Following months of lockdown, and now lawsuits between tenants & landlords, many are starting to become a lot more concerned about the status of retail real estate in NYC. There’s no denying it, retailers have been hit hard and vacancies are spiking as we head into 2021. The latest report from CBRE affirms this.
Covid-19 hit like a tornado, hitting us hard and heavy. Unlike a tornado however this one has stuck around for a little longer which has made it difficult to pick ourselves up and repair the damage it has caused. But is that the new potential reality of NYC’s retail market? Is it the only factor that we have to address at this point?
As online shopping and e-commerce have been growing stronger with each passing year, is it only the big box retailers who are being impacted? Or are local retail markets also facing these challenging headwinds? We understand shopping malls are more vulnerable to the online takeover, but does the same go for local retail as well? Or can we be content to say that if someone wanted to visit a store, that they would be more likely to frequent somewhere local?
We must also consider the other factors, which are contributing to the challenges NYC is facing. In addition to the shutdowns, we’re also facing a social and political inflection point. Once things firm up on the elections front, will this all go away, or will it lead us further down the proverbial “rabbit hole”? Will the retail market see the same struggles as the shopping mall category? Only time will tell.
As was recently reported in The Real Deal, retail in Time Square is losing substantial value in addition to the overall retail market. With the fall of tourism and the fact New Yorkers are not commuting to work as much, many retailers have been shutting down. While there is a normal turnover period for all retail space, this time landlords are having a much more challenging time finding new tenants.
The other day I met a good friend named Michael Gershkovich, the owner and chef of Mike’s Bistro, an upscale kosher steakhouse in midtown Manhattan. Our conversation included all areas of life. One of the questions I asked Michael was about his vision on an overall NYC retail real estate market. He gave me a great answer, which offered a lot of hope: “do you really think NYC was built on one individual industry?” he said.
He then added, “I meet many people who think the world around them is in line with their own lives. When things are good or bad for them, then the rest of the world is facing the same thing”. He further agued “NYC is the capital for many idealistic concepts and ideas. With a diversity of industries in many areas, businesses have come and gone throughout the history of NYC, and it always figured itself out. Will tomorrow be the same as yesterday? For sure it won’t, but we will definitely come back better and stronger in an evolved environment”.
Considering his statement really opened my mind to a new perspective; I started dreaming of a new and improved city of hope. The fact is that NYC has always had a deep impact on the rest of the world. This time will be no different. Each generation will “pass the baton” to the next who will innovate and improve what we have.
In the early 1900’s, NYC manufacturing factories produced more than half of the total national output. Today’s NYC is much different as the drivers have become financial services; professional and technical services; health care, educational services, and so on. We’ve always come back better and stronger. This time will be no different.
But the question that remains is how will NYC’s retail market come back?
Whether we can save what we already have or not remains to be seen. We must all continue to be diligent and have to be ready for the changes ahead – no matter where they come from. Albeit, these changes will be challenging for some, there is no other way forward but to move towards a brighter future.
I want to hear what you have to say. Add your thoughts to the comments and let’s keep this conversation going.
– For Real Estate Trends, I’m Moses Gross.