Much has been written lately about the dire situation among retailers in Manhattan, where each week brings news of more store closures. But COVID-19 is an international pandemic that is having implications in every corner of the globe.
Recently, FN sat in on a Zoom call organized by Joe Aquino, president of the JAACRES real estate services firm, where brokers from across the U.S. and Europe shared updates on the state of the retail markets in their respective cities.
Below are their reports, in their own words.
New York City
Head of retail at JAACRES (and founder of the David Z chain)
“I spoke to one of the oldest retailers in New York City — my friend Danny Wasserman at Tip Top Shoes. And I said, Danny, ‘Can you make money in the shoe business today?’ He told me, ‘No.’ And this is a shoe store where all the employees are union — there’s no such thing as union employees anymore. Where is the commitment [from brands]? You know, stores have to beg for shoes. It’s like pulling teeth. The brands just don’t want to give you the shoes. They don’t need you anymore — unless you have, you know, hundreds of thousands of followers on social media. Then you bring something to the table. [Or you’re] one of those sneaker boutiques with hundreds of thousands of followers. So they keep the program going [because they have] a cool factor. But other than that, I mean, Nordstrom will stay in business. Macy’s will stay in business. Bloomingdale’s remains to be seen. I don’t know. It’s impossible.”
Owner of Lewis Real Estate Services
“It was a ghost town when I went into the office recently in downtown. Fortunately, the City Center project, which is a luxury high-end project that I had the good fortune to help lease, no one has closed there. But I wouldn’t be surprised at that only because it’s catering to the higher-end market in D.C. — your Hermes and Dior and all those kind of folks. They’re not dealing with the typical pedestrian buyer. But I was surprised that stores like Nordstrom Rack, which had only been open maybe a year in downtown, has closed. Johnston Murphy, who’s been there for a very long time, they’ve closed. Men’s Wearhouse was on the main street level in my building, and they’re gone. It’s a little unsettling to see all of these closings. I think we always tend to reinvent ourselves after some big recession. We did that after the 2008 recession. This is different. And I’m more concerned because it happened so suddenly and companies are realizing that maybe I don’t have to have all of my employees downtown every day. That means a lot of the office workers will not be coming downtown, will not be buying a lot of office clothing to wear. All of that’s going to trickle down and impact all of this.”
Senior commercial real estate adviser at Compass
“Everything has been sort of defying [the norms]. I’m dealing right now with Lexus corporate to do a pop-up location — we’re debating between Wynwood and Lincoln. First, nobody has foot traffic at all, it’s next to nonexistent. The retailers are really hurting. But nonetheless, their marketing is doing this nationwide. Cars are still selling, I guess, is the message there. I’m also working with an international name in the music business, and we started looking for food and beverage locations pre-COVID. I thought they would’ve been the first ones to pull the plug. But we’re going to sign the lease within 30 days on one or two locations in Miami. Go figure. This space that they’ll probably take on Lincoln Road used to be Marciano, which closed two weeks ago. When that lease was signed five years ago, they were paying about $200 a square foot. Rents peaked already on Lincoln Road, so they were coming down pre-COVID. There are so many REITs and corporate owners of these buildings, and they’re not going to come off their bottom line, but this is a mom-and-pop landlord, so we’re going to strike a deal.”
Real estate attorney and agent with Sperry Commercial
“The residential market here is hot, hot, hot. The only way that I can explain it is that people are moving from places like California and New York and any other metropolitan area, to move out here into the suburbs of Las Vegas. The commercial market has been flat. The stores have been open. Restaurants, like anywhere else, have been problematic. There have been some permanent closings. They’re trying to do a lot of takeout. As we enter into September and October and November, when all of the eviction moratoriums start ending here, unless they extend them, we are going to see a lot more legal action, as in California. A lot of the retailers negotiated on their own these three-month deferrals, in anticipation that everything would be finished in three months. But that’s not going to happen. So from a legal side, I’m starting to get more requests … to help people negotiate their deferrals. It’s becoming a little bit more of a problem. There’s more pressure on landlords, tenants and, soon to be, lenders. The market is OK from what I understand, but I don’t anticipate that it will be from September through the end of the year or longer.”
Real estate analyst at Quarters
“Kaufhaus des Westens [KaDeWe] is closing their location — that’s the equivalent of Macy’s closing their 34th Street location. And they’re going to the South; they’re going to Neukolln, which is basically like closing your 34th Street location and trying to get a new development in Williamsburg in 2001 or 2002. It’s not a proven market, and there’s no money to support this infrastructure. So that’s the biggest shock that’s happening right now on the retail side, because that’s a six, seven-story building. It’s somewhere in the order of 200,000 or 300,000 square feet. And they’re vacating the market right now. My belief is that it’s driven by tourism and the fact that we just don’t have anybody that’s coming in. The Americans can’t come. So we lost the international shopping market for vacationers, and the Berliners can’t afford it. [There’s more travel in Europe] than the Germans would like — we’re starting to spike again. But pretty much all our borders are open. The people are coming back, but the shops aren’t full. It’s a different kind of tourist. The further you travel, the more you’re willing to spend. If you’re coming from Munich or Cologne, it’s just a weekend trip, and those [higher] price points aren’t going to be met with the current travelers.”
Emma Rossi Bernardi
Director and chairman of Global Luxury/ERB Real Estate
“After months of lockdown, now, finally, we’re working like we used to work. But this situation is really bad. I think it will become even worse — the economic situation in the country — because I’m noticing many things. Everybody that has their retail spaces, they are all negotiating the prices. The prices have come down a lot. For example, there’s this famous bar in the center of Rome, which is called Ciampini, in Piazza San Lorenzo in Lucina — which is like Madison Avenue [in New York]. They used to pay 38,000 euro in rent. Now they’re paying 13,000, which is incredible. It’s about one-third of the price. Some stores are closing because the owners don’t want to put down the price of the rent. Trussardi is leaving their shop in Via Frettina because the owner didn’t want to go down on the price. So they said, no, we’re not going to pay, like, 30,000 euro a month in a moment where the tourists are much less and we’re not selling as we used to before. The situation with the tourists in Rome has become better. I always walk in the evening when I take around my dog and I always go to Fontana di Trevi, which I call the ‘Observatory of the Tourism of Rome.’ And I must say, it’s not as full as it used to be, but they are at least half as many people [as before the lockdown].”