A less-bleak Bleecker? Rents down, hopes up

The Native Leather shop was on Bleecker St. for nearly 50 years, but closed last year after the landlord would not renew its lease. Its owner told Jeremiah’s Vanishing New York blog that the landlord wanted double the rent they were paying. Photos by Tequila Minsky

BY GABE HERMAN | Bleecker St.’s stretch through the West Village continues to be plagued by retail vacancies. Some blocks sport as many as seven empty storefronts total and several in a row. Yet local real-estate experts say that commercial rents on the street have actually dropped dramatically — by more than 50 percent, according to some estimates — and that there is reason for optimism for Bleecker’s future.

Local merchants and business owners remain skeptical, however, as businesses continue to close and the vacancies lead to less foot traffic for the surviving shops.

Marc Jacobs famously had six stores on Bleecker St. as part of the big-brand boom on the boulevard that started in the early 2000s. But in March 2017, Marc Jacobs closed its last fashion shop in the area, according to fashion news site WWD, and now only a bookstore, Bookmarc, remains at W. 11th St. About a year earlier, other nearby high-end closings on Bleecker St. included Mulberry and Brooks Brothers. And the Michael Kors shop recently closed after opening in 2010 and remodeling in 2016. The street’s two Ralph Lauren shops are also long gone, having pulled up stakes years ago.

In recent years, as big brands have fled, retail rents on Bleecker St. have plummeted from a high of $700 per square foot to a current rate of about $200 to $300 per square foot, according to Joel Isaacs of Isaacs and Company, which deals in commercial real estate. Isaacs said his company is seeing an increase in activity due to lower rents, even though many vacancies remain on Bleecker St.

“It’s definitely going to take a little time,” Isaacs said of the storefronts filling in again. “But I know just within my own office that there are a number of deals pending for some vacancies. I think we will potentially see some local retailers coming back to the area with some reduced rents.”

When it comes to real-estate trends and what has happened in the West Village, “it’s a bit of a momentum game,” according to Bob Perl, the founder and president of Tower Brokerage.

Perl said it can go back and forth, for example, when places started leaving recently.

“There’s a lot of momentum that falls behind places like Bleecker,” he said, “where one big name follows the next. And, at a certain point, when they decide it’s not fitting for their business plans and they start pulling out, the momentum swings in the other direction.”

Now, with lower rents along Bleecker St., “it’s an opportunity for retailers who have been on the sidelines hoping for this moment to occur,” noted Adelaide Polsinelli, senior managing director at Eastern Consolidated, a commercial real-estate brokerage firm based in New York City.

Two vacancies among the many on Bleecker St. Photo by Gabe Herman

Polsinelli noted, however, that there may still be financial difficulties for those who bought in at the height of Bleecker St.’s rates.

“Anyone who bought their property on Bleecker, or in the area, from 2014, 2015, they bought at the height,” she noted. “So there has to be a real serious conversation with their financing, their lenders, their investors, what the expectation is going to be. Because anyone who bought with the expectation that rents were rising and they bought at the top of the market is going have a serious problem.”

Some vacancies on Bleecker St. may remain if landlords can’t lower rents because of their financing deals. “However,” said Polsinelli, “there were plenty of people who bought before that and they still are in the money, so to speak, and they still can take a discounted rent.”

Along with some local businesses returning, Isaacs said that outside brands may come to the area from places like Los Angeles, for example, along with Internet companies that are looking to expand into “brick-and-mortar” retail spaces.

Brookfield Properties, for one, plans to give opportunities to Internet companies and mom-and-pop businesses as part of its upcoming plans for Bleecker St. In April, Brookfield bought seven storefronts along the street at four properties, at W. 11th and W. 12th Sts., for $31.5 million, as first reported by the Wall Street Journal. Brookfield’s plans also reportedly include arts and culture events to help revitalize the area.

Brookfield’s investment on Bleecker St. is encouraging for the area, in Polsinelli’s view.

“They’re betting on the long-term vitality of Bleecker,” she said, “and they’re saying, ‘We just put our bets on this. We think that the future is very bright.’ ”

Another closing sale, next to another closed store, on Bleecker St. Photo by Gabe Herman

Looking ahead for both Brookfield and Bleecker St., over all, Polsinelli sees a changing retail landscape that includes shorter leases that allow for adaptability to what consumers want, and a change in what products are provided.

“Retail is evolving into more of an experience than just a necessity,” Polsinelli explained. She said that, for example, instead of a traditional perfume shop, perhaps there would be a perfume lab where customers could experiment and create their own customized product to buy.

Or next to Magnolia bakery, perhaps a business would offer classes on how to make cupcakes, Polsinelli mused. She noted that Murray’s Cheese shop, for example, already offers cheese-making classes. And Le Pain Quotidien on Bleecker St. near Broadway offers several baking classes next door to its bakery space.

“It’s interactive, it’s a new concept,” Polsinelli said of possible adaptations in Bleecker St. retail, “but it takes advantage of what’s already existing and brings it to another level, so that the experience for a retailer and a consumer is seamless. They come in, they’re engaged, they participate, they get involved, and then they have a takeaway.” Polsinelli said the takeaway could be a product, but also a membership, subscription or the experience itself.

Polsinelli also noted the importance of the trend of pop-up stores, in which businesses get a chance to test the waters in the area, or even in particular spots within the area, to see what consumer demand is.

“Maybe the retail shouldn’t be a 10-year tenant in the same space,” Polsinelli said. “Maybe it should be a concept that changes — like art every month. Maybe it’s a constant pop-up where you’re always surprised — and because you don’t know what to expect, you want to come back for more.”

And the Internet may be more complementary than threatening to retail shopping, Polsinelli added, especially if the focus is put on the shopper’s experience.

“The West Village is very exciting,” she said. “You never know what you’re going to see, who you’re going to see, what you’re going to experience. And buying in the store is not the same as getting the same product online.”

While those in real estate see promising signs for Bleecker St.’s future, local merchants are left with the reality that, as of right now, vacancies remain and businesses continue to close shop. Just earlier this month, bakery Maison Kayser closed its location at Bleecker and Christopher Sts., for example.

Posters resembling a property on a Monopoly board, like this one, were plastered on shuttered Bleecker St. storefronts between Sixth Ave. and Thompson Sts. The posters list the prohibitive rents — including for short-term pop-up stores, too — that merchants have been facing, and also quote Jane Jacobs on the two key “public powers” shaping American cities: votes and “control of the money.”

The block of Bleecker St. just across from the closed bakery, between Christopher and W. 10th Sts., has been blighted by seven total store vacancies in recent weeks. Vijay Desai, owner of the Village Apothecary on this block, spoke in early June of the bakery’s closing.

“It’s such a surprise,” he said. “And all the stores on this block — it’s all empty. It’s tough because that affects walking traffic, because we rely on that walking traffic for new business.”

A big empty space next to the Village Apothecary used to be occupied by Manatus, a down-home Greek diner that had been there since the 1980s. It was forced to close in 2014 when the landlord asked for a rent increase from $30,000 to $50,000 a month, according to John Kaliabakos, director of pharmacy services at the Village Apothecary, who has worked there for 25 years.

“They’re like, ‘We can’t do that,’ ” Kaliabakos said, regarding Manatus. “And then they wind up being empty for two years, and it just looks bad for the neighborhood.”

The recent closing of Maison Kayser, a popular pastry shop and cafe, took many by surprise. Photo by Gabe Herman

Todd Rigby, co-owner since 1983 of the flower shop VSF, on W. 10th  St. just off Bleecker, remembered a time when a big chain was forced out by locals in favor of a small business. He said that before Manatus moved in, McDonald’s had signed a lease for that space.

“All the antique shops and great little businesses were all in an uproar,” Rigby recalled. “So they started a petition and they got the landlord to not rent to McDonald’s.”

These days, though, locals may have to settle for any kind of store over more vacancies.

“Obviously the people that live in the neighborhood would love a deli, something that they could use,” Kaliabakos observed. “Usually, it’s going to be another clothing store or something like that. But anything as long as it’s not empty would be nice.”

Another local merchant named Ancy, owner for 18 years of Beautiful Tibet, an arts and culture shop between Grove and Christopher Sts. on Bleecker, said he has stayed in business thanks to loyal customers who are seeking the type of exotic items that he offers.

“They’re not looking for something high-end,” he said of shoppers at his boutique.

“They’re trying to make it a very high-end street for this area,” Ancy added, “but they couldn’t do that.”

He was hopeful that more local shops would return, because he said the big-name trend clearly wasn’t working, and the area’s market goes in cycles.

“It has to come back that way,” he said.

In an uncertain and evolving retail climate, short-lived pop-up shops — like this one that recently ended its run on Bleecker St. — may become more common. Photo by Gabe Herman

VSF’s Rigby, however, is less optimistic, even with the news of Brookfield’s plans on Bleecker St.

“Sounds like it’ll be Tiffany’s,” he shrugged, referring to one of the high-end shops at Brookfield Place, down by the World Trade Center. “I can’t imagine that they’d be renting to a deli.”

Rigby and Catherine McClarin, his partner and co-owner of VSF, said they have been able to stay in business because they don’t depend on walk-in traffic.

“We’d be in trouble if we did,” he said. “It’s just tourists asking questions, asking where Magnolia Bakery is.”

There is some hope among local owners about Mayor Bill de Blasio’s proposal to fine landlords whose storefronts remain vacant for too long.

“That would help us a lot, especially this block,” said Village Apothecary owner Desai. “I hope that even the mayor could help out and subsidize the rent for mom-and-pop, to bring the local family back to the neighborhood, instead of all these chains.”

Florist Rigby also thinks the proposed fines could help get the empty stores filled.

“It would be nice,” he reflected. “I have to walk further and further for a deli, like there’s just nothing around anymore.”

For his part, Kaliabakos remains optimistic about the Brookfield deal.

“People are hopeful,” he said. “It’s a buzz in the neighborhood that that’s going to change something. So we’re hopeful, but let’s see what happens. Hopefully, things will change a little bit. It’s not a good look for half the stores to be empty.”

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