New York City, arguably the shopping mecca of the United States, is plagued by veritable storefront wastelands. Though a bird’s eye view provides a pretty picture of traffic in the area, walk the streets and the rows of empty storefronts speak to a problem in renting spaces.
Why has this happened in a city that is by no means financially failing?
- Because most landlords get their money from tenants that rent spaces on higher floors, retail spaces are treated as something extra instead of an integral part of their building, meaning landlords demand far too much money.
- Sometimes, though, the landlords are headquartered halfway around the globe in Asia or the Middle East and may lack local inside knowledge. Along with not being receptive to tenant requests, they’ll alter the terms of the lease or switch brokers unexpectedly.
- Financial booms are phenominal for city growth, leading to the creation of thousands of square feet for retail. Though there will always be a few takers, there ends up being too much new space for a buyer pool that remains restricted.
- Many tenants that signed with the city a decade or two ago found price per square foot to be extremely cheap if only due to the crime rates being high and 9/11 affecting the appeal of the city. Since New York has recovered and these older leases are ending, landlords want more per square foot. Renters, understandably, aren’t willing to accept these new prices.
- Some landlords often hold their spaces for national chains, such as Target or Wal-Mart. These companies are so large that it’s assumed they can pay high city fees without trouble. Unfortunately, these landlords remain blind to the fact that even national chains can fail, leaving cities with even more unused space.
- Finally, such vacancies also point to the fact that there’s really not that high of a demand for retail space in New York City. Including competition, high rent and absurd regulations, the city is anything but a welcoming home to new business.
Though these problems run deep, steps can be taken to curb such a depressing sight in a city that should be beautifully outfitted with blocks of stores.
The first is for landlords to simply adjust their asking price to fit the reality of their space.
Secondly, developers can take into account the surrounding vacancies and embrace pop up concepts instead of adding more empty storefront space because they’re hoping for a rental by a big company sometime in the unforeseeable future.
Finally, the city itself needs to loosen their extremely restrictive laws that more often than not deter potential clients.
In the end, it’s all about compromise. No one wants New York City to lose its status as a retail powerhouse, but as the empty storefronts are showing, no one is working to stop this fate.
Source: NY Post