The most high-end shopping areas in the United States are seeing tenants depart, and rents are dropping at a time when COVID-19 has halted tourism for the time being, left millions without jobs, and has had shoppers stuck in their residences, CNBC reported.
Average asking rents in 16 significant retail areas in Manhattan fell for the eleventh straight quarter in Q2 concluding June 30, arriving at $688 per square foot per a CBRE report. The last time prices fell under $700 was 2011.
Rents in SoHo’s Prince Street area notched the largest drops, as they fell from $699 per square foot to $437 per square foot. Additionally, the Upper Madison Avenue area that is home to many high-end merchants experienced a fall in rents of 15.3 percent from a year prior.
It is probable that the pressures from the pandemic will affect shopping areas like Rodeo Drive in Los Angeles, the Las Vegas Strip and Chicago’s “Magnificent Mile” for a sustained period of time per the report.
“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,” Naveen Jaggi, who serves as the JLL’s Retail Advisory team president of commercial real estate services, said per the report. “We will see an extension of what happened in 2008 and 2009, which left American consumers shifting toward value more aggressively.”
Transformations were already underway prior to the pandemic in certain cases. In 2018, discount merchant Five Below brought a retail location to Fifth Avenue.
And, in June, Valentino SpA, a high-end fashion label, sought to have the courts conclude its lease for a top tourist location in New York City. The spot was reported to be a well sought-after portion of Fifth Avenue that extends from East 49th Street to Central Park and has some of the most expensive rents worldwide.