Fifth Avenue Landlords Are Owed About $200 Million In Unpaid Rent
Among the hardest hit by Covid were retail businesses across the country, including in once-coveted, well known shopping areas like New York City’s Fifth Avenue.
What used to be a shoppers paradise has now simply turned into a “battleground between landlords and tenants seeking a way out of pricey leases”, Bloomberg reported this week. In addition to a huge drop off in tourists, shops have also been hard hit by a lack of working citizens passing by to and from their daily commute to work.
Well known tenants like the National Basketball Association, Valentino and Marc Fisher are all in the midst of legal battles over unpaid rent. Landlords along a 20 block radius of Fifth Avenue, in sum, are owned about $200 million.
The NBA has kept its store at 545 Fifth Avenue closed and owes $8 million in back rent, the report says. Valentino simply walked away from its property at 693 Fifth Avenue and is now battling its landlord in court over the rest of its 8 year lease. Marc Fisher is currently in the midst of a lawsuit with its landlord, the Trump Organization, over $1 million in missed rent that dates back to November.
Armani may not retain its real estate near 56th Street after its lease runs out in two years and Abercrombie and Fitch, across the street, says it hasn’t decided on its future.
Tom Mullaney, a managing director at brokerage Jones Lang LaSalle Inc., told Bloomberg: “The numbers are big. If some of the tenants are financially stressed and they lose, it’ll be very painful. Conversely, if some of the landlords are overleveraged and have cash flow issues, it can be traumatic for them too.”
The lack of open businesses could negatively affect tourists’ decisions to come back to the ctiy. When combined with the increase in crime that Mayor Bill de Blasio has overseen, New York could be well on its way to becoming an eventual hellscape if action isn’t taken.
Either way, Fifth Avenue may not ever be the same. Landlords are cutting prices to try and entice renters to come back:
Ground-floor asking rents on Lower Fifth Avenue, from 42nd to 49th Streets and dominated by national chains, fell 20% in the fourth quarter from a year earlier, data from Cushman & Wakefield show.
Luxury-leaning Upper Fifth Avenue, stretching to 60th Street, fared better. Rents there slipped 3.7% to $2,575 a square foot on average. For both areas, more than 23% of the retail space is available, according to the brokerage.
Simeon Siegel, an analyst at BMO Capital Markets, concluded about the stores: “They will likely never be what they’ve been before. But at the end of the day, they’re still one of the best ways to reach people — if people are there.”
Tue, 04/06/2021 – 11:31