NYC's Retail Explosion

RDM’s Blake Grosch and Joe Leach were in attendance for Bisnow’s 4th Annual Retail Real Estate Summit where industry leaders discussed the resurgence of the retail sector, the state of investment activity and measures retailers are taking to combat online shopping.

The dual-panel event featured professionals from Crown Acquisitions, Brookfield Office Properties, Cushman & Wakefield, Westfield World Trade Center, CBRE, The Howard Hughes Corp. and AKF Group with keynotes from Lacoste North America and Arent Fox.

In his keynote, Francis Pierrel, President & CEO of Lacoste North America noted:

• Retailers need to be where people want to spend money.
• The biggest opportunity is to locate where people find leisure - think Eataly
• NYC’s 5th Ave lacks a reason to attract people beyond shopping.
• Building owners need to understand DNA of a brand when designing stores - Lacoste is about colors.
• Brands need to maintain a long term vision to maintain profit.
• When it comes to tech, 40% of shoppers use their phone for shopping purposes.
• This is why shoppers need access to WiFi.
• Wifi also allows retailers the ability to track movement of people in the store.

The event featured two speaking panels. This is what we heard:

First panel
The first panel discussed ways to attract customers into NYC stores.
• Experiential retail is a great way to attract people to stores in NYC.
• Scott Galin (Handler RE) sees Hudson Yards & Downtown as the two new “hot areas”.
• Spiegelman (Cushman) sees West 57 as the most undervalued retail strip in Manhattan and is poised for dramatic change.
• Ecommerce represents 8% of all retail sales, brick and mortar is still most effective for selling.
• Alexander Hill (Eastern Consolidated) sees "spying" improving the customer experience.
• Edward Hogan (Brookfield) believes human experience is the key to success in retail.

Second Panel
The second panel discussed the state of the retail market and predictions for the near future.
• Kathryn Welch (Forest City Ratner) sees retail coming back across the country but notes it never left NYC.
• Christopher Curry (Howard Hughes) is excited about the transformation of South Street Seaport.
• Adam Ifshin (DLC Management) sees NYC playing “catch up” in order to have retail options comparable to other world class cities. Notes there's very little development in the US right now.
• Curry - it's hard to find retail with unique experiences in NYC. Tourists like to go where New Yorkers go.
• Welch has not seen foreign currency utilized in their deals.
• When Basel 3 is implemented there's no question the cost of capital will go up.
• Isaac Chera (Crown Acquisitions) has seen retail become “very mature” coming out of the recession. Prior to this there were players that didn't necessarily know what they were doing.  Also sees retail growing in every sector in NYC -- luxury, specialty, dollar store, etc.
• Steven Copeland (AKF Group) notes that NYC has a competitive advantage when it comes to infrastructure, not always the case in other cities.
• Welch sees rents increasing in all the boroughs Forest City Ratner has properties, thinks there will be a correction possibly in 2014. Notes large vacancies in some key areas.
• Chera predicts rents hitting $4000 per SF on 5th Ave.
•  Welch doesn’t see ecommerce ending any time soon. Believes retailers who embrace the internet will do much better. Sees event driven programs the future for success for brick and mortar.
• Based on recent survey data, Millennials still prefer to shop in brick and mortar.
• Hendrickson predicts 2015 will not be as strong as 2014.
• Welch also predicts retrenchment with sales and rent growth.