The past few months have seen a lively exchange of views on the health of the city’s retail businesses. Some analysts worry that the turbulence affecting other markets could migrate to New York City and slow what has been a booming sector. In particular, the credit crunch that is squeezing businesses across the country could mean that expansion plans get put on hold, causing damaging ripple effects on leasing throughout the city.
Optimists, however, think that the city’s unique characteristics will continue to drive strong local retail demand. For The Real Deal’s special supplement this month, we look at both views, examining how the city’s retail scene is faring in a series of stories.
Just as prices of high-end properties in Manhattan have remained strong, a survey of the city’s high-end retailers offers cause for cheer (see Gilding the apple). Further proof of the strength of the city’s retail scene was the opening last month of Gucci’s new 46,000-square-foot flagship store on Fifth Avenue (see Paying homage to couture). Not only was it the most expensive build-out of space in the city’s history, at around $1,500 per square foot for ground-level space, the lease also sets an overall record for boutiques in the city.
Luxury retailing isn’t the only branch of retail that continues to fare well in the city. Commercial high streets in the outer boroughs are also at near-zero vacancy rates (see The city’s other Fifth Avenues). The retail scene in Brooklyn has been particularly strong. According to a recent study of Brooklyn’s retail sector by Massey Knakal, the borough’s number of commercial strips has grown in only a few years from about 75 to about 125.
These developments haven’t gone unnoticed by national chains. As the demographics of large parts of Brooklyn and Queens have shifted, so has the appetite of national retailers to tap into these markets. Psychographic studies, or segmentation research, continues to locate new concentrations of the well-off (see Where the shoppers are).
Market studies aren’t the only means of choosing retail sites. Our Q & A with managers charged with site selection for American Apparel, Gristedes supermarkets and Lenny’s, the sandwich makers, reveals that in Manhattan, statistics count, but not as much as old-fashioned gut instinct (see Opening new doors, slowly).
Of course, national brands aren’t the only businesses eyeing the city’s frontiers of gentrification. Along with businesses like casual coffee shops and bistros, independent wine stores are emerging as urban retailing pioneers. While stocking and furnishing such shops may seem easy, the experiences of a number of these independent stores suggests opening wine stores can be costly and time-consuming (see Wine stores pioneer fringe areas). Our supplement also looks at the recent purchase of the city’s Virgin Megastores by Related and Vornado and offers speculation on what might happen to these huge and iconic retail spaces (see Cue violins for Virgin Megastore).
Finally, we look at the emergence of vertical retailing on Manhattan’s Upper West Side (see Retail goes vertical on UWS). Four projects are offering tenants lean ground floor space with roomier digs above or below ground. This kind of space is alluring to suburban big box retailers, just one of the many types of stores looking for access to Manhattan’s teeming customer base.