New York’s retail real estate industry suffered heavily during the pandemic. This was a natural consequence for an industry that relies heavily on people coming out of their homes to shop. The prolonged lockdowns fluctuated prices, with landlords losing their tenants as businesses were unable to stay afloat with no customers. Consequently, the past two years have proven to be particularly challenging. After being halfway through 2022, the dire situation is starting to look up. The industry has bounced back surprisingly well despite the negative forecasts by real estate pundits earlier. The industry started to gain momentum in June 2021, and it has continued its upward rise.
This article provides insights by Robert K. Futterman, the President of Futterman Realty, who discusses the latest trends in New York’s retail real estate market. Futterman has been in the business for over 39 years and has made a space for himself. He is respected for his insight and know-how in the retail real estate market. During his lengthy career, he has facilitated some of the biggest deals in New York. He is a five-time winner of REBNY’s Deal of the Year Award. Futterman’s success is owed to successfully representing both landlords and tenants. He has also worked with New York’s biggest retail developers to lease out their shopping spaces. He has singlehandedly revitalized some of New York’s most important districts including the Meatpacking District, SoHo, Columbus Circle, Times Square, and the Union Square South.
One of the difficulties in predicting the trends in New York’s retail real estate market is confidentiality. Landlords and tenants tend to keep the details of their deals a closely guarded secret. This lack of transparency makes it difficult to understand the market. In such a situation, the market’s insiders, like Futterman, play a crucial role as their years in the industry have entrusted them with accurate foresight. Robert Futterman has a well-connected network, which means he knows about opportunities before the public catches wind of them. He has developed a reputation for market intelligence.
The retail real estate market is set to recover with increasing strength. There is a surge in demand, with increasing available debt. The industry has $152.2 billion available for investment, which will be invested in various opportunities in the coming months. All these signs point to a strong year for retail real estate.
“The best-kept secrets in New York are Brooklyn, Queens, Staten Island, and the Bronx. The sales volume there is not to be believed. It’s constantly growing,” says Futterman. These districts have made their presence felt in the last decade and continue to be a viable locations for investment. In the post-pandemic recovery, Harlem is coming out to be a strong contender, as it is the closest to reaching its pre-pandemic levels. Severely lagging is SoHo, which is 60% short of its pre-pandemic level.
The key New York areas like Third Avenue, Sixth Avenue, and Midtown, are probably not the best spot to be right now as they have been saturated by major players. However, in the coming years, these areas too represent an opportunity for creative and new companies to make a space for themselves. Areas like Times Square, Madison Avenue, and Fifth Avenue continue to attract deals as they continue to occupy the spot for the priciest retail rents. Notable developments include Swarovski’s upcoming flagship store at 711 Fifth Avenue and Planet Hollywood’s return to Times Square.
A bulk of retailers continue to move to the Meatpacking District. Futterman had played a pivotal role in its revitalization and his efforts continue to bear fruit for all the retailers in that district. The retail revival has continued with force even after the pandemic. Currently, the district is home to a mix of brands, that range from luxury brands to tech companies, including Dior, Hermès, Tesla, and Google. Futterman believes that the district’s popularity is owed to it attracting scores of international tourists and locals. When the pandemic hit, the once vibrant locale became a dreary site with shuttered storefronts. The Meatpacking Businesses Improvement District quickly sprang into action and commissioned murals to bring life to the shuttered shops. The district was also the site for Digital Art Month which attracted more crowds. Since then, the district has attracted more than 25 new businesses.
The pandemic forced people to work from home. In the post-pandemic world, hybrid work continues to be a reality. This does not, however, mean that physical offices are out of fashion. The demand for physical office spaces has remained and landlords with office spaces will slowly see their places fill up with tenants. One of the changes that have happened though is that companies are moving their offices to more cost-effective locations and there is a tendency to avoid high-density areas. Businesses continue to pursue quality spaces, just like in the pre-pandemic times, as they are still seeking accessible spaces that offer a host of amenities and flexibility.
Some of the biggest deals signed this year include the 8,100 square-foot lease by Canada Goose at 689 Fifth Avenue and a 5,300 square-foot lease by Versace at 747 Madison Avenue. Additionally, at 44 Union Square, Petco acquired a 30,000 square-foot lease. Broadway Avenue saw Din Tai Fung acquire a 26,400 square-foot lease. Another notable mention is a 26,000 square-foot lease by Food 52 at 902 Broadway Avenue.