New York's vanishing shops and storefronts: 'It's not Amazon, it's rent'

[EastSideHBG]

Edward Helmore in New York
Sun 24 Dec ‘17 04.00 EST

Walk down almost any major New York street – say Fifth Avenue near Trump Tower, or Madison Avenue from midtown to the Upper East Side. Perhaps venture down Canal Street, or into the West Village around Bleecker, and some of the most expensive retail areas in the world are blitzed with vacant storefronts.

The famed Lincoln Plaza Cinemas on the Upper West Side announced earlier this week that it is closing next month. A blow to the city’s cinephiles, certainly, but also a sign of the effects that rapid gentrification, coupled with technological innovation, are having on the city.

Over the past several years, thousands of small retailers have closed, replaced by national chains. When they, too, fail, the stores lie vacant, and landlords, often institutional investors, are unwilling to drop rents.

A recent survey by New York councilmember Helen Rosenthal found 12% of stores on one stretch of the Upper West Side is unoccupied and ‘for lease’. The picture is repeated nationally. In October, the US surpassed the previous record for store closings, set after the 2008 financial crisis.

The common refrain is that the devastation is the product of a profound shift in consumption to online, with Amazon frequently identified as the leading culprit. But this is maybe an over-simplification.

“It’s not Amazon, it’s rent,” says Jeremiah Moss, author of the website and book Vanishing New York. “Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that.”

Part of the problem is the changing make-up of New York landlords. Many are no longer mom-and-pop operations, but institutional investors and hedge funds that are unwilling to drop rents to match retail conditions. “They are running small businesses out of the city and replacing them with chain stores and temporary luxury businesses,” says Moss.

In addition, he says, banks will devalue a property if it’s occupied by a small business, and increase it for a chain store. “There’s benefit to waiting for chain stores. If you are a hedge fund manager running a portfolio you leave it empty and take a write-off.”

https://amp.theguardian.com/business...ps-amazon-rent

[10023]

That sounds like it's not really rent; it's credit agencies.

[jd3189]

The city is essentially losing its soul. It's probably not the only one. I can imagine SF and other gentrifying cities are witnessing the same thing.

[Eightball]

It you read the full article, it sounds like capitulation may have occurred, and the upswing/correction may have already started.

Still a concerning phenomenon. Of course many areas have never had any soul to lose...

[LouisVanDerWright]

We all agree on this board that density is a good thing, but I've often wondered if there isn't an upper bound where additional density becomes detrimental. For example, is there a point at which the number of residents or hotel rooms above grade creates more demand for ground floor retail spaces than the total amount of ground floor spaces available? Perhaps parts of NYC are reaching that bound now causing the basic services necessary to make cities viable to begin to be squeezed out in favor of ultra luxury retailers or the like.

[mrnyc]

its not just the mom and pops, it places like the generic grocery stores, which take up a lot of real estate. that in itself has become a serious issue.

i attended a big rally for one of our many grocery stores that have closed. all the local politicians came. everyone spoke and lamented.

finally the store manager, who we all knew well, spoke. he said look around. the apts on the right and left and just across the street go for millions. we cant sell onions and apples here for a dime or raise prices and compete with that. he said i dont want us to lose our jobs, but i do not blame the owner one bit. who could resist selling such valuable property?

anyway, that shut’em up. it was a fitting final word. needless to say its just been sitting vacant.

[Eightball]

The paradox, of course, is that you have never had more grocery options (mainly online tho) which mitigates that somewhat. I still prefer to pick my own produce and have everything else delivered but you aren't exactly without options...

[mhays]

Manhattan has very little street frontage per acre, because it has very large blocks. Avenue space is particularly limited. Combine that with its unique-in-US density, and the result can be not enough retail space. That can be solved of course by encouraging multilevel retail, or taking away some of the hurdles that tend to make it difficult.

Other cities like mine have smaller blocks so more frontage per acre, and require retail that's not warranted, so we have tons of vacancies outside the destination retail areas.