While New York City real estate experts have suggested that anywhere between 10 and 20 percent of Manhattan’s retail space is vacant, that figure in itself may not be an indicator of good retail health of an area. A successful retail area may be more about the uses.
The writer Derek Thompson in the New York Times had a real estate broker walk 18 prime retail blocks. Out of 246 storefronts, only 13 had for rent signs in vacant storefronts, suggesting a vacancy rate in the manageable 5 percent range. But there is a change of use in retail. Food and drink categories have been the main businesses leasing retail spaces in New York City in the last three years, with what is termed as “fast casual” eateries multiplying over 100 percent in ten years.
Since 2008 over 271 new Dunkin’ Donut locations have been added in New York City, and the surge in restaurants in downtown spaces is matched in cities across the United States. In the last five years consumer spending on restaurants has risen 20 percent, with “Americans between the ages of 25 and 34 spending “about half of their food budget eating out, according to the Consumer Expenditure Survey. That is without precedent in American history. (In 1904, 90 percent of food was consumed at home.)”
The result? In New York City restaurants are essential to an area’s retail future and strict regulation of liquor and wine licences can make or break food and beverage businesses from locating in neighbourhoods. And surprisingly fitness clubs go hand in hand with restaurant retail locations, as the emphasis is on ” health, foods, body consciousness, and an obsessive attention to aesthetics.”
New York City’s retail businesses now cater to a richer cohort that work out and drink artisanal coffees. While contributing to the “blandification” of New York City, it also suggests businesses that attract the same customers as those served by high-end gyms and restaurants would do favorably. Low crime rates and lower rents are now bringing many corporate offices back into the New York City downtown.
While online shopping has made an impact in downtown retail, the United States may have also had just too many retailing opportunities, with “10 times more shopping space per capita than Germany, and five times more than the U.K.” While there is postulating that store closures are due to online shopping, the closures could also be a correction while “the retail industry is working to figure out which Amazon-proof businesses belong in brick-and-mortar stores. For now, the answer seems to be restaurants.”
Here is a YouTube video outlining the vacant stores in the 5th Avenue area where landlords are still holding for higher rents. In the video, Mayor de Blasio considers a “vacancy tax” for storefront owners who leave a retail store vacant too long.