Friedman Report sees increase in retail rents.
"Despite continuing layoffs and a mixed 1994 Christmas season, large chains and smaller retailers will continue expanding in Manhattan during the coming year, driving rents upward," he adds.
According to Friedman, retailers who entered the critical December shopping season were disappointed in 1994. He says holiday sales in 1994 were mixed, especially for apparel retailers, who were affected by the northeast's unseasonably warm winter.
Retailers such as The Gap, The Limited, Gymboree and Toys R Us had disappointing sales, while holiday season sales increased dramatically for retailers such as The Wiz, PC Richards, Today's Man, Structure and Barnes and Noble.
Friedman further noted that the recovery of Manhattan's retail market has been marred by economic uncertainty. In 1994, there were 250,000 fewer jobs in New York City than in 1989. Mayor Giuliani eliminated 15,000 jobs during his first year in office and it is rumored that Wall Street will layoff as many as 10,000 people this year. Solomon Brothers and Merrill Lynch have announced impending cutbacks, while a host of bank mergers, specifically the merger of Manufacturers Hanover Trust and Chemical Bank, have eliminated thousands of jobs.
Despite these unsettling events, Friedman says stores continue to expand by leasing major space in almost every area of New York City.
"Manhattan has become one of the nation's most competitive superstore markets," says Friedman. "Today, the superstore phenomenon is growing by leaps and bounds, and it's difficult to keep track of the openings all over town."
In addition to Barnes and Noble and HMV Records, major players in the superstore market include Daffys, which opened on two floors in Herald Center; K-Mart, which signed a lease at One Penn Plaza for a 140,000 square-foot store; NBO, which opened in the former Gap space on 42nd Street between Third and Lexington Avenues; and Modells sporting goods, which leased the former Plymouth Shops space on 42nd Street across from Grand Central Station.
Uptown, prime space has been leased by Today's Man, which will open in 30,000 square feet of space at 521 Fifth Avenue; Nike, which leased the 80,000 square-foot space vacated by Galleries Lafayette in Trump Tower; Liz Claibourne, which has leased space at 650 Fifth Avenue; and Disney, which reportedly signed a lease for 711 Fifth Avenue.
In addition, Friedman says expansions are planned by such major retailers as TJ Maxx, Loehmanns, Filene's Basement, Burlington Coat Factory, Staples, Daffy's, Toys R Us, Hermans and Speedo. He added that smaller space users that are currently expanding include Nine West Shoes, Au Bon Pain, Duane Reade Drugs, C.V.S. Drugs (a division of Melville), Cosmetics Plus, Bostonian Shoe, Osh Kosh B. Gosh, French Connection, GNC, and countless coffee bars.
According to Friedman, the expansion of established retailers and the influx of new retailers to New York City has driven rents up as much as 10 to 15 percent in Midtown Manhattan. In most Uptown areas in New York City retail rents are up approximately 10 percent from last year, and space is already tight on Fifth Avenue in the 50s.
"The bottom line for all of this activity is more space absorption in 1994 than in any previous year in memory," says Friedman. "In 1995, we will see even more retailers entering the New York market, and rents will begin escalating as prime retail sites dry up."
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|Title Annotation:||Newmark and Company Real Estate Inc. Retail Division Managing Dir. Edward A. Friedman|
|Publication:||Real Estate Weekly|
|Article Type:||Industry Overview|
|Date:||Mar 15, 1995|
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