BY MICHELE HERMAN | The dog and I took a midday stroll along Christopher St., a route we haven’t walked much since the Citibank branch where I used to do my banking closed last year. On the single block between Hudson and Bleecker, I counted eight empty storefronts.
I’ve lived in the Village long enough to have witnessed periodic cycles of extreme vacancy, so I wasn’t shocked exactly. No, what I felt was more a pervading anxiety about the impending collapse of the whole world order, a worry that in-person commerce is going the way of the local tinsmith while the populace placidly waits for the price of robots to come down on Amazon.
I thought maybe my imagination was getting ahead of me, leaping from a motley handful of shuttered sex shops to total upheaval of everything we think we know about cities and commerce. But then I turned the corner onto Bleecker and counted another bunch of empty stores.
I reasoned that randy Christopher St. might be a special case, but empty storefronts on a major fashionista destination like Bleecker surely point to something way out of whack with the economy. What I wanted to know was whether it’s the kind of out-of-whack thing that will right itself gradually and imperfectly, the way market economies sometimes do. Or is it the kind that will get its own chapter in history books — the Industrial Revolution, World War II, the End of Stores? This is assuming there will be history books and that we will all agree on what history is.
Clearly, I needed some help sorting this store situation out, so I called on two experts I know: the president of a retail chain who is also a real-estate developer because, as he told me, retail is basically screwed; and an expert on business cycles who has proved prescient many times, as when his firm warned in 2011 that the economic recovery was completely passing by less-educated white men. I also cold-called a broker whose phone number was posted in one of the vacant Christopher storefronts who, it turns out, is thinking hard about this very topic.
Though they look at the economy through different lenses, all three confirmed my fears about a rough road ahead for many forms of traditional retail. To put it bluntly: If the overvalued properties and onerous regulations don’t choke retail — both independent and chains — in the short term, the $15 minimum wage, online shopping and the new direct-to-consumer economy will kill it later unless businesses can figure out ways to adapt.
The first thing that’s out of whack at the moment is the discrepancy between the value of residential and commercial spaces, especially here in Manhattan. The broker I cold called, Harry Zikos of Nest Seekers International, grew up in Astoria in a family of brokers, landlords and builders. He confirmed my suspicion that Christopher St. landlords are basically greedy at the moment.
“They’re getting top dollar on their residential, but truth be told, the commercial space is not worth as much,” he said. “There’s a lot that goes into the dynamic of bricks-and-mortar retail.”
He thinks that landlords will eventually realize they can’t command anywhere near the roughly $128 per square foot they’re asking now for those skinny spaces.
Another reason for all the vacancies, he said, is the large number of sign-offs required from various city agencies, including Health, Buildings and, here in the Village, the Landmarks Preservation Commission.
“Not everyone wants a bar or a food tenant,” he added, “so that limits the possibilities. And there’s not that much foot traffic.”
David Weinman, president of the Fabco Shoes chain and a separate development company, echoed many of Zikos’s sentiments. He scoffed at the very idea of shopping on Christopher St. First of all, he said, everyone buys their sex toys online now.
“It’s not really a shopping street,” he added. “It has no raison d’être.”
Even streets that have long been known as shopping destinations are struggling.
“Have you walked down Canal St. lately?” he asked. “Half the street is vacant.”
Eighth St. and Sixth Ave., he added, are barely viable.
“Who’s there — N.Y.U. students?”
Then Weinman mentioned a half-dozen additional depressing factors affecting retail citywide. He placed a fair amount of blame on the city’s annual valuations, which rise every year as a matter of course, bringing up real-estate taxes. His big concern for both chains and small independent businesses is the impending rise in the minimum wage.
“It will have a devastating impact,” he said. “We’re facing imminent store closings because of it. Both supermarkets and small stores that depend on labor just can’t pay the labor and rent and can’t make money.”
He pointed to one of his tenants, a Dairy Queen on W. 14th St. Like all fast food, he said, “it’s a labor-heavy operation — what, with cleaning, stocking, cooking, servicing and night-shift employees pumping oil out of the tanks.”
Even McDonald’s, he added, is struggling to create a new kiosk-like model with smaller spaces and fewer employees.
Add to that, he said, a glut of mall building in the boroughs, where the land is still relatively cheap, which has arrived at the same time that people are spending less time in stores. He told me anecdotally that one prominent local chain counts the amount of foot traffic in front of each of its 80 stores in the city, and has seen an annual decline between 3 and 6 percent over the past seven years. Meanwhile, banks remain willing to lend, so developers keep building, further feeding the glut in the boroughs.
“If Macy’s is not doing well,” he said, referring to the chain’s closing of 68 stores last year, “no one is doing well.” He then rattled off a list of chains that are in trouble: “Forget about Sears and Kmart — they will disappear.”
So who’s thriving? Being a shoe guy, Weinman singled out the new Nike superstore on Broadway, and the Ugg’s stores, along with the Burton Snowboards store in Soho and Warby Parker eyeglasses.
Who stands a chance in the near future?
“Stores with something very special to offer or iconic stores like REI, Paragon, B&H,” he said, “big spaces, really well-run. Whole Foods and Trader Joe’s. Three Lives bookstore has a following.”
An expert on business cycles, who asked that his name not be used because his observations were anecdotal, concurred on rent and regulations as two of the three biggest culprits.
Storefront rents, he said, “have shot up to dizzying levels.”
As for regulations, he said, “The city has a huge number that keep growing. The de Blasio administration’s response was not to reduce regulations, but to start a new department tasked with helping businesses understand those regulations. That will, of course, ultimately lead to even higher taxes, which also squeeze business margins.”
All three experts weighed in on the obvious role new technologies are playing, both in the ease of online shopping and the direct-to-consumer paradigm.
“I can just tell Alexa to order stuff and ‘she’ will just do it, or play Bollywood songs or Mozart,” the business-cycles expert said.
Zikos said all those well-heeled tourists on Bleecker may be consuming, but they’re doing most of it on their smart phones.
“And there’s little need for small mom-and-pop shops like shoemakers, dry cleaners and haircutters,” he added, “now that mobile commerce is figuring out ways to provide these services directly to customers.”
I asked each individual what kinds of businesses can make it. The business-cycles expert pointed in two seemingly opposite directions.
“In areas frequented by tourists, high-end stores and flagship stores that serve as giant advertisements to build brand image will predominate,” he predicted. “In other areas, it seems, beyond banks and urgent-care centers, the stores that can make it include 24-hour chain drugstores and compact nail salons, for which revenue per square foot is sufficiently high.”
But he believes there is still a place for thoughtful, nimble, only-in-New York businesses, like the CW Pencil Enterprise on Forsyth St.
Some of the blame for store closings rests on retailers themselves. New York retail, said the business-cycles expert, has always been about the survival of the fittest.
“At some level, it’s about their own inability to cater to the demands of their customers,” he said. “In addition to the rents, regulations and technology, the demographics are changing in ways that make it imperative for stores to adapt if they want to survive.”
Zikos noted that property owners can get burned while trying to make a killing.
“If you’re greedy, you sit and wait and hope for a national retailer to come along,” he said. “But they need only so many locations.”
Weinman, who works with a lot of young immigrants, said that 20 years ago, newcomers were still opening delis and nail salons, but fewer people are willing to put in the 60-to-70-hour week required to be a success.
“The next generation is educated, and they’re definitely not going into retail,” he said.
Is there reason for optimism? Zikos sees a shifting relationship between landlord and tenant.
“Developers will look at retail tenants as business partners rather than people who write me a check,” he explained. “We live in a world of everyone being a start-up entrepreneur or an incubator, and we love the idea of equity in a new company. The tenant’s success will mean the landlord’s success. You can’t legislate your way in; it has to happen through grassroots practices. The culture will decide.”
Near our talk’s end, Weinman tossed out a rhetorical question: “When’s the last time you shopped in a shoe store?”
He assumed I buy shoes by ordering several pairs online and sending back the ones I don’t like. In fact, I told him, I just bought shoes at Harry’s. I even had the salesman bring out the Brannock Device, unchanged since the ’20s, to measure my feet, and sure enough, I’ve been wearing the wrong size for years. I let him sell me special spray to protect the suede of my new desert boots. It was an experience that required a little travel, a little weather, a little time, a little patience, but it was a satisfyingly human one. Just trying to do my bit for the future, or maybe the past.
