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Some retailers thrive in recessionary times.

Few would argue that the real estate downturn continues to plague virtually all corners of the New York City marketplace. Indeed, the ill effects of high property taxes, overbuilding and shrinking space demand, against the backdrop of a national recession, will likely linger throughout much of 1992.

The retail market has hardly been spared in this time of economic adversity. Last year, stories of retailers - filing for bankruptcy protection, or, worse yet, ceasing to exist - captured headlines, then seemed to become commonplace. Even "rock-solid" names like Macy's lost in their struggle for financial health.

A few retailers, however, have remained impervious to the malaise, staying intact and, in some cases, planning for longterm growth. Discount retailers, for example, have become increasingly appealing, quite naturally, as the economy worsens.

Also thriving are fitness centers and other retailers that sprouted up in response to our country's growing obsession with health and fitness. Finally, niche retailers, such as The Gap, have fared remarkably well, and continue to supplement their already strong local presence with additional new stores throughout Manhattan.

Restaurants and night clubs have been impacted in a variety of ways. Most notably, expensive restaurants and clubs are doing quite well, with steady or growing business. Less expensive ones, among them fast food restaurants, have been suffering, curtailing expansion, and even giving up various locations.

Certainly, the soft market has made consummating leasing transactions substantially more lengthy and difficult. With a shrinking pool of space-seeking tenants and a virtual sea of space options, tenants take their time investigating their options, before coming to the bargaining table with an array of demands.

Yet the market is hardly without activity. In the last few months, in fact, we have negotiated some 17 retail leasing transactions, aggregating more than $25 million in rental.

Until the economy begins its recovery, activity in the retail market will likely continue to be fueled by a growing number of discount chains, and other niche retailers that respond to the economic realities of the day.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Real Estate Weekly
Article Type:Brief Article
Date:Feb 19, 1992
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