Retail markets seen turning up.
"I thought this year there would be a lot of bankruptcy filings and retailers going out of business," said Benjamin Fox, executive vice president and principal of Newmark New Spectrum. "I think everyone is pleasantly surprised. The talk of doom and gloom that was quite pervasive, we don't have that anymore."
Heavy job losses in the finance industry earlier this year also contributed to the downturn, according to a report by Marcus and Millichap, a company that specializes in real estate investments.
However, job growth of 0.9% is expected to help the market to recover by the end of the year, according to the report.
"As the employment rate picks up, the market will pick up," Fox said. "New York, because of its diversity and because of its density, makes it possible for many retailers to experience a down period and still thrive."
Most in the industry agree that the market will continue its climb.
"The retail market in New York City is on the rebound," said Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide and expert in the luxury retail market. "It has been on the rebound since the beginning of the summer, I'm predicting a very good ending to the third quarter and very good start to the fourth quarter."
While Lower Manhattan is still suffering from elevated vacancy, national retailers such as Crate and Barrel, Costco, Home Depot, Whole Food Market and Borders Books continue expansion plans in other parts of the City, showing faith in the vitality of New York's marketplace.
"Rumor is that Home Depot is going to pull the trigger on two deals in Manhattan," said Gene Spiegelman, retail expert at Cushman and Wakefield. "Target has been playing around in Manhattan. It's just very difficult on that particular concept that is so space intensive."
The earlier slump in retail sales has enabled some retailers to take the plunge and others to consider the option, said Robert K. Futterman, of Robert K. Futterman and Associates.
"The lack of demand over the last couple of months caused landlords to drop their rents," Futterman said. "For the first time you are hearing that Wal-Mart and Target are zeroing in on the market. Obviously, the reason Home Depot is coming in is because lower rents have enabled them to move forward."
With lower rents and the economy seemingly taking a turn for the better, 2004 may be the year that retail makes a significant turnaround.
"New York City has been resilient through a very challenging time," said Gene Spiegelman. "That is the simplest way I can say it. I expect it to stay consistent through the end of the year. If there will be any major turn, it will come next year."
New York City is unique in its economic makeup and that's what makes the City thrive, especially the retail market, said Fox.
"You look at a city like San Francisco, they are hurting where retailers rely on tourism," he said. "That's not the case in New York City. New York City is not wholly dependent on one or two particular markets or industries. In New York, the local people make up the majority of the retail base."
"With consumers thinking of 'back to school' shopping and the holidays right around the corner, the retail market will continue to climb," Consolo said.
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|Title Annotation:||End Of Gloom And Doom|
|Publication:||Real Estate Weekly|
|Article Type:||Industry Overview|
|Date:||Aug 20, 2003|
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