Vacant New York

Back in March Saul mentioned he sensed a lot of vacant storefronts around Manhattan.

Here is someone who observed the same thing and is trying to quantify it.

http://www.vacantnewyork.com/

20 Likes

If vacancies persist or get worse it should drive conversion to alternative uses such as residential housing.

If vacancies persist or get worse it should drive conversion to alternative uses such as residential housing.

Hi Chris,
That ain’t gonna happen! These are high traffic areas at street level on busy avenues in Manhattan. These vacancies are right facing the street with other stores on both sides of them. People walk by in a constant stream, and cars are always passing right in front of them. No one would want an apartment in them Often they are at the bottom level of high price 20 or 30 story apartment houses. The apartments are expensive but the store fronts are four or five times as expensive. The problem is the internet. Brick and mortar stores can no longer pay such high rents. The prices have to come down. The landlords don’t want to drop prices, and are stubbornly leaving the spaces vacant, because if they start dropping prices they will have to drop prices in their other locations too. Simple as that.
Saul

7 Likes

That ain’t gonna happen!

Ok, well, if they are not going to rent it to retails then what will they do with the properties? There’s value only if this is a best use for it.

Chris

Ok, well, if they are not going to rent it to retails then what will they do with the properties?

My guess is rental rates will come down. Joe has a picture framing shop. Joe’s lease expires and his landlord wants to raise his rent 30%. Joe see’s all the vacant storefronts and asks around until he finds a landlord who is tired of having his property vacant. This landlord breaks ranks and rents to Joe at 20% less than Joe was paying before and almost 40% less than his old landlord was asking. Good for Joe and good for the new landlord who now has a revenue stream coming in instead of sitting with his property vacant, paying taxes on it, and watching more and more empty storefronts.
Saul

2 Likes

My guess is rental rates will come down.

Maybe in the short-run to mid-run. However, if demand for retail drops enough and there is enough demand for a better, more lucrative use for the real estate then you could see conversion assuming the city allows the alternative use.

Ok, well, if they are not going to rent it to retails then what will they do with the properties? There’s value only if this is a best use for it.

On a positive note…
Amazon drop off points
3D printing stations
Drone bases
Electric mobility device refuelling points
Physical interactive services that cannot be dis-intermediated by the internet like nail painting bars, hair salons etc
Entertainment locations - art galleries, live band venues, buster and dave places, hooters etc

On a negative note…
Pawn shops
Betting shops
Everything for a pound type shops
Hooters

Ant
(Not sure what category to put hooters in)

3 Likes

A friend of mine was a district manager for a bagel chain. They were looking for a new location when one that previously housed a restaurant became available. It was in the area they were looking, it had parking, and it also still had alot of the equipment. One problem was there would be no foot traffic. The bigger problem was the lease was for $10,000 per month, and this was in North Carolina.

As my friend succinctly put in his Elvis-like drawl: Ah doan thank so. Thassa lotta bagels.

And the property is still empty.

Jeb

3 Likes

And the property is still empty.

Thanks Jeb, I think that that is exactly the same thing that is happening in NYC.
Saul