Manhattan retailers threatening to get out of Dodge if landlords don’t cut rent

Retailer wants Thor to lower its rent at 115 Mercer Street

115 Mercer Street and Joseph Sitt
115 Mercer Street and Joseph Sitt

Facing high costs and lower than expected profits, retailers on some of Manhattan’s most expensive thoroughfares are trying to get landlords to give them a break on rent.

For instance, the Kooples, a French clothing seller, is threatening to leave its space at Thor Equities’ 115 Mercer Street six years ahead of when its lease expires if the landlord doesn’t reduce the rent, Bloomberg reported.

“We were expecting much higher income,” Elodie Barbe, a spokesperson for the Kooples, told Bloomberg. “We are under discussions with the landlord to see what is possible.”

Property owners in Manhattan have increasingly granted rent reductions and inked short-term leases in a bid to avoid rampant store vacancies. According to Cushman & Wakefield, some 11,000 stores may close in the U.S. in 2018.

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“Landlords are adjusting the way they do business to market conditions,” Patrick Smith, a vice chairman of the retail brokerage at Jones Lang LaSalle, said “It’s healthy. It certainly has stimulated activity.”

Last week, The Real Deal reported that Thor lost most of its interest in three retail-and-office properties due to unpaid debt to its joint-venture partner. It’s unclear if Thor will agree to lowering the Kooples rent, which is $650 per square foot for its space.

An analysis by TRD in 2017 found that retail sits vacant in nearly $1 billion worth of newly-bought Soho real estate, largely due to landlords holding out for tenants to pay near asking rents. [Bloomberg] — Kathryn Brenzel