New York City’s Cooling Market (12/2)
Dec 2, 2008 10:56 AM
Mendelson: Certainly in secondary markets, I don’t think tenants are negotiating harder, but they are standing by the sidelines, waiting to see where things go. I know a number of landlords who are prepared to give additional incentives for tenants to take space. There has been a willingness to listen more than there has been in the past. And in your primary markets there is not enough available space to really look at.
Goldberg: Yes. There is more negotiation going on than there was in years past. Now, you can have landlords doing work for a tenant or giving a tenant an allowance. There weren’t many retailers who got [that] before.
Bellantoni: We are seeing people put plans on hold for the next several months as they evaluate their sales performance. But it’s not happening as much in New York as it’s happening across the country.
RT: Which neighborhoods are still performing well and which are starting to soften?
Goldberg: I think the best markets in the city, the proven markets—Fifth Avenue, Midtown, Madison Avenue, the heart of the Upper East Side—are still strong. The secondary markets are being hit much harder. And the downtown financial district got hit hard.
Bellantoni: We are certainly not seeing a slowdown in Soho, or on Fifth Avenue, because there is not a lot of available space. And Times Square is continuing to be strong, Union Square, areas near Herald Square. The neighborhood where there is some movement is on Madison Avenue above 57th Street.
And we are starting to see some corrections a little bit in some of the Upper East Side and Upper West Side neighborhoods.
RT: Are you working on any large transactions right now?
Mendelson: We are working on a few. We have an agency on 666 Fifth Avenue and we are actively in discussion with half a dozen retailers. Everybody just wants to make sure that the decision they are making is the right one. When you talk about Fifth Avenue, it’s a branding opportunity. We put the Brooks Brothers space on the market and we leased half of the ground floor to the Abercrombie & Fitch’ kids division. What we have is the remainder of the Brooks Brothers space—approximately 5,000 square feet on the ground and 7,000 square feet on the second floor.
Bellantoni: I have some deals I am still negotiating and hoping to close prior to the end of the year. One of the deals I am working on would be the retailer’s first location in New York. It’s a pretty good sized deal.
Goldberg: We are as well. There are still a couple of deals we’ve been working on that are moving forward. Most of the ones that are happening right now are tenants that already have stores in the city that were able to negotiate a good deal they might not have been able to a year ago. And there are still tenants coming in from other countries where these would be their first or second store in New York.
RT: What kind of a mood do you expect going into the ICSC New York show?
Goldberg: You are going to see landlords ready to move quickly on deals and tenants being much more selective. I don’t think deals are going to get signed at the conference, but that’s no different from years past.
Mendelson: We are going to see a very somber mood. The ICSC is an organization of shopping centers and I don’t think there is a lot of shopping center expansion. The sales numbers are down substantially. There are a number of people who won’t be coming to New York City this year because of the cost. A number of companies that used to entertain won’t because corporate expenses are being cut.
Bellantoni: It’s going to be a tough environment for many. There will still be deals made in New York and hopefully, not much re-trading. If nothing else, just getting together and sharing stories will help people as well. And that is the other point of the conference—to see some familiar faces.
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