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Clouds Gather Over New York Retail Scene

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There's been a flurry of stories in the past couple of days painting a grim picture of New York City's retail scene. Yesterday, the New York Times wrote of local landlords offering retail tenants deep discounts to keep them in spaces.

“Everyone is afraid of losing revenue stream,” said Faith Hope Consolo, the chairwoman of retail leasing and sales for Prudential Douglas Elliman, who is representing retailers and landlords on six lease renewals. At least two of the landlords have been fearful enough about losing tenants that they agreed to rent cuts of more than 10 percent.

Ms. Consolo added that “2009 is going to be the year leases were negotiated more than ever before.”

Jeff Gural, who owns 40 Manhattan buildings, said that he has been reworking lease agreements with struggling shop owners to help them stay in business. He typically asks for their financial statements as evidence, then tries to cut deals that can include deferring rent payments.

“If someone can show us that they're in trouble and they've been a good tenant over the years, we try to help,” he said.

Last night, Bloomberg then broke the news that Fortunoff Fine Jewelry & Silverware LLC had shuttered its Manhattan flagship. That could mean the entire chain, which operates 20 remaining stores, including four carrying a full collection of jewelry, gifts and home goods, and 14 selling outdoor furniture is facing liquidation.

Lastly, today the New York Times talks of the troubles suddenly hitting some of the luxury retail districts in the city.

New York's most elegant shopping corridor, the Gold Coast of Madison Avenue, from 57th Street to 72nd Street, is pockmarked with vacancies as retailers flee sky-high rents. More than two dozen retail spaces are on the market and are either empty now or about to be. Windows that once showcased hand-tooled leather suitcases are now plastered with for-rent signs.

“This is as bad as I've ever seen it,” said Alan Victor, a broker who has worked the street for more than four decades and who is an executive vice president of the Lansco Corporation.

Another broker, Gene P. Spiegelman, an executive director at Cushman & Wakefield, said that 13 percent of the retail spaces on Madison Avenue were available either as a direct lease or a sublet. Not included are those with tenants who would move if the right offer turned up.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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