Retail and rents
I love to come back to NYC after our winter sojourn in LA and see what has happened since we have been gone. What is loud and clear since we left is the countless empty stores that are leaving entire blocks vacant. That does not bode well for vibrant communities.
There has always been a disconnect between landlords and market value when things begin to shift. Who wouldn’t want to believe that their space is still worth what the last tenant paid? Unfortunately, much of the prime real estate around the city is owned by families that own countless properties and they are willing to just let those storefronts remain empty.
Mayor DeBlasio has proposed fining landlords who keep their spaces empty for an extended period of time essentially forcing them to figure out market value sooner than later. Who knows how much capital has been leveraged on these properties but the point is vacant blocks is not good for any city.
We can bemoan about the closings of the big stores like JCPenney, Sears, ToysRUs, JCrew, Gap, and others but they aren’t coming back. The question is what is coming? Brick and mortar stores are not going away. 97% of Generation Z still shops in brick and mortar stores. How about that? People might be more inclined to push a button and buy their clothes or buy the basics for their homes but it appears that the young still like to get out and experience the world.
I can imagine a store or open mall where it looks and feels different. Think Fred Segal meets a wine and beer tasting meets a coffee shop meets a book reading meets a cooking class meets an apartment where everything is for sale but you don’t want out the door with it in your hand but it shows up at your door at a later time. Above that new Main street store is places of residence. Or how about indoor farms where the community comes together? Lots of concepts are out there but just like the cost of entry has dramatically been reduced for starting a business online, we need to do the same in brick and mortar. Landlords need to find the price where they still make money but allows for a new generation of creativity to become the next wave of local stores that eventually will become chains and the cycle will continue.