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Manhattan Pop-Up Shops Might Be Here to Stay

These days, with the softening real estate industry in Manhattan, stable long-term retail tenants are a scarcity. To compensate, the real estate industry is adapting to short-term tenancies, named licensing deals. Licensing deals allow tenants to use a space rather than own it for a specified time period. The method is being used to rent to pop-up shops in the city. A pop-up tenancy can last from a day up to a year. Both landlord and tenant can benefit because it avoids lengthy legal processes, and bypasses the usual 80- to 100-page lease for a curt version.

It appeals to tenants because it allows them to test the market before tying themselves down and committing for the long run. The owner makes money on the property while it remains on the market for a long-term lease. The tenant gets visibility in the prestigious New York market with very limited risk. The landlord benefits in averting an empty store front, and as a bonus many pop-ups come with celebrity back-up, such as Gwyneth Paltrow and Kanye West, which help endorse the properties.

As per The Real Deal, pop-ups were traditionally seen as short term improvising that landlords and brokers used while waiting for permanent tenants. But some experts say these transactions will become increasingly sought after, as building owners struggle to minimize vacancies in the ongoing battle between brick-and-mortar stores and e-commerce. Currently, less than 15 percent of all retail sales in the U.S. are made online. By 2025, however, it is estimated that one out of every four purchases will be made online, as per a November 2016 report from FTI Consulting. These odds create a daunting reality in which retail stores are increasingly guarded when it comes to signing long term leases.

“Things change so drastically these days, it’s harder for retailers to consider a long-term deal,” says Kelly Gedinsky, Winick Realty Group broker. “Unlike five years ago, landlords are more open to pop-ups because so many [potential tenants] are coming to them and their brokers saying, ‘Look, we want to test this market for a year. If it works, we’d be happy to look into a longer-term deal.’”

Manhattan Borough President Gale Brewer’s office counted 200 vacant store fronts along Broadway this June. She places the blame on high rents, and e-commerce augmented by Manhattan’s pricey commercial rent tax. Between 2010 and 2014, average asking rents in 16 Manhattan strips, as tracked by CBRE, jumped 89.1 percent. It is “an unsustainable situation for some tenants as rents surpassed what their sales growth could support,” says the brokerage firm. Manhattan vacancies have been on the rise since, from a low of 2.5 percent in 2012, to 3.7 percent in 2016, and now 4.2 percent in the first quarter of 2017, according to Okada & Company.

A San Francisco-based website entitled Storefront, lists vacant storefronts allowing potential pop-ups to browse through available spots on a map, by price and square footage, similar to Airbnb or StreetEasy. The site charges a 20 percent fee, and a company rep walks a renter through the process. “We don’t see ourselves as a competitor to the traditional retail market … We just see that space is space,” said Joy Fan, Storefront’s national director. “Vacancies are unfortunate, but the shift needs to happen, so we’re really architecting the next layer of retail for the future.”

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The Jewish Voice-082317-Manhattan Pop-Up Shops Might Be Here to Stay

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.

The UES is facing a retail vacancy epidemic

In the heart of retail’s “Gold Coast” on the Upper East Side, the space that once housed trendy dress shop BCBGMAXAZRIA collects dust. The retailer called the five-story townhouse home at 770 Madison Avenue for over a decade, but shut the doors in February amid a larger corporate bankruptcy. The landlord has yet to find a replacement.

Over on Lexington Avenue, there are four retail vacancies near the corner of East 85th Street. And on the 13-block stretch of 3rd Avenue between East 70th and 83rd streets, there are only two blocks that aren’t marred by at least one empty storefront.

Manhattan’s streets are awash with empty storefronts after retail asking rents climbed to untenable levels and tenants started to push back. But the sheer number of vacancies on the Upper East Side is alarming: The Real Deal counted 82 empty storefronts along Madison, Lexington, Third and Second avenues between 57th and 96th streets during an afternoon in late July.

“That is a lot, and there’s probably 20 percent more that’s on the market,” in terms of space that’s currently occupied and available for lease, said Greg Tannor, a retail specialist who left Cushman & Wakefield in April to join Lee & Associates as a principal.

Third Avenue between East 57th and 79th streets saw the biggest increase in its availability rate during the second quarter among the 11 retail corridors tracked by Cushman. The availability rate rose 7 percent year-over year to 16.6 percent, according to Cushman’s most recent retail report.

And Madison Avenue between East 57th and 72nd streets saw the second-highest increase: a 5.3 percent jump to an availability rate of 23.5 percent, which is the third highest among the corridors the brokerage tracks.

The forces at play are different among Upper East Side’s different retail corridors. Madison Avenue, for example, is one of the city’s premiere luxury shopping strips with asking rents to prove it (an average of $1,431 per square foot).

Over on Third Avenue, asking rents average $283 per square foot, and experts in the area said the avenue’s shops are geared more toward chain apparel stores and national brands due to the kinds of large retail spaces that line the avenue. The struggles faced by national retailers, therefore, are having more of an impact on storefronts on Third Avenue than they would on a tony strip like Madison, brokers said.

“Third [Avenue], I think, is the first market to really struggle with some of the difficulties we’re seeing with national soft goods retailers,” Cushman’s Steven Soutendijk said. “They’re the ones that are struggling in malls across the country.”

In recent months, for example, stores went empty at 1030 Third Avenue when American Apparel closed up one of its last shops following a bankruptcy auction earlier this year. And Reebok left behind and empty storefront at 1132 Third Avenue after shutting down its FitHub location.

By comparison, Second Avenue is considered more neighborhood-focused, geared toward service retail like dry cleaners and restaurants located in smaller stores where top-line rents are more manageable.

Beyond the general woes facing retail, the avenue was long impacted by construction along the Second Avenue subway line, which finally opened earlier this year.

“Certainly, now that the construction has completed, those vacancies should naturally have to fill in,” Winick Realty Group’s Kelly Gedinsky said. “They’re not obstructed by bridges over the sidewalk space anymore.”

For more, download the full article in PDF

THE REAL DEAL_080417_The UES is facing a retail vacancy epidemic

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.

Are pop-up shops becoming a permanent fixture?

Pop-up shops are getting access to some of the best storefronts in New York City under so-called licensing deals, with a lot less hassle than a regular retailer faces.

Stable long-term retail tenants are hard to come by in Manhattan as the market continues to soften, and the real estate industry is adapting to short-term tenancies as much as long-term ones. Additionally, many pop-ups come with celebrity backing, from Gwyneth Paltrow to Kanye West, which can help landlords promote their properties.

A pop-up tenancy, which by most industry definitions lasts from one day to one year, can be extremely attractive to both parties — a landlord monetizes the space and remains open for a long-term lease, and the tenant gets visibility in the high-profile New York market with relatively little long-term risk.

As The Real Deal reported in December, pop-ups are typically seen as a stopgap measure that landlords and brokers can use while they wait to secure more permanent tenants. But some industry players say they will become increasingly commonplace as building owners look for new ways to minimize losses and retain tenancies in the ongoing shift from brick-and-mortar retail to e-commerce.

Online sales currently make up less than 15 percent of all retail sales in the U.S., but by 2025 roughly one in every four purchases will be made online, according to a November 2016 report from the global advisory firm FTI Consulting. Retailers themselves have become increasingly wary about signing long-term deals in such a rapidly accelerating environment, Winick Realty Group broker Kelly Gedinsky said.

“Things change so drastically these days, it’s harder for retailers to consider a long-term deal,” she noted. “Unlike five years ago, landlords are more open to pop-ups because so many [potential tenants] are coming to them and their brokers saying, ‘Look, we want to test this market for a year. If it works, we’d be happy to look into a longer-term deal.’”

For more, download the full article in PDF

THE REAL DEAL_080217_Are pop-up shops becoming a permanent fixture

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.

Real Estate Weekly

Brokers get some face time during ICSC RECon 2017

icsc 2017If the REBNY banquet is the industry’s Oscars, then ISCC RECon is its Coachella.

In the midst of a national retail slump, brokers partied their troubles away under a scorching sun in Las Vegas OVER the past few days. And if they were worried, they sure weren’t showing it.

One thing brokers are on the same page about is urging retailers to change their game.

“I think we’re in a time of fluctuation, and retailers might want to be re-strategizing their look into  how they approach retail in general and how their business needs to change because of all the online pacing,” said Kelly Gedinsky of Winick.

For brokers, Gedinsky said in today’s retail environment, it’s all about hitting the pavement — canvassing, cold calling, and back-to-basics hard work.

“I would say as a firm, part of our culture is to really pound the pavement and I think that has helped us in this environment because we don’t rely on just leasing our stuff off signs, or pulling in the leads based on signs,” said Gedinsky.

“So we do a lot of cold calling, street canvassing and I think that benefits our activity. Especially these days, you can’t rely on just emailing. Now emailing has become so commonplace it’s too easy to press delete. You’ve got to get on the phone and get face-to-face.”

For more, download the full article in PDF

rew_052317_Brokers get some face time during ICSC RECon 2017

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.

Real Estate Weekly

Inside RECon2017

danielle winick and kelly gedinskyFresh off closing a $1.67 billion construction loan for the American Dream mega-mall in Secaucus, Triple Five’s Paul Ghermezian was upbeat about the years-long venture during the first full day of RECon 2017 at Las Vegas Convention Center today. Winick Realty’s Danielle Winick and Kelly Gedinsky were all business at their kiosk while Ikea’s Russian team was confident recent political turbulence won’t stop the company’s advance.

For more, download the full article in PDF

rew_052217_Inside RECon2017

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.

 

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Landlords look to pull Fifth Ave. north of GM Plaza

59th-night-snapchat-cropHarry Macklowe famously transformed Fifth Avenue retail when he brought the Apple cube to the base of the General Motors Building in 2006. Now, 10 years later, the GM Building’s neighbors have a similar idea, but this time they’re thinking in two dimensions.

Property owners on East 59th Street are repositioning retail spaces looking out onto the GM Plaza in the hopes of creating a shopping “square” that piggybacks on the recent Cartier and Under Armour deals, anchoring the north end of the plaza the way that Bergdorf Goodman does on the southern end.

And early signs indicate the changes will pay off.

Techies have lined up outside Snapchat’s pop-up shop at 5 East 59th Street ever since it opened in late November in the building that once served as home to the Playboy Club, which owners GreenOak Real Estate and Capstone Equities overhauled earlier this year.

The partners quickly bought out the Italian restaurant Bottega del Vino and several office tenants above. They’re marketing the property now as a 40,000-square-foot combination space, looking for a single tenant that will sell trendy wares off the ground floor and use the ones above for offices or showroom space once Snapchat’s short-term lease is up.

One of the major selling points is the building’s 5,000-square-foot façade that can be used as an eye-catching sign seen across the plaza.

“I think part of the appeal is that it’s the only unencumbered building you can occupy in this neighborhood and use the façade as frontage,” said Kelly Gedinsky of Winick Realty, which is marketing the space. “It’s visible as far as Park Avenue in the 50s and 7th Avenue.”

For more, download the full article in PDF

the-real-deal_122116_landlords-look-to-pull-fifth-ave-north-of-gm-plaza

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.