Fifth Avenue used to command top dollar from high-end retailers willing to pay any cost to have a place on the avenue. But those days are over.
Average ground-floor asking rents on the tony shopping strip between 49th and 59th streets are down 11 percent from their peak in early 2017 to $2,779 a square foot in the first quarter, according to data from Cushman and Wakefield cited by the Wall Street Journal.
“Even must-have locations, must have rents that are rational,” Acadia Realty Trust CEO Kenneth Bernstein said during a recent earnings call.
The availability rate, which reflects vacancies and expiring leases, has only recovered slightly from the 13-year high of 27.5 percent in the fourth quarter. It stood at 25 percent in the first quarter of the year.
Major store closures on the corridor include Ralph Lauren, which closed its flagship Fifth Avenue store in 2017. Gap and Tommy Hilfiger followed suit in recent months, citing a shift in focus to e-commerce platforms.
Vornado Realty Trust CEO Steve Roth said the real estate investment trust has not yet found a replacement for Massimo Dutti, which is closing its 54th Street store.
“It’s obviously a great location,” Roth said in an earnings call. “Pricing is not what it would have been 3 years ago.”
Nina Kampler, a retailer leasing consultant, advised landlords to temper their expectations.
“The smart landlords are renegotiating to keep their places lit,” said Kampler. “If they are stubborn and waiting for a messianic future, they’re hallucinating.” [WSJ] — Georgia Kromrei