A senior Blackstone Group executive believes the state of the U.S. retail market is worse than expected.
“The retail industry is clearly facing headwinds. And it’s the first time we’ve seen secular rather than cyclical headwinds,” Nadeem Meghji, Blackstone’s head of North American real estate, told the Financial Times. “We’re now seeing pressures even on luxury retailers, which I didn’t expect to happen as fast as it has.”
Blackstone still owns grocery-anchored shopping centers but has sold off its malls.
“The internet has made the value proposition for a lot of shopping malls less relevant,” Meghji added. “If you add in the factor that they actually tend to have higher operating costs due to security, electricity and so on, then they are high-cost rental spaces for retailers.”
Manhattan’s high-end retail market has been struggling with rising vacancies. According to Cushman & Wakefield’s most recent market report, six of Manhattan’s twelve top retail markets have availability rates of 20 percent or more. Ralph Lauren recently shuttered its Fifth Avenue flagship store, and as The Real Deal reported last week sales at Apple’s store at the GM Building fell over the past three years. [FT] — Konrad Putzier