Leasing frenzy of rapid-delivery apps slows down fast

Landlords sour on the startups, which picked up 150 retail spaces last year

Gale Brewer, New York City council member (Getty Images, iStock)
Gale Brewer, New York City council member (Getty Images, iStock)

The rapid rise of fast-delivery apps in New York City is grinding to a screeching halt as landlords and politicians look to backtrack from the companies’ recent gains.

Startups like GoPuff, Gorillas, Jokr and Getir have combined to take anywhere between 150 and 200 retail spaces in the past year, Solomon Sharaby, a broker with KSR, told the New York Post. The companies were able to take advantage of vacant storefronts and sweetened leases to gain a major foothold in the city.

However, their favorability seems to be fading faster than their 15-minute-or-less delivery promises.

Landlords are finding the delivery apps less appealing in residential neighborhoods, bothered by the lack of foot traffic they deliver and the constant hum of employees riding by on their e-bikes. As many property owners look for traditional tenants to move back into their spaces, some politicians are pushing back on the “dark stores,” citing concerns over warehousing in the city.

“They’ve run into a number of obstacles between rising rents, potential zoning issues and landlords who are not excited about them as tenants because they don’t add anything to the neighborhood,” Newmark Group vice chairman Jeffrey Roseman told the Post.

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City Council member Gale Brewer has asked the Department of Buildings and Department of City Planning to examine potential zoning issues with the companies, claiming the repurposed storefronts act like warehouses in retail-zoned areas. The former Manhattan borough president is reportedly also considering introducing legislation.

A bill coming to the New York City Council aims to bar on-demand grocery apps from advertising 15-minute delivery times, the Post reported. Council member Christopher Marte is reportedly set to introduce the bill to counter the business models that threaten worker and pedestrian safety.

Some companies are responding by trying to create small retail zones open to the public in order to avoid being labeled as warehouses and risk being shut down.

None of the rising apps appear to be profitable, the Post noted, calling into question the companies’ future prospects as tenants amid the retail market’s rebound.

Instant delivery startup 1520 already bit the dust, running out of funding less than a year after launching. The Information reported this month Jokr launched talks to sell its New York operations, but the company has denied such discussions.

[NYP] — Holden Walter-Warner