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NYC retailers upbeat at close of 1992.

The long retail downturn may finally be coming to a close as retailers ended 1992 on an upbeat note. So says Edward A. Friedman, president of Newmark Retail Services, whose retail report tracks rental rates for retail space throughout Manhattan.

According to Friedman the critical Christmas retail season was boosted by anticipation of the Clinton inauguration and increased consumer confidence about the new administration. Not only did consumers purchase Christmas gifts, but big ticket items such as furniture and appliances increased sales for a wide range of retailers from discounters to department stores, which bore the brunt of the economic downturn.

Specialty stores that did especially well during the Christmas season included The Limited, the Gap and Federated Department Stores, which owns the Bloomingdales and A&S department stores in New York City.

Friedman notes, however, that not all the news was positive. Though Wail Street firms have been enormously profitable for the past two years, as of November, 1992, Wall Street employed 127,000 people in New York City, the same amount as a year earlier. This figure is off 22 percent from just before the 1987 stock market crash, and many banks, insurance companies and financial institutions have ongoing plans for employment cutbacks.

As a result, the downtown Manhat- tan retail market remains depressed. Now that over 100,000 Downtown workers have lost their jobs and area office buildings continue to show high vacancy rates, this market will probably not improve during 1993, accord- ing to Friedman.

In addition, many retailers are still experiencing serious problems. Melville, a diversified chain that owns Chess King, Thom McAn and Marshalls, plans to close 10 percent of its stores, and mergers among banks, such as Chemical and Manufacturers Hanover Trust, have added to the retail space now on the market. Other retailers have gone out of business, including Coward Shoe and Plymouth Shops. On the bright side, many-chains with a presence in Manhattan continued to expand. These included Cosmetics Plus, Labels for Less, the Wiz, the Gap, Lechters Housewares, Coconuts music stores and Au Bon Pain. Other retailers entered New York City for the first time, including Levi Jeans, which opened a store on Lexington Avenue and 59th Street; Footlocker, a division of Woolworth; Payless Shoe; The Bombay Company; Bed, Bath and Beyond, which now occupies an entire blockfront between 18th and 19th Streets on Sixth Avenue; and Warner Bros. Studio Stores which recently announced a lease for a 30,000-square-foot store on the northwest corner of 57th Street and Fifth Avenue.

According to Friedman, the expansion of established retailers and the influx of new retailers to New York City can be attributed to rental rates that fell as much as 30 percent in some areas from a few years ago and the availability of prime locations, though supply is starting to dwindle. While most uptown rents remain 20 percent to 30 percent below 1980's levels, rents have increased in areas such as Fifth Avenue in the 50's and East 57th Street off Fifth Avenue.

"Although the recession has cost New York city almost 400,000 jobs, declining retail rents and the availability of prime space will spur the expansion of established retailers and attract other retailers to New York for the first time in 1993," said Friedman. "We are already seeing the expansion of small retail businesses and the creation of new ones."
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Title Annotation:New York City; New York, New York
Publication:Real Estate Weekly
Date:Mar 10, 1993
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