The retail property market in NYC is experiencing a disruption right now. The number of vacant retail properties is on the rise. Major retailers on Fifth Avenue are closing their doors. Mayor de Blasio is trying to lobby for a vacancy tax that would penalize landlords who leave retail properties empty. At the other end of the scale, the largest multistory warehouse in the United States is being built in Brooklyn to improve the distribution of retail products. All of these things are sending mixed signals to commercial real estate investors and property developers in NYC. So where is the market for New York retail properties headed?
No Country for Big Box Stores
The Gap, Ralph Lauren Polo, and Henri Bendel have joined the ranks of prestigious retailers who are closing down their prime location retail establishments in NYC. While the shift away from big box retailers was signaled as far back as 1999, this latest round is sending the message that major retailers are shifting to meet the demands of online shoppers instead of pouring money into locations that routinely underperform.
Vacant NYC Retail Properties
Large retailers aside, there are a number of smaller storefronts that have been vacant for years throughout NYC. While big box retailers may not be as viable as they once were, there are initiatives to get small business owners into smaller retail properties. Opportunity Zones and more are trying to establish a common ground between business owners and landlords to get entrepreneurs to occupy those vacancies. The idea is that people are constantly traveling to NYC for an authentic experience. Currently, it makes no sense to try and woo the big box retailers when people can get the same product by shopping online. Instead, the focus is on smaller businesses that offer unique products and services that people cannot find anywhere else, to boost tourism and revenue for all parties involved.
Better Supply Chains
Behind the potential boon that NYC retail properties can provide, there are warehouses. Larger manufacturers and retailers are scoping out warehouse space in NYC to improve distribution as well as larger supply chains. From produce to large machinery, clothing, raw materials, imported goods, and everything in between, businesses are looking for warehouse space to store products that can then be sent to retail shops throughout New York City.
At the street level, the market landscape in NYC seems to be going in a number of different directions at once, and very little of it makes any sense at all. Zooming out to a higher level, the shift in NYC retail properties and warehouse space is indicative of something that may well spread to the rest of the United States. Savvy commercial real estate investors and property developers are giving up older thinking to adjust for the new opportunities on the horizon.
Express Capital Financing provides funding solutions for commercial real estate transactions and projects of all sizes throughout NYC. Contact our offices today to learn more.