Now is the time for global brands to enter the New York City retail market – by Lee Block
The story of brick-and-mortar retail’s demise has been a popular narrative both far and wide. The recent spate of nationwide store closings and bankruptcies from well-established brands have caused some alarm amongst retailers. In New York City specifically, high retail rents have priced out many businesses as landlords demand top dollar. In turn, vacancy rates have steadily climbed over the past 24 months to levels approaching those seen at the height of the Great Recession.
However, the economy of New York City today is much different from that in 2008, or even at the height of the retail boom in 2014 – in fact, it is more robust than ever. The Gross City Product (GCP) of New York is $1.5 trillion, second only to Tokyo amongst cities, and would rank amongst the top 20 countries in economic output – placing it just behind Canada ($1.6 trillion). Moreover, the city’s growth rate continues to outpace other major industrialized European cities, and the U.S. as a whole. New York’s GCP has grown at a rate of 2.3% in Q1 and Q2 of 2017, while the U.S. GCP has grown at a rate of 0.7% during the same time. New York is also adding over 33,000 jobs (3.1%) per quarter in 2017. And its unemployment rate of 4.3% is the lowest ever recorded for the city. In a time where wage stagnation is a major concern for the U.S. and other industrialized economies, New York’s personal income rose 9% year-over-year from 2016.
With that knowledge in hand, it can be inferred that climbing vacancy rates and ensuing rent reductions in the retail sector are not signs of an economic downturn, but market course-correction – one that can be seen as an unprecedented opportunity for foreign retailers to break into the New York market at deeply-discounted rental rates and abundant landlord concessions.
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Winick Realty Group is one of New York’s prominent real estate firms specializing in retail leasing and advisory services. Over the years, Winick Realty has served a broad range of domestic and global clients, with a strong emphasis on long-term representation and expansion and growth strategies. Winick Realty Group is highly recognized as a forerunner in the retail real estate market.