

The total number of private establishments in the city had its steepest drop in at least 30 years over the course of the pandemic as Manhattan couldn’t keep up making it but Brooklyn keeps on taking it.​

“Simply put, the rents are too damn high,” said Jason Hairston, explaining on Thursday why he’d closed his popular 14th St. eatery, The Nugget Spot, in September of 2020.
“I was on the way,” Hairston recalled. “I had spent money on a logo and redesigning my store. I was getting ready to open another location in Columbus Circle [in the new Turnstyle Underground Market] and to be in Citifield for the 2020 season. I’d been open for seven years and I was getting ready, getting my sauce made, my flour made — things were lining up and falling into place and then we had to shut our doors.”
In a business with thin margins to begin with — and uncertainty about how long the pandemic, and the city’s shutdown, would last — “there was no way I was going to make money,” said Hairston, a lifelong New Yorker who’s now living in New Jersey while consulting for a Korean hot dog franchise.
“The only reason I would be there would be to support my landlord,” he added.

The Nugget Spot was one of the 4,040 private establishments the city lost between the fourth quarter of 2019 and the fourth quarter of 2021, according to a new report from New York City Comptroller Brad Lander, as huge losses in Manhattan wiped out gains in Brooklyn. Over the same two-year pandemic stretch, “jobs in New York City fell by approximately 295,000, or 7 percent,” as THE CITY previously reported.

NYC Comptroller’s Office
The rare citywide drop in the number of private establishments since 2019 — including a loss of 2,023 retail locations along with 2,482 private household employers, as families let go of on-the-books nannies and maids during the pandemic — was easily the biggest recorded at least since the feds implemented their current counting system in 1990.
Since then, the number had steadily gone up except during the recession in the early 1990s and the years just after the 9/11 attacks.
Manhattan’s share of the city’s private establishments dropped below 50% for the first time, according to Lander’s report, as Brooklyn gained 1,267 over the same period — continuing a 30-year growth trend in which the borough has surged from 17.8% of the city’s total in 1990 to 24.4% in 2021. (The Bronx gained 109 private establishments and Staten Island eight between 2019 and 2021, while Queens lost 158.)
NYC Comptroller’s office
Using Google mobility data, the report also found that New Yorkers in every borough spent less time in “retail and recreation,” “grocery and pharmacy” businesses, “transit stations” and at “the workplace.”
Meanwhile, time spent in parks was up sharply, ranging from a 19% increase in Manhattan to a 148% increase in Queens.
That helps explain why Walgreens sublet 16 of its former Manhattan locations in 2020, a move that Fraser Engerman, a spokesperson at the retail and pharmacy giant, suggested was in the interests of “the communities we serve.”
“As we move forward on our strategy to expand Walgreens role as a leader in the delivery of healthcare, we are focused on creating the right network of stores in the right locations to best meet the needs of the communities we serve,” Engerman told THE CITY. “There are a number of factors that we take into consideration including dynamics of the local market and changing buying habits of our customers.”
NYC Comptroller’s office
For Brandon Jenkins and Sebastian Stant, two young entrepreneurs who opened their first brick-and-mortar site for their emerging clothing brand in May, Manhattan’s luxury fashion corridors just weren’t an option.
Their company, Sadderday, strives to sell affordable street wear, and the expensive, long-term lease the pair would have had to agree to in SoHo would have forced them to abandon a core part of their customer base, which they had built up online in the decade prior.
“We didn’t really want to have to raise our prices in order to meet SoHo rent, or stick out like a complete sore thumb around everything else there,” said Stant, adding that Brooklyn “was a no-brainer for us.”
Instead, they opted for a location in Williamsburg, which has outdoor space where customers can work or hang out in — something they could have never found in the city.
“We’re like a friendly brand, people can sit in the store with us,” said Jenkins, a Bed-Stuy native. “We offer drinks, music. We’ve got like a little backyard that people come in.”
City Councilmember Lincoln Restler, whose district includes thriving downtown Brooklyn along with Greenpoint, Brooklyn Heights, Boerum Hill and Williamsburg, saw the comptroller’s report as a sign of the borough’s new centrality.
“Businesses want to be located in the most dynamic neighborhoods in New York City and Brooklyn is the place to be,” Restler told THE CITY. “Increasingly, the private sector understands that to attract the best talent, it helps to be based in neighborhoods where their workers live. New York City is becoming a true five-borough economy with Brooklyn leading the way.”
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David Goldsmith

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Whichever way I walk to my office I seem to pass 2 shuttered locations of fast delivery startups.
‘Built On Quicksand’: How The Rise And Demise Of Rapid Grocery Delivery Will Shape And Scar Retail
Rapid grocery delivery concepts that saw meteoric growth, with venture capital-backed promises to deliver goods at lightning speed, are experiencing something of a flameout.

Layoffs, political blowback, pay investigations and market contractions dominate the headlines when it comes to the sector — less than a year after operators blazed into markets as the latest retail darling. As these outfits look to rightsize their businesses and stop the financial bleeding, they are being forced to consider how to navigate shifting consumer demands, tight economics and what could be a frosty reception from the retail real estate community.
“We’re definitely not inclined to have any other grocery fulfillment tenants in there,” Compass associate Zev Sonkin said of a retail condo space at 150 West 26th St., previously leased to Buyk, a rapid grocery delivery app backed by Russian money that went bankrupt in March after the war in Ukraine curtailed its funding.
“The landlord wasn't really left with much recourse, as somewhat overnight, we were notified that [the company] had ceased operations. It was a bit abrupt.”
Sonkin is representing the landlord in its search for a new tenant.
Some landlords are learning to be gun-shy of these kinds of operators, said Meridian Capital President of Retail Leasing James Famularo, who in the last 12 months arranged three leases in the city for Getir and one for Fridge No More.
Getir laid off 14% of its workforce in May and is now being investigated by the New York State Department of Labor over employee pay disputes. Fridge No More shut permanently in March.
“After you burn your fingers once, you’re less likely to put your hand over the flame again,” Famularo said, noting the Getir locations his team arranged are still in place, unlike the Fridge No More lease. “That’s the thing about trends: After it fizzles out, nobody wants anything to do with it going forward.”

"Fizzling" isn’t the word everyone uses when it comes to the rapid grocery apps that have been forced into retreat.
“It was built on quicksand,” Phil Lempert, a supermarket expert and the food trends editor for Today on NBC, told Bisnow. “I'm surprised that it didn't implode faster.”
Just nine months ago, companies like Gorillas, Getir, Jokr and 1520 were making headlines with their rapid expansion, leasing dozens of storefronts in the city to make good on promises to deliver in 15 minutes or less. Lempert told Bisnow at the time he considered the model “absurd” — and within months, cracks were beginning to show.
Last week, Gopuff co-founders and co-CEOs Yakir Gola and Rafael Ilishayev told investors Gopuff is closing 76 U.S. warehouses and laying off 10% of its global workforce. Gopuff will have 18 locations in New York after consolidation, down from 24.
In June, Jokr, which previously said it planned to ultimately have 100 micro-warehouses in New York City alone and hit a valuation of $1.2B in December, announced its complete withdrawal from the U.S. market. By December last year, 1520 had shut down completely after running out of money and failing to negotiate a sale to Jokr.
“What we're seeing are so many companies that have had brilliant leaders who are able to sell concepts to raise huge amounts of money from venture capitalists,” Lempert said. “And nobody at the venture capitalists' firms seems to get a reality check and really understand what the business is or whether or not consumers want it.”

The challenges aren’t just financial.
In December, then-Manhattan Borough President Gale Brewer sent a letter to multiple state and city agencies saying companies were flouting zoning laws by operating as warehouses in areas zoned for retail.
Last week, the New York City Council introduced bills to regulate app-based rapid delivery companies and their dark stores, The City reported. Under the legislation, they wouldn't be permitted to guarantee a 15-minute delivery and would be forced to comply with a cap on the delivery load cyclist employees are carrying. New York City would have the power to issue licenses — and violations.
“Getir operates successfully in nine countries and we always pay utmost attention to being fully compliant with all applicable laws and regulations,” Getir Head of Government Relations Nico Probst said in a statement to Bisnow. “Getir values our people, as evidenced by the fact that we fully employ all team members as W-2 employees who earn health benefits and retain 100% of their tips.”
Getir isn't closing New York locations, but it has paused expansion.
“Rapid delivery will look quite different by this time next year; the players, models and use cases will be changing,” Celia Van Wickel, senior director in digital commerce at data analytics and brand consulting company Kantar, told Bisnow.
She said New York City warehouses will be consolidated to serve a larger radius, reducing speed for some neighborhoods, and that only one or two models may survive.
“I do believe the on-demand delivery need is there, but it is balancing the business, monetizing, selling services, automating, finding partnerships and balancing for larger basket sizes to sustain,” she said.
The big challenge for online grocery companies on the grand scale, according to Brandon Isner, the head of retail thought leadership for the Americas at CBRE, is going to come down to price in an inflationary environment.
“People don't want to pay for delivery necessarily. They want value,” he said. “So I think that's where a lot of the companies have run into trouble — just paying for the services is something they don't want to do because grocery prices are already rising.”
Compass Vice Chairman Robin Abrams said she expects there will be plenty of uses to pick up where the rapid delivery apps have dropped off.
“There's still new concepts that are coming in and expanding, and all the restaurant operators are still taking advantage of available space,” she said. “I see the whole health and wellness sector continuing to want to expand.”
Rapid delivery isn't especially hard on spaces, Meridian's Famularo said, since it largely involves installed shelving. He is shopping around about a dozen New York City locations once used by quick delivery apps.
“If it can be vented, we turned it into an F&B space. If we can't, we look for one tenant — or we look for options to divide the space,” he said, noting that smoke shops are the latest trend on the retail market.
“There are different options; maybe we can try a SoulCycle or Barry's BootCamp. That was another trend before Covid. … In any given year, there's two or three trends. Everybody kind of jumps on the bandwagon and drinks the Kool-Aid.”
Manhattan’s retail real estate is showing promising signs of a gradual recovery, with rent prices stabilizing and availability down across several of Manhattan’s most sought-after retail corridors. The focus these days is trying to find users that will serve the neighborhood as opposed to simply paying rent, said Jay Norris, who runs Guesst, a provider of tenant sales data to landlords.
“I think there's a responsibility for a lot of property owners to actually nourish their communities,” he said. “Like Placemaking 101.”
That is going to be the approach at the former Buyk space in Nomad, Compass’ Sonkin said, adding that the focus is now on finding a tenant for the mom-and-pop landlord that will both fit well in the area and remain in the space long-term.
“This space lends itself well to the [The Fashion Institute of Technology] and creative community in Chelsea,” he said. "There are a lot of vintage clothing and secondhand stores on that block. … There's also Goodwill in the area and a few others, so we've had interest.
“We want to focus on the longevity of the tenant.”
 

David Goldsmith

All Powerful Moderator
Staff member

New York City’s only Trader Joe’s Wine Store has closed​

Two Buck Chuck is saying “goodbye” to all that.

A major Manhattan landmark has closed up shop.
Trader Joe’s Wine Shop, located at 138 E 14th St. just below Union Square, permanently shut its doors on Thursday, August 11, marking the end of an era for budget booze shoppers. The next door Trader Joe’s grocery store is still very much open for business, with the typical store-long line of NYU students, summer interns and commuters grabbing dark chocolate peanut butter cups and bags of frozen cauliflower gnocchi while they multitask crossing off their shopping lists while inching closer to the very distant registers.

“We have been operating our small Wine Shop in the Union Square neighborhood for over 15 years, and we thank you for all the business and support throughout the years,” reads a printed sign in the window of the now-shuttered shop. Trader Joe’s website confirms that this location is indeed permanently closed leaving yet another vacant storefront in Manhattan.

Naturally, New Yorkers are devastated at the unpredictable loss—and right before the weekend!
“Falling to my knees at the now out of business 14th st trader joe’s wine store,” someone tweeted. Many more shared their heartbreak on social media, with a devastating memorial thread currently being updated on Reddit.
But not all is lost: the message also states that the shop is exploring new locations to “optimize the potential of our one and only license to sell wine in New York… We look forward to sharing our plans to offer an even better wine shop experience to our New York customers as soon as they are finalized.” All staff members who lost their positions at the wine shop are being paid for their scheduled shifts through August 28 and will be offered opportunities to transfer to other New York City Trader Joe’s locations.
No word on where the wine inventory will transfer, but likely not to your favorite neighborhood Trader Joe’s. New York State law only allows one wine license per entity, meaning that grocery chains can only sell wine in one of their physical locations. Trader Joe’s capitalized on this by not using coveted shelf real estate to sell Two Buck Chuck, but rather utilize their one and only license to dedicate an entire shop to wine. This rule applies to all chain stores in the city, which is why only the Whole Foods on the Upper West Side (808 Columbus Ave.) sells wine (beer and alcoholic beverages under 6% ABV are allowed at other stores, as long as it’s less than 25% of the inventory).
Shoppers had no advance notice of Trader Joe’s Wine Shop’s closure, and some are speculating that the lease was up. Rent increases are hitting hard, which is all the more reason many in the neighborhood may be craving some cheap wine. Luckily, the East Village is far from a booze desert, with shops like Convive, Wines on First, East Village Wine & Spirits, plus many more, offering affordable bottles just blocks from Union Square. Pour one out for Two Buck Chuck tonight (but like, not too much, inflation is real!).
 

David Goldsmith

All Powerful Moderator
Staff member

Ben Ashkenazy dumps Midtown retail building at $6M loss​

Four-story locale sold for $12.7M; it was acquired in 2016 for $18.5M​

"Ben Ashkenazy of Ashkenazy Acquisitions sold a 4,100-square-foot retail building at 730 Lexington Avenue in Midtown for a humbling $12.7 million. Amerant Bank affiliate MCNA Properties IV bought the site; Miguel Palacios signed the sales deed. Ashkenazy acquired the four-story building in 2016 for $18.5 million. Shoe retailer Aldo closed its store there, depressing the property’s value."
PincusCo is reporting this property has traded again one year later for $6.5 million.
 

David Goldsmith

All Powerful Moderator
Staff member
Aby Rosen’s RFR buys Soho retail asset for $32M, leading midsize i-sales


Multifamily properties continue to drive most activity in the city’s slowing investment sales market, but a high-profile retail asset led mid-sized commercial deals recorded in city records last week.

An entity tied to Aby Rosen’s RFR Holding bought the four-story retail building at 102 Greene Street in Soho for $31.5 million from investment firm TA Realty. French jeweler Cartier leased 9,300 square feet at the property earlier this year. The property was reportedly valued at $43.5 million as recently as 2017, when SL Green sold its 90 percent stake in the building. An Eastdil Secured team represented the seller.
 

David Goldsmith

All Powerful Moderator
Staff member

Black Friday store traffic jumps, but sales don’t​

Shoppers showed less fear of Covid, more fear of overspending​


Black Friday proved to be a mixed shopping bag for retailers across the country.
The traditional post-Thanksgiving consumer bonanza sparked more foot traffic than recent years as concerns about Covid declined, according to the Wall Street Journal. Despite the increase in store visits, however, sales didn’t jump in a statistically significant way.

Several firms that track shopper activity recorded increases in Black Friday traffic from last year. RetailNext, which counts shoppers via cameras and sensors, recorded a 7 percent increase year-over-year. Sensormatic Solutions, meanwhile, noted a 2.9 percent increase in foot traffic from last year.
Yet in-store sales were essentially flat from last year because the average shopper spent less per visit, according to RetailNext. Inflation’s impact was to blame for the static sales numbers, as well as anticipation of Cyber Monday deals.

Some consumers didn’t wait until Monday to score sales online. Black Friday sales increased 12 percent year-over-year according to Mastercard SpendingPulse, which includes both in-store and online retail sales, but excludes auto sales and isn’t adjusted for inflation.
“It’s more of an experience than it is a purchasing moment,” AlixPartners retail executive David Bassuk told the Journal, deeming Black Friday this year “lukewarm.”
Friday unfolded as retailers and their landlords were buoyed by positive signs about the sector’s bounceback from the pandemic. Retail availability dropped nearly a full percentage point across the nation to 5 percent in the third quarter, according to CBRE. It was the lowest level of availability in the firm’s 17 years of tracking.
Rising interest rates are slowing development in the sector, constraining supply. That dynamic is serving retail landlords and mall operators well in one sense, as the lack of space allows them to demand higher rents.
Sensormatic Solutions had recorded a 28.3 percent decline in retail traffic from 2019 to 2021 as Covid restrictions and fears decimated the annual shopping extravaganza and pushed consumers toward e-commerce instead.
 

David Goldsmith

All Powerful Moderator
Staff member

Amazon Fresh stores have gone stale​

“Zombie” properties languish, openings stalled since September​

Amazon Fresh is leaving a bad taste in the mouths of several communities stuck with “zombie” stores, waiting indefinitely for them to open.
Grocery stores that appear ready to open but sit closed are accumulating for Amazon, The Information reported. Local officials and landlords spread across the country are in the dark about whether the stores will ever open.
Amazon launched its brand of full-sized grocery stores without checkout lines in September 2020, proceeding to open about two stores every month over the following two years. The brand topped out at 44 locations in the United States and 19 in the United Kingdom.
Things seem to have ground to a halt for Amazon Fresh, though.
Since September, the company hasn’t opened a new Fresh store. There are at least seven locations that appear to be completely built out, but haven’t opened. There are another 26 locations in development and the fate of those projects is unclear. The Detroit Free Press this week reported two locations are headed for Michigan.

The so-called “zombie” stores span several states, with one in a Philadelphia suburb, another in Southern California, one in Staten Island and three in New Jersey. In Holmdel, New Jersey, The Information observed weeks of missed package notices piling on the door.
It’s cheaper for the company to keep the stores in place while not operating, rather than ditch the stores altogether. While the company is on the hook for rent, maintenance and taxes, shutting down a store could also force Amazon to pay a fee for a lease withdrawal or severance to hired employees.

The physical stores department of Amazon has underseen a lot of changes in recent months, as has the rest of the company. Corporate retail teams are believed to be in danger of being laid off in 2023.
It’s been a challenging year for Amazon’s efforts in the physical retail realm. The company announced in March it would close all 68 of its bookstores and pop-up shops. At the time, the company appeared interested in diving deeper into its grocery offerings, which also include Amazon Go and Whole Foods.
 
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