Retail rents plummet across New York City, as America's glitzy shopping districts turn into ghost towns

High-end handbag maker Valentino is suing to get out of its lease on Fifth Avenue in Manhattan, a vacated Barneys New York still sits empty on Madison Avenue just a block over, while bankrupted luxury department store chain Neiman Marcus is shutting its doors for good on Worth Avenue in Palm Beach.

As the coronavirus pandemic brings tourism to a temporary standstill, leaves consumers holed up at home and puts millions out of work, America's glitziest and most expensive retail districts are losing tenants, and rents are in a free fall. The pressures from the Covid-19 crisis will likely have a lasting impact on shopping streets such as Michigan Avenue — better-known as the "Magnificent Mile" — in Chicago, the Las Vegas Strip, and Rodeo Drive in Los Angeles, to name a few.

It is already beginning to play out with the changes taking place throughout the New York City retail scene, serving as a leading indicator of what's to come in other major metros, real estate analysts predict.

"In the U. S., certainly you will see that what was once perceived as a luxury block in any major city is no longer exclusively luxury," said Naveen Jaggi, the president of commercial real estate services firm JLL's Retail Advisory team. "We will see an extension of what happened in 2008 and 2009, which left American consumers shifting toward value more aggressively."

"More and more retail real estate space is going to be taken up by non-luxury," he said. "Take Fifth Avenue. You see a Vans, a Five Below and a Timberland. Those kinds of brands are the ones taking space. That's all you need to know about the direction of Fifth Avenue."

Some of these changes were already shaping up before the Covid-19 crisis. The discount re... (Read more)

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