Locally owned mom-and-pop shops and restaurants have been the lifeblood of the city’s street retail. But since COVID hit our shores, their ranks have been decimated.
Chain stores have also rolled up their welcome mats with over 1,000 shuttering over the past year, according to a Center for an Urban Future study — a drop of 13.3 percent — and most don’t yet know if they will ever reopen.
Manhattan was the hardest hit with 520 out of the 1,057 stores that closed and a loss of 17.4 percent of its chains.
Queens and Brooklyn both had declines of over 11 percent while the Bronx dropped by nearly 10 percent.
This mass shuttering of stores bumped up the number of vacancies across the city and also led to declining rents.
For instance, according to CBRE, the average retail rent along Manhattan’s 16 prime retail corridors dropped 9.9 percent year-over-year to $652 per foot.
“What’s different now is that the landlords are a lot closer [on rents],” said Brad Siderow, CEO of Siderow. “The delta was huge before.”
Rents around Times Square are “the lowest in years,” said Morris Sabbagh, president of Kassin Sabbagh Realty. Yet tourists are still making their way to the international hot spot, in part lured by vast discounts by airlines and hotels.
Sabbagh added that pricing for small stores is now “extremely affordable” and savvy shopkeepers are taking advantage now — dreaming about the future and the vaccine roll out.
“They are thinking that by Q3, things should be semi-normal and if they lease now, they will get a 10-year deal with just six months’ worth of pain [with getting the store up and as customers take time to get back to work],” he said.
Medical and dental offices are another bright spot. Many are expanding, moving or taking over spaces left by older practitioners who are using COVID as an excuse to retire.
Discount stores like Dollar General are also raking in the money and boosting retail leasing in the process.
“The lower price retailers are doing very well as the stimulus money was given out, and people are shopping local for items they need,” Sabbagh said. “Target is expanding and killing it,” he observed as the store has leased many new locations.
However, fashion tenants, Sabbagh said, are still sitting in limbo, unsure whether the dramatic shift by consumers to online shopping will stick around long term.
To adapt, some stores are offering to take online returns just to get customers back in the stores. Others, like Bonobos, are merely a showroom for the online platforms. And those tenants with a proven track record will also make the move in a “flight to quality” for better, and now more affordable spaces.
“Fifth Avenue won’t go to zero,” Sabbagh predicted, “and Madison won’t go to zero.”