The address most sought after by major brands in New York has lost (a little) of its luster. Rents have fallen by 10% in one year and vacancies remain high in the face of the growing success of online commerce.
It is regularly at the top of the list of the most expensive shopping streets in the world. If the 5e Avenue at New York remains an address of undeniable prestige, tenants no longer seem ready to pay the stratospheric rents of recent years. On average, rents for a ground floor of the commercial artery fell by 11% compared to the last peak reached in early 2017, according to statistics from the Cushman & Wakefield brand cited by the Wall Street Journal. They still remain at the comfortable level of 26,700 euros per year per square meter ($ 2,779 per square foot).
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For a good number of professionals, even the essential addresses must now have more rational rents. With the growing success of e-commerce, many brands are reducing the size or surface of their stores. Ralph Lauren chose in 2017 to close its flagship on 5th Avenue, followed by Gap and Tommy Hilfiger more recently. Result: the availability rate of these businesses (combining vacancies and expired leases) remains particularly high. After peaking at 27.5% at the end of last year, it barely fell to 25% in the first quarter of 2019.
Bedbugs at the Apple store
Henceforth, negotiations between owners and tenants are becoming increasingly tight. The best years therefore seem to be behind them and real estate professionals generally advise them to reduce their ambitions a little. As often, it is better to rent out your property quickly rather than wait for very hypothetical better days. Proof that fate persists on 5th Avenue, it is one of its emblematic brands, Apple, which has recently suffered some setbacks. While its iconic glass cube is currently undergoing renovation, the ephemeral premises of the apple brand have been victims of an infestation of Bedbugs. Despite alerts from employees, the public continued to be welcomed on site. With the case going public in mid-April, the brand finally stressed that the incident was “isolated” and had been resolved.
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