LATEST NEWS

Times Square Faces An Identity Crisis As Rents Fall And Retailers Bail

In its quest to attract visitors, Times Square is reverting to a sanitized version of its former self.

By Jeff Vasishta December 20, 2016
Photo courtesy of Tooykrub / Shutterstock.com

Can you offer an experience? That’s what landlords in Times Square want to know if you wish to work there. It may seem like flashback to the job requirements during the seedier days of the renowned retail and entertainment junction in Manhattan. In a way, it is. Conventional shopping is out, taken over by Amazon. Businesses now have to offer something that require customers to show up in person for a once in a lifetime experience. Or at least, once in a lunchtime.

Taking a leaf out of their Broadway brethren’s playbook, businesses new to the area are offering things that can’t be shipped to your door.

“What matters is entertainment and food,” Laurent Morali, president of Kushner, told the Wall Street Journal. In 2015, Kushner bought the retail condo covering 51/2 floors at a former New York Times building on West 43rd Street. It recently signed leases with tenants to bring an 11,970-square-foot food hall curated by chef Todd English—a 60,000-square-foot interactive exhibit from National Geographic called ENCOUNTER: Ocean Odyssey and a 49,000-square-foot miniature world called Gulliver’s Gate. “That was our focus from the second we toured the property to the second we finished leasing it up.”

RelatedTop Five Retail Spaces To Rent In Washington Heights For Under $6,000

The threat from Amazon can’t be overstated. There’s been a drop in rents this year and retailers have balked at the exorbitant cost of doing business at the “Crossroads of the World”. Ironically, it was the escalating rents last year that caused two of the most “experiential” retain outlets “Toys R Us” and FAO Shwartz (which owns T.A.U.) to leave in 2015.

Shwartz famously had six-foot stuffed giraffes and a danceable piano. Toys R Us had a 60-foot-tall indoor Ferris wheel with themed cars, a 20-foot-tall robotic T. Rex that swiveled and roared at shoppers, and a 4,000-square-foot Barbie dollhouse. They were the definition of a retail experience. So what happened?

RelatedAmazon Go Store Changes The Retail Shopping Game By Doing Away With Checkout Lines

“The real problem is the margin on the product,” Lee Peterson, executive vice president of brand, strategy and design at WD Partners told Forbes after the shuttering. “Apple doesn’t seem to have an issue with high rent. … If Toys ‘R’ Us would spend more time on proprietary product and innovation in general, they’d have less trouble paying rent in any of their locations. It’s just another sign of the death of the warehouse concept. Or, better put, the migration of the warehouse concept to clicks vs. bricks.”

“Both stores were probably guilty of keeping a pre-Amazon strategy for far too long,” said Zel Bianco, president and CEO of Interactive Edge. “Incorporating mobile shopping and encouraging an omnichannel experience could have gone a long way.”

Now landlords have been given a stark wake-up call. According to Cushman & Wakefield, asking rents in the Times Square sub-market fell 18 percent to $2,104 a square foot in the third quarter, compared with the previous year’s high of $2,500—the steepest drop in Manhattan

It’s not just Times Square that’s feeling the online pinch. Throughout the city, tasking rents have been tumbling like boulders in a earthquake—down 11.5 percent on Madison Avenue and 11 percent on Fifth Avenue according to brokers Cushman & Wakefield. For New York businesses to survive, they can’t simply rely on tourists, turning Manhattan into Vegas with down jackets. Office workers and residents can provide a captive audience.

“You have a booming residential market west of Eighth Avenue and millions of square feet in Times Square that wasn’t here 10, 9 years ago, but only a handful of retailers geared toward the local-residential and local-worker market,” said Tim Tompkins, president of the Times Square Alliance.

Maybe Times Square has to revert to a PG version of it’s former self—a place to go for good time.

 

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

  • AGORAFY
    Avocado toasts are the reason why millennials can’t afford a home, says one Australian real estate developer. #AvocadoToast #Millennials https://goo.gl/TBCPnv
  • AGORAFY
    Five years on since Superstorm Sandy, Queens’ coastal peninsula is in the midst of a development boom. #Development #Rockaways https://goo.gl/BRKRrD
  • AGORAFY
    It turns out, renters can’t get enough of good ol’ no-doorman-no-frills apartments. Too bad developers aren’t building any. #Doorman #LuxuryRentals https://goo.gl/pdnbo6
The Housing Market In Shenzhen, The Silicon Valley of China, Slows In 2017
The city of Shenzhen has been on the real estate radar for quite some time. It is known as the Silicon Valley of China. Many…
Developers Jump Aboard The Trend To Revamp Transit Hubs And Remake Cities
Never has the often used marketing term, “close to transportation” been more important when attracting home buyers. These days it’s not just homes that are…
Millennials Are Fueling The Current Sizzling Real Estate Market
Ever wondered why the hosts of home improvement shows seem to be getting progressively younger, along with the fresh-faced couples getting their new properties made…
The Best Cities For Recent Grads To Rent – Without Blowing Their Entire Paycheck
What’s next post graduation? For most, the logical answer is to find a job. After the excitement of finishing your studies and the big celebration,…
Luxury Knows No Limit In Malaysia As A Deluge Of New Developments Hit The Market
The amount of newly constructed high-end real estate in Malaysia is almost as abundant as the lush vegetation which covers the tropical landscape. Despite vacant…
Don’t Call It A Commune – Upscale Co-Living Is Attracting Major Development
What may have once been referred to as a commune is today termed a co-living space. The big news that it’s not hippies with hemp…
It’s Official—New York Is Now The Most Expensive City In The World To Build
As if you didn’t already know, it’s expensive to build in New York City. Not just expensive but now officially the most expensive place in…
An Ultimate Destination For The Most Comprehensive Real Estate Data, Agorafy Prepares To Launch Nationwide
In the coming days, Agorafy will be entering a new chapter. It is the beginning of a new growth cycle in real estate technology with…

TOP 10