Photo: RetailWire
Not to get all Dickensian, but if you’re a landlord of retail real estate, this may be the best or worst of times for you depending on the market you’re in and the type of space you operate.
If you’re in Manhattan, there’s a good chance you have space available, reports The Real Deal. A new survey conducted by the real estate brokerage firm, Douglas Elliman, found that 20 percent of Manhattan storefronts are vacant, up from seven percent in 2016. A separate tally by Manhattan Borough president Gale Brewer found a total of 188 storefronts vacant along Broadway alone.
As to the why behind Manhattan’s skyrocketing vacancy rates, it depends on who you ask. Indy retailers blame landlords for continuing to raise rental fees to drive them out and bring in more chain business. Landlords claim they are willing to offer below market deals for merchants willing to sign longer leases, but they aren’t finding many takers.
In an opinion piece on Crain’s New York Business site last month, Bob Phibbs, president/CEO of The Retail Doctor and a RetailWire BrainTrust panelist, wrote that landlords and retailers are both to blame for the current state of affairs in New York City.
Landlords, he argued, “who passively wait for a bite from a bigger fish should be penalized” in the form of a “vacancy fee.” Failure to do so, Mr. Phibbs maintains, will tamp down on retailing, a key growth engine for the city.
Retailers, for their part, need to offer compelling reasons for consumers to visit and shop at their stores. Instead of simply ceding sales to online competitors, store operators must commit to “outstanding customer experiences” led by associates trained to excel in serving the needs of consumers.
While retailers and landlords may be finding it hard to make it in New York City, there’s a market to the south that is doing quite well. The Richmond, VA region’s retail vacancy rate was near a record low at 4.6 percent during the second quarter, according to the Richmond Times-Dispatch. In the affluent Short Pump suburb outside of Richmond, retail vacancies are at 2.7 percent, with a market rental rate of $29.48 per square foot.