The suburban convenience store 7-Eleven, which put the Slurpee frozen drink on the map, is ramping up expansion in New York City, with plans for 100 to 150 new stores across the five boroughs over the next three to five years.
Emboldened by higher retail vacancy rates and lower rents due to the recession, 7-Eleven, which currently operates 46 stores in the city, plans to open 10 new locations this year alone: three in Manhattan, three in Queens, three in Staten Island and one in Brooklyn, said Ken Barnes, real estate manager for the retailer’s northeast division.
These include a Manhattan store at 103 West 14th Street, and one in Greenpoint, Brooklyn, at 883-885 Manhattan Avenue, both scheduled to open next month.
Other leases are in the negotiation phase.
Asking rents in the city have dropped 10 to 15 percent, and signing rents are 20 percent lower than last year, said Barnes in explaining the decision, which runs counter to the contractions that a lot of other retailers are currently going through.
“Other retailers have scaled back their growth programs, allowing more opportunities for 7-Eleven. Besides vacancies, you have a decline in overall rents in New York City, making it more attractive to grow our stores.”
Barnes said the Dallas-based retailer is underdeveloped here and is still performing well despite the recession. The expansion, he said, will be weighted toward Manhattan and Queens, based on population density and number of existing 7-Elevens in the market.
The company’s New York plan is part of a larger nationwide push for the retailer, which operates and franchises more than 6,200 stores in the U.S. and Canada. It is scheduled to open 200 stores nationwide this year, and 350 in 2010.
“People are looking for value,” said Greg Covey, an associate with Robert K. Futterman & Associates who is working on the leases for a number of the retailer’s locations in the city. “Apparel [retailers] are struggling, home goods are struggling; [but] 7-Eleven caters to the everyday needs of consumers, particularly New Yorkers.
“They offer coffee, food and a brand people know from their youth — particularly those from the suburbs,” he said.
The convenience store likes to open stores in heavy traffic areas, Covey noted.
“They’re very smart in the way they’re expanding and taking advantage of market conditions,” by signing long-term leases and locking in lower rents, said Ariel Schuster, executive vice president of Robert K. Futterman.
Of course, 7-Eleven isn’t the only convenience store benefiting from lower rents. Schuster noted that “it’s become easier” for local bodegas and gourmet markets that had been priced out of the city in the past five years to expand as well.
After exiting the Manhattan market in the 1980s, when cigarettes and beer were a substantial part of its merchandise mix and competing bodegas were offering more food, the retailer tweaked its concept in the early 1990s, adding sandwiches, hot food and salads.
Today, 7-Eleven’s New York City stores “outperform the national average,” Porter said.