New York City’s Cooling Market (12/2)
Dec 2, 2008 10:56 AM
The National Bureau of Economic Research officially declared on Monday what most pros in the retail real estate industry had already come to accept—that the United States economy has dipped into a recession. How long and deep the recession will be is still an open question. However, most experts think the U.S. is looking at its worst recession since at least the early 1980s, if not since the Great Depression.
New York City itself—home to many of the financial institutions that are failing, merging or being bailed out by the federal government—is feeling the pains of the economic contraction and the prolonged credit crunch that emerged after the popping of the massive housing bubble.
It is in this context that industry pros will gather in New York City next Monday through Wednesday for ICSC’s second largest event of the year—the New York National Conference & Dealmaking. Retail Traffic talked with three pros in the city about the outlook on how the developing trends will affect the Manhattan retail market for retailers and landlords. Andrew Goldberg is executive vice president with the New York tri-state region retail services team of CB Richard Ellis. Karen Bellantoni is executive vice president with New York City-based brokerage firm Robert K. Futterman & Associates. Brad Mendelson is executive director with Cushman & Wakefield in New York.
Retail Traffic: Have you seen any change in retail foot traffic in New York City in the past several months as a result of the recession?
Goldberg: During September and especially October, there was not much buying going on. What that did was cause a lot of retailers to have a lot of extra inventory going into November. So [many of them] are hitting discounts much earlier this year, so I think you saw a shoot-up in buying in the last week before Thanksgiving. But in September and October, everybody was holding onto their money.
Mendelson: The areas we are working in are Fifth Avenue and Times Square and we haven’t seen [a drop off] and I am not sure there has been a diminution in traffic on 34th Street or in the primary markets of Soho. The people are still here, [maybe] they are finishing up vacations they paid for a long time ago, but we haven’t seen a huge diminution in traffic.
Bellantoni: I am seeing considerable traffic on the sidewalks, which is a case to me that there are still plenty of tourists coming to New York. But I am seeing fewer bags. And Fifth Avenue is still incredibly busy with people.
RT: What kind of holiday season do you think we will see here?
Bellantoni: We’ve heard that business is off. Everything is indicating that the [holiday] sales performance is going to be less than last year.
Goldberg: A lot of the sales that will happen will be at much greater discounts than in years past. Everybody is very leery about having merchandise left on the floor.
Mendelson: We work on a rolling 12 months [basis], from November to October, and we are not seeing a diminution in sales, there has still been growth and it’s projected to be positive growth for the rest of the year, but it may be in the teens instead of the 20s.
RT: Are you seeing tenants become bolder about negotiating lower rents or getting perks from New York landlords?
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