Financial 411: Retail Rents

Email a Friend

For retailers suffering from the crash of 2008, one bright spot may be a little wriggle room with the landlord. Average asking rents in Manhattan declined 11 percent between last fall and the spring of 2009, according to the Real Estate Board of New York. But the high-end corridor of West Bleecker Street actually saw a 33 percent INCREASE in average rents. WNYC’s Beth Fertig reports for the Financial 411 on what’s behind that anomaly.

Twenty-five year-old Juliana Iudecello knew right where to go on her first trip to New York City. The Italian shopper headed to Bleecker Street between Hudson and Christopher.

IUDECELLO: It’s alternative, it’s cool, it’s different from where the skyscrapers and so it’s more um, calm and relaxed.

Iudecello had just bought a bag at the Marc by Mark Jacobs accessory store. Once a haven for antiques, books and Eastern-influenced jewelry, the far western corridor of Bleecker Street now resembles a condensed version of SoHo or Madison Avenue. In the past five to ten years, the designers Cynthia Rowley, Tommy Hilfiger, Ralph Lauren, and boutiques like Intermix that have all opened stores on the leafy, West Village street. For shoppers, it’s very alluring.

MILLER: Easier to walk through, not as crowded, uptown’s way too crowded.

That’s Sam Miller, who was visiting from San Diego with her four year old son. Though she didn’t buy anything, Miller noticed a lot of activity.

MILLER: It doesn’t seem like there’s any stores that are out of business whereas uptown it seems like there’s a lot more out of business, and Times Square it seems like there’s more out. But here it looks like, you would never guess there was a recession going on. I was just in Magnolia Bakery and they had line out the door, and I can’t believe it. Five dollar cupcakes it was just amazing. None of these stores look like they’re hurting at all.

But looks can be deceiving. While aking retail rents on west Bleecker went up more than any other Manhattan neighborhood this year, according to the Real Estate Board of New York, that figure is skewed. Stacey Pecor owns Olive & Bette’s which has four clothing and jewelry boutiques in Manhattan, including one on Bleecker. She says rents are up only because they were undervalued for so long.

PECOR: I mean there were a lot of old antique stores that had been there 20 years, there were delis there 20 yrs, and all of those are now changing over to retail. It has nothing to do with the economy because the economy on Bleecker Street and sales on Bleecker Street are down as much as they are on Madison, the same as they’re down on Columbus, the same as they’re down in SoHo.

Pecor says sales at all of her stores are down about 35 percent, though that’s an improvement compared to the end of 2008. New York City retail sales are down between 8 and 10 percent according to the Partnership for New York City – and even more among higher end stores.

However, realtors say the fact that rents were still rising on Bleecker this spring could be a sign that the street is healthier than other retail strips. Robin Abrams, Executive Vice President of the Lansco Corporation, says shops there are smaller – so they’re easier to lease. And despite its proximity to the now trendy Meatpacking district and SoHo, she says Manhattan CAN support a number of high-end shopping streets.

ABRAMS: I think that when retailers come in they look at New York and you look at the population and the traffic here and it is unlike anywhere else. And they definitely can develop the strategy and have a goal to do a half a dozen stores very easily without saturating the market.

But as big designer stores proliferate – with Mark Jacobs planning a sixth store in the neighborhood – not all retailers benefit equally from the foot traffic.

Wendy Larrabee Ginsberg owns Verve shoes and accessories, which has been on Bleecker for 13 years.

LARRABEE GINSBERG: The types of stores that are coming in, the corporations, basically bring in a brand shopper. They don’t bring in the cool, young trendy New Yorkers anymore because those people want independent designers - they don’t want to shop in corporate stores. So we see more tourists, more like I say brand shoppers, it doesn’t really help the independents at all.

Verve has two stores on the street and Larabee Ginsberg says the rent on one is expected to triple this year. For WNYC I’m Beth Fertig.