Despite many, many denials from the Bush Administration over the course of last year, the recession has been upon us for quite sometime. The jolt from the stock market starting in September was only a part of what has been going on. Americans had been feeling the pinch and the pain for a long time now and it showed in retail sales this past holiday season. Due to that drop in sales, many stores will be going out of business and even in Manhattan, the evidence will be all around us as we walk through the streets.
From The NY Times:
“The national retail scene is a mess, and it is going to impact us,” said Gene P. Spiegelman, an executive director in Cushman & Wakefield’s retail services group. He predicted that demand for space would soften throughout the city’s many shopping districts this year, and in fact, landlords in some of the trendiest areas have already begun lowering asking rents.
Industry experts say they also expect the pace of store closings to pick up in February and March, after retailers have tallied the cost of exchanging unwanted holiday gifts for cash.[...]Suddenly, retail brokers say, this is shaping up to be one of the best tenants’ markets in years.
“Tenants definitely believe that the market has flipped in their favor,” said Michael J. Hofmann, a senior managing director at Colliers ABR, who represents both tenants and landlords. He said the tenants he was working with were negotiating more aggressively with landlords. Their offers, he said, “are at levels that we never would have proposed six months ago.”
Landlords have gradually begun lowering asking rents, even in some of the city’s most desirable shopping districts. For example, average asking rents fell by 3 percent last year on Madison Avenue, ending the year at $1,057 a square foot annually. And asking rents fell by 5 percent in SoHo, to $263 a square foot, according to Cushman & Wakefield.
Even in the upside of this news, there is still misery and sadness. Even with those lower rents, finding the credit for business to help move into new retail space is practically non-existent. It is definitely a buyers'/renters' market, but having the cash or capital to make the deals is tough considering the economic environment we are in at the moment.
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