Manhattan's Blighted Soho District Showing New Signs of Life
March 11 2021 - 12:45PM
Dow Jones News
By Esther Fung
The pandemic has been especially hard on Manhattan's SoHo
neighborhood, but there are recent signs the popular shopping
district may be on the mend as lower rents attract fresh
interest.
Italian women's fashion brand Pinko signed on Wednesday a
sublease at 143 Spring Street, taking over a 4,925 square foot
property formerly occupied by Bed Bath & Beyond, to create a
new U.S. flagship store.
One block over, luxury boutique retailer Valentino SpA last
month signed a lease for its first SoHo store, occupying a
two-story space of 8,718 square feet. In December, big-box retailer
Target Corp. signed a 27,600 square foot lease at 600 Broadway in
December.
Brokers credit lower rents for helping to lure back tenants, as
well as the recent rollout of vaccines which has raised the
prospect of a recovery in tourism.
The pandemic thinned out the number of visitors to SoHo, and it
all but eliminated the throngs of international tourists that
typically flock there for strolling, shopping and dining. Over the
summer, vandalism and looting kept many visitors away and caused a
number of shops to board up their windows, leaving the ritzy
district marred by vacant or barricaded storefronts.
But attractive terms helped convince Pinko to agree to at least
a one-year commitment to SoHo, said Alex Carini, president and
founder of Carini Group, a commercial and residential real-estate
brokerage focused on European brands in the U.S.
"We have negotiated lease terms for Pinko that are at a very
significant discount" to what the main leaseholder is paying, he
said.
Pinko's yearlong sublease with options to extend is for $30,000
a month or 15% of sales, whichever is greater. This allows the
tenant some downside protection and offers the landlord the chance
to get paid more if business is good. It works out to a yearly rate
of $73 a square foot.
"The one-year lease is a good way to weather the uncertainties,"
said Mr. Carini.
The SoHo district had a retail availability of 29.5% in the
fourth quarter of 2020, up from 23.8% at the end of 2019. This
meant close to one-third of the space in the neighborhood from
Houston street to Canal Street was vacant or available for lease.
Meanwhile, average asking rents tumbled 22% to $290 a square foot
in the fourth quarter, down from $370 at the end of 2019, according
to real estate services firm Cushman & Wakefield.
SoHo's sky-high rents started to slide after reaching a high of
$556 a square foot in 2016. As consumers warmed to e-commerce, many
retailers have reassessed how much bricks-and-mortar space was
necessary, especially in locations where the rents were costly.
Many businesses left Soho.
While this downtown neighborhood shows signs of renewed tenant
interest, it appears to be coming at the expense of other Manhattan
districts. Pinko recently closed two other locations on Madison
Ave. and West Broadway to focus on its latest flagship, while
Valentino has closed its store on Fifth Avenue.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
March 11, 2021 12:30 ET (17:30 GMT)
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