New York City is seeing many changes when it comes to commercial real estate. Big retail stores are closing, mega-projects are moving in, and tech companies abound. How do these changes affect the outlook for investors?
Many large retailers have recently announced that they are actively closing stores in 2019, including Victoria’s Secret, Gap, Payless ShoeSource, and Tesla. Traditional retail is struggling. In New York city, the retail shopping downtrend combined with the high price of rent has caused many businesses to suffer. It’s estimated that around 20% of Manhattan’s retail storefronts are vacant or will be vacant in the near future.
Although these statistics are alarming, there’s good reason to believe that the playing field will level out in time. Many over-leveraged properties will likely go into foreclosure, and eventually retail property prices will become attainable again. We may even see a return of small businesses in New York City, rather than only big chain retailers. After these foreclosures start, the time to invest in retail property will begin.
New York City is seeing many large-scale projects, including the building of Hudson Yards, a $25 billion neighborhood. Many of these projects are coming to neighborhoods that have previously been quiet. These projects will present opportunities in the outer boroughs for investors— particularly those who are looking for long-term investments. However, investors who are looking for short-term projects should think twice before investing around these big projects.
New York is ranked by the Savills Tech Index as the number one tech city in the world. So, although Amazon will not be building its new headquarters here, New York is still the center of the technology world. We can expect to see new tech companies moving in and creating fresh opportunities for investors. This is another area where those looking for long-term investments will prosper.
In conclusion, the changing face of commercial real estate in New York presents challenges, but also opportunities. But if you keep a long-term mindset about your investments, you’ll be poised to profit in this changing landscape.