Manhattan’s famed Fifth Avenue suffered some of the largest drops in retail asking rents as the coronavirus pandemic slammed New York City.
According to commercial real estate services firm Cushman & Wakefield, the lower part of Fifth Avenue, which starts at 42nd Street and ends at 49th Street, saw rents decline roughly 30% in the second quarter compared with the year-ago period. Among the retailers in the area are fast-fashion giants H&M, Zara and Urban Outfitters; sneaker brands Adidas, Skechers, Asics and Vans; the NBA Store; and outdoor companies The North Face and Timberland.
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Meanwhile, rents fell 6.6% on the upper stretch of Fifth Avenue, which houses a number of the world’s high-end brands. Luxury department stores Saks Fifth Avenue and Bergdorf Goodman; fashion houses Gucci, Prada and Versace; designers Salvatore Ferragamo and Dolce & Gabbana; as well as sportswear behemoth Nike all line the upper thoroughfare, which spans from 49th Street to 60th Street.
The trendy Soho neighborhood and tourist-frequented Madison Avenue also recorded decreases of more than 14%, while the rents in the posh Meatpacking District were unchanged. The only locale where retail asking rents climbed was in Lower Manhattan: The area — where the city’s financial powerhouses and cultural landmarks are concentrated — noted an 8.7% gain from the prior year.
Even before the COVID-19 health crisis, the rise of e-commerce and surge in commercial real estate rents have put increasing pressure on brick-and-mortar retailers. Many were further hampered when state and local officials imposed stay-at-home orders and restrictions on nonessential businesses, forcing the widespread closures of stores across the country.
Since the outbreak took hold in the United States, a slew of major retailers — including J.Crew, Neiman Marcus and JCPenney — went bankrupt, while others have drawn down millions or applied for government stimulus funds to keep their businesses afloat. Separately, a growing list of landlords have resorted to legal action against tenants who have skipped out on their lease obligations to cut costs and maintain liquidity.
Experts have also forecasted that vacancies in popular shopping destinations could mount post-pandemic. “I think [this situation] will continue for a while, and all retail stores will be at risk, including malls,” HRC Retail Advisory president Farla Efros told FN in March. “The ones that are on the bubble will suffer the most.”