1991 retail store leasing review.

1991 retail store leasing review

Despite the economic slowdown that continues to affect retail sales in the metropolitan area, Manhattan retailers have demonstrated a remarkable degree of resiliency throughout the past year, proving once again that high density pedestrian traffic helps to cure the blahs.

Retail store vacancies on virtually all the main shopping streets remains relatively low. This fact alone tells a fairly encouraging story. And while rent renegotiation has been somewhat in vogue in 1991, considering the rapid rise in rents over the last decade, reductions were probably inevitable. In the long run, this will prove to be a healthy readjustment for retailers and landlords alike.

To be sure, there are a few sections of Manhattan that have been hurt by the sluggish economy and the virtual halt in commercial and residential development. In particular, the Wall Street area has been severely hit by the collapse of the financial sector. Well to do yuppie stockbrokers are no longer well to do, or stockbrokers for that matter, and retailers have suffered as a result.

Fourteenth Street at Union Square languishes, partly as a consequence of the failed redevelopment of the former May's department store site, while Second Avenue on the upper east side is pock marked by boarded up restaurants which have succumbed to the recession. In Midtown west, the Eichner Company's "Metropolis" multi-level retail extravaganza at Broadway and 45th Street, has fallen victim to the long delayed redevelopment plans for the Times Square area.

Throughout the year, however, there has been consistent deal making around town, as highlighted by the following review of neighborhood leasing activity:

In Midtown, between 34th Street and 59th Street, choice retail space remains extremely difficult to find. While there has been a sharp increase in the number of bank spaces available for lease, these prime, highly visible corner locations have attracted active interest from retailers seeking large space. Newcomers to midtown include Eddie Bauer, (Third Avenue at 45th Street), Boogie's Diner, (Third Avenue at 58th Street), Planet Hollywood (57th Street between Fifth and sixth Avenues), and Gallerie Lafayette in the former Bonwit Teller space in Trump Tower. Old-timers such as The Gap has leased space at 42nd Street and Broadway, and Sixth Avenue at 48th Street. Midtown, it seems, is definitely Gap town.

On the east side, Tower Records will be opening later in 1992 on Third Avenue and 87th Street, as will The Gap on the entire blockfront of Third Avenue between 66th and 67th Streets. William-Sonoma and HMV Records have already opened on Madison Avenue and 86th Street and Lexington Avenue and 86th Street, respectively. It just seems that despite everything, the upper east side continues to thrive. However, the big story of 1991 has to be the Barney's deal on Madison Avenue and 61st Street. Not since the Ralph Lauren deal almost 10 years earlier has the opening of a retail store on the east side attracted so much attention.

In Greenwich Village, Reebock and Giorgio Armani's lower price A/X concept have leased large spaces along the busy Broadway corridor, helping to add further legitimacy to the vitality of the Noho/Soho retail market.

Further downtown in the financial district, the Concourse in the World Trade Center thrives with bustling retail activity, in sharp contrast to its troubled, but much fancier brother in Battery Park City. Century 21, the giant discounter relocated to a huge store in the area, proving once again that when thinking downtown, think inexpensive.

Rebound of the year award is a tie between Columbus Avenue and Soho, which despite rumors to the contrary, has very few prime stores available for lease. The MVP award goes to Broadway on the upper west side. Robbing a bank is easier than finding a choice empty store on Broadway.

In short, the retail leasing picture in Manhattan has improved steadily over last year, and the outlook for 1992 is viewed with guarded optimism by retailers, brokers, and landlords. With the Gulf War behind us and the hope of a stimulated economy leading up to the November elections, we might actually see an even more optimistic picture - but let's not get carried away.

Value and service are the catch words in retailing these days. And lower rents will indeed spur leasing activity from healthy, expansion minded tenants. As always, those with foresight will do well in 1992.