As retail market changes, landlords seek solace in short-term leases

Stores test out locations for a few years or even months

TRD New York /
Nov.November 21, 2017 10:20 AM

138 Greene Street (Credit: Thor Equities)

Retail landlords are increasingly turning to short-term leases as a way to test the market and give stores a chance to try out locations.

Lease agreements that last two to three years, rather than the traditional five- to 10-year longer-term leases allow retailers to test how much they can afford at a location, Crain’s reported. These deals also provide landlords with rent in the short term and the possibility of landing a tenant for an extended period of time.

For example, Gucci recently signed a two-year lease for 11,000 square feet at Pearlmark Real Estate Partners’ 375 West Broadway. The deal includes an option to extend the lease for eight years. A Chicago furniture store is leasing 138 Greene Street in Soho for nine months. The landlord was initially seeking a tenant for five or more years.

“These deals are arming retailers with a range of data that allow them to reliably budget what a given location can support in rent,” said Michael Glanzberg, a principal at retail-leasing brokerage Sinvin Real Estate.

According to CBRE, the number of vacant ground-floor stores in Manhattan has swelled from 99 to 200 since 2014. Average asking rents along the borough’s prime corridors fell 30 percent from the fourth quarter of 2014 from $1,020 a square foot to this year’s $711, according to CBRE.

Some landlords are also accepting significant price cuts to rents. Fashion brand AllSaints inked a one-year lease for 20,000 square feet at Tishman Speyer’s 635 Fifth Avenue for a “fraction” of the $18 million the developer was asking, sources told Crain’s.

Last month, an analysis by The Real Deal found that retail spaces in nearly $1 billion worth of recently-purchased Soho property sat vacant. [Crain’s] — Kathryn Brenzel 


Related Articles

arrow_forward_ios
Clockwise from top left: 312 West 34th Street, 61 North 9th Street, 639 Classon Avenue, and One Fulton Square (Credit: Google Maps)

These were the top 10 NYC retail leases in July

When it comes to retail, “real estate in New York is fundamentally broken”

An example of roll-off waste management (Credit: YouTube, iStock)

Big building owners prevent city from dumping container-pickup in trash-collection reform

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

Council member Vanessa Gibson (Credit: New York City Council)

Commercial landlords face new fines as City Council passes anti-harassment bill

As House begins impeachment inquiry, here’s what we know about Trump’s Ukraine-real estate ties

Embattled Prodigy Network CEO Rodrigo Niño to step down

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation

arrow_forward_ios