We thought it wouldn’t happen so fast.
Another day, another bare storefront.
We’ve known about struggling suburban malls for years, and we’ve had a front-row seat for the rise of ecommerce. But New York City, with its collection of retailers both chic and esoteric, seemed resistant to brick-and-mortar demise.
Traditional retail stores are vanishing at a pace that must leave landlords’ heads spinning. On the rare occasions that a new tenant moves in, it rarely involves shopping bags. Instead, we are seeing the rise of “experience” in retail, a shift to emotional connection that generally involves a lot less merchandise at ground level.
Experiential retail is part of a larger trend. Retailers are dashing for online safety; brick-and-mortar is increasingly becoming a call-to-action for online ordering.
It’s affecting suppliers, too. As retailers shrink stores and inventory, suppliers are forced to develop direct channels to consumers, no doubt causing channel conflict in their race to preserve revenue.
Which retailers and suppliers will build the deep connections with customers that survive the onslaught of Amazon? We’re taking bets. We also can't wait to see how retail space is repurposed: viz WeWork buying the Lord & Taylor building.
Radio Shack Still Exists?
Here’s a breakdown of major retail store closures expected to roll out over the next couple years. Kmart, Macy’s, and all of Starbucks’ Teavana stores may not come as a surprise. But who knew Crocs and Radio Shack still had so many stores to close?
Note to self: utilize all stray gift cards other than Amazon—soon!
Soho No Go
On the investment side of things, it’s not looking any better. Retail property that was eagerly snapped up just a few years ago is now failing to be filled by new stores.
Take SoHo for example: investors who spent almost a billion dollars to acquire retail-and condominium-centered buildings over the last six years are facing crazy vacancy rates, according to research by The Real Deal. Even buildings that haven’t changed hands recently are stuck in the transition between tenants. Retailers who are losing confidence in brick and mortar business are unwilling to pay top dollar to get into formerly fully occupied neighborhoods.
The result? 569,00 square feet of retail space sitting empty in one of New York City’s most sought-after areas.