Manhattan Retail Struggles as Rent Plummet to Lowest Level Since 2011
Despite having reopened for almost two months, retailers in Manhattan are still struggling to get back on track. Not only are most of Midtown’s workers stuck at home, but international tourism has also significantly dropped, seeing a 40 percent decline according to the Partnership for New York City. The group estimates that as many as one third of the 230,000 small businesses in the city will shut down permanently as a result of the ongoing coronavirus pandemic’s impact on the U.S. economy.
“It’s a nightmare,” said Tom Mullaney, Jones Lang LaSalle Inc’s managing director of restructuring. “A lot of stores are going to disappear and never come back.” He added, “It’s taken a turn for the worst. The pace of which people are filing notices of default, lawsuits and trying to evict is accelerating.”
Restaurants in the area have been hit equally hard. “The restaurant scene supports so many pieces of New York City culturally, it’s very difficult to watch,” said CEO of brokerage B+E, Camille Renshaw. “So many people make money as they come up in the city through the restaurant scene. If that doesn’t exist, how do these folks survive?”
Vornado Realty Trust, which operates as a major landlord in New York, has revealed that it recently wrote off a whopping $36 million USD in rent, including for the lease on J.C. Penney’s location in the Manhattan Mall. “The retail environment is very difficult,” Michael Franco, president of Vornado. “We’ve taken our share of hits just like all the other retail landlords. Most retailers are focused on survival and few are focused on opening new stores.” Some landlords are now looking to defer rent, but according to Business of Fashion, some tenants have refused to vacate despite missing rent payments, making it increasingly difficult to find a new taker for the spaces.
In other business-related news, Nike is planning to open 200 more stores despite revenue dropping 38 percent last quarter.
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