We were in Manhattan for Mother’s Day weekend, and I had the chance to walk both Madison and Fifth Avenues to about 80th Street, then back to our hotel window shopping with an occasional duck inside to shop. NYC was bustling as ever, Broadway was thriving, and Times Square was wall-to-wall.
But the retail! So many stores were closed or seeking tenants, I had to write my friend real estate expert and appraiser Jonathan Miller, who I unfortunately did not have time to see:
“But the empty retail spaces! Whoa even along Fifth and Madison! I think I saw one or two every block, and we walked from 44th to 80th. What gives” I wrote in an email.
“It’s funny you mention the retail apocalypse – I am supposedly on “Inside Edition” tonight to speak to this very issue! Strolled up and down Fifth with a camera crew last week to explain it for 90 minutes in a 3 minute segment. From 49th to 59th, 1 out of 4 stores are empty.”
Funny they mentioned Trump Tower, because I walked by the place and did a total double take when I saw the armed guards. I mean big special ops-type police in black, big machine guns strapped across their chests at full attention. I stopped and gasped until I realized I was in front of Trump Tower. (The side, which you can see in the Inside Edition segment, is also blocked off from Fifth to Madison. New York friends tell me that when President Trump comes to town, which is now infrequently, entire blocks around Trump Tower are blocked off.)
I wanted to snap a picture of the officers, one caught my eye and smiled slightly, very slightly. I stopped, reached for my phone, then put it back. Nope, not worth getting shot with an AR47 for a Facebook post.
Jonathan says the reason why so many shops are empty is because rents are so high — $2800 per square foot in the area — and because of internet shopping. I really didn’t see less foot traffic, I just saw fewer stores to traffick into. Jonathan says rents can be as high as $1.5 million a month for 53,000 square feet: who can afford that?
Also, it seems every store in New York City has private security working the front door.
So yes, major brands are re-thinking the economics, shunning retail square footage for cyber, saving on both rent and security. Other friends told me they expect it to get worse: soon the only retail you will see will be services: nail salons, banks, restaurants, and professional offices. I cannot imagine how much a manicure will cost with $2800 psf rents!