The Real Deal New York

West 8th Street’s retail woes

October 30, 2007
By Jen Benepe

Shop owners who still linger on the stretch of Eighth Street, once called the city’s shoe capital, said the September 11 attacks ravaged the shopping district, which remains littered with empty storefronts. Since the collapse of the World Trade Center towers, 24 of 54 shoe stores have closed, a devastating percentage.

Today, 16 storefronts remain empty, giving the street a ghostly look and turning off potential new retailers. Other shops sport “Going Out of Business” and “70 Percent Off” signs. It’s reeling, although shop owners, landlords and brokers say it’s much more than a five-year terror hangover that’s led to the area’s decline.

The Eighth Street strip is an example of how market economics and changing fashion tastes converge and can upend a single street that once depended on shoppers from Brooklyn, the Bronx and Queens.

Rising rents played a role in the long march of Eight Street to decline — rates doubled at some stores, putting veteran shopkeepers out of business. Some of the shuttered spaces have stayed vacant as long as two years while their owners wait for the area to come back, and the visual effect does little to dispel an aura of decay.

One shop owner, who is closing his shoe store after 20 years and declined to identify himself, said rent hikes were a citywide phenomenon, but also that “the easy money” landlords were seeking would cause the whole street to collapse.

“I feel bad, because this store was like home,” he said, as boxes were hauled out of his storefront for the last time.

The rents are rising from an average of $50 a square foot per year to $80, $120 and $150, but are still way below the standard $200 to $350 per-square-foot prices in other parts of the Village and Soho, said Aaron Gavios, executive vice president at Square Foot Realty. His firm recently tried to rent out 21, 23 and 25 West Eighth Street, two of which have 1,500-square-foot spaces — large for the street. But the landlord passed on the one good offer from Quizno’s, a fast food franchise.

“The retailers walk the block, and they see all these vacant stores, and they think the plague hit it,” said Howard Aaron, president of Square Foot. Other brokers passed on the shared listings and said the street was “finished,” he noted.

A building superintendent for several properties on the block said drug dealers and panhandlers parked in front of Gray’s Papaya on the corner of Sixth Avenue often urinated in store doorways, and harassed pedestrians, which adds to the seedy atmosphere.

He also pointed to a row of street vendors selling used magazines and incense in front of the old, unoccupied Sam Goody on Sixth Avenue. “Who wants,” Aaron said, “to come here when it’s like that?”

Alliance, shop owners at odds

Some shop owners point part of the blame at the direction their Business Improvement District, the Village Alliance, is taking.

One shoe store owner, who also requested anonymity for fear of being blackballed among brokers and by the Village Alliance, said he’s been in the same location for more than 50 years, attracting customers from all over the world. “This was the capital of the world for shoes,” he said. He said Honi Klein, the director of the BID, wants to steer the street away from shoe retailing.

Another shoe store manager at 55 West Eighth Street agreed: “The more shoe stores you have on Eighth Street, the more business you are going to have,” he said, calling Klein’s strategy “a mistake.”

But some people involved in the area said they were glad to see the old retailers go. Critics said shoe retailers lack energy and a broad range of merchandise, and attracted low income, discount-seeking clientele, which they said contributed to the area’s problems.

Klein said most of the old customers looking for shoes have moved on, especially to the retail area on 14th Street, where they shop at discounter DSW and other hot retailers. “The bottom line is that 14 new shoes stores between 16th Street and University [Place] have sprung up over the past seven years,” said Klein.

“That’s not the same customer and it’s never been the same customer,” countered the manager at Studio 55, which sells brands like Clarks, Dr. Martens, Ecco, Timberland, Dansko and Frye. His company has three stores on the street that he said are thriving, with both branded and private label goods, despite rising rents.

A newer strategy for the street

Nevertheless, Klein has moved forward with the strategy of catering to area residents, adding restaurants and making it a hub for ethnic dining options. The street now has a Belgian creperie, a Mexican cafeacute;, a Brazilian restaurant, a health food store and a pizzeria.

Broadway Panhandler, a large gourmet kitchen store, opened up in a large space across Sixth Avenue from Gray’s Papaya, setting a new tone for the down-market discount strip.

“It evolved almost like magic,” Klein said. Lower rents pulled the retailer away from Soho, where rents can hit $350 a square foot.

Eugene Warren, a principal with commercial landlord Buchbinder & Warren, which owns several buildings on the block, agreed with Klein. He said his firm now focuses on leasing to more expensive shops that will add ambiance and provide neighborhood services. They recently signed leases at 26, 28 and 30 West Eighth Street with a wine-tasting shop, a wine store and an art store. “When we have a vacancy now, we search for something varied and different,” Warren said.

It’s a formula that already worked at the edge of Union Square — Buchbinder & Warren also owns the building that houses the Diesel store on Union Square South.

Bill Abramson, who handles leasing for Buchbinder, said that it made some improvements to the façdes and offered a slight reduction in the asking price of $150 per square foot to attract the right tenants.

The company would like to rent to businesses that cater to the many new residents that have recently invested in $600,000 studios and $1 million apartments nearby. Market players said they’re not sure they can attract such retailers to Eighth Street in its present condition.

At Untitled, one of the few remaining high-fashion clothing boutiques on the street, owner Kevin Kelly said his brand-name products such as the colorful Ed Hardy hand-painted hats and T-shirts and Cedella Marley (Bob Marley’s daughter) clothing line appeal to a steady clientele (including some celebrities), and he has been able to stay profitable.

After 20 years on the block, Kelly has a favorable long-term lease on his two-story, 4,000-square-foot store, and said he’s made a point of keeping up with changes in fashion.

“Unfortunately, what happened in this neighborhood, some people were not selling interesting things and they weren’t changing with the times,” he noted.

That fact is obvious when walking the street. Some stores sell cotton clothing made in India, smoking paraphernalia, T-shirts, tarty Lycra dresses and belt buckles that evoke the 1970s. It’s a nod to what made the area a hip shopping street back in the day, but it’s out of date, said Klein.

Referring to the underserved family demographic in the area, where the neighboring park “is overflowing with children,” Klein said, “those people are not buying T-shirts or having their bodies tattooed” — other retail categories that she is asking landlords to avoid.

There are positive signs of change on the strip: eateries catering to increasingly upscale neighborhood tastes have done well. Le Pain Quotidien, at the corner of Fifth Avenue, is undergoing a third expansion. Crumbs, a bakery catering to children’s parties, is also getting ready to open on the street, Klein added.

William Friedland, whose company owns the 14,000-square-foot former Sam Goody store at 398 Sixth Avenue, said he’s close to signing a new national retail tenant, which would help banish the street vendors. He also plans to lease space at 16 West Eighth Street to a fashion, clothing or shoe retailer.

“Of course I would rent to a shoe store,” he said. “I am a great fan of the clustering concept.”

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