New York City Retail Will Completely Collapse
The bottom line is cost of doing business in New York City has never been low but today its impossible. This is not just restricted to the major leases signed on Fifth Ave either this is the small side street businesses in New York City. You can't escape the high rent in New York City and its causing an exodus of what made New York City attractive in the first place. Small local businesses that had great quality and UNIQUE experiences. Now all is left is massive conglomerates with repetitive and unoriginal experiences, except for the few who have survived and gotten very creative to survive. This exodus will cause the true spiral in New York City retail because once the money runs out to support the high prices holding out the floor gives out, there wont be enough small businesses to support the bottom.
Since these local businesses and UNIQUE experiences are moving further and further out to places in Brooklyn like Sunset Park, past Jersey City, far out Williamsburg/Bushwick and yes even STATEN ISLAND they are bringing these great experiences with them. The people will follow for these experiences and set up enclaves in more affordable areas. To be honest with you the longer it takes for retail to collapse and correct the more pain it will be for New York City retail owners because once these enclaves are more and more established in two years how are they going to attract these tenants back? They are making money and paying a 90% discount or more to the space they would be paying in the city. This makes it hard to drag the businesses back to the city creating like I said a true dropping out of the bottom for pricing across all the retail avenues. The ones they do attract back will find the most vulnerable and the best deals and pricing will suffer as there will be no small businesses to fill the gaps right away.
This all comes back around to the reason why people originally and always have flocked to New York City it is the promise of and the actual UNIQUE experiences of it. The original restaurants that are truly one of a kind and you cant find any where else that make the best desert, drink or certain food you HAVE to go there for. The club and bar that has the best music, bartenders or cocktails that you wait in line for hours to experience. The local shop or butcher that has the best product or cuts and who knows you and exactly what you want. These experiences are now the rarity and not the norm. New York City is losing what made itself New York City and is a classic example of a victim of its own success.
It is also coming in the face of a perfect storm with residential rents coming at an all time high across the city and people wanting to stay in the area but cant afford it. So these outlying enclaves are now all the more appealing for cheap rents for consumers and businesses and will only gain steam unless landlords in the city experience extreme pain for a minimum of two years. Don't even get me started on the rise in crime, political complacency and rise in homelessness in the city that also adds to these exodus factors.
Once the collapse happens it will most likely be too late for it to correct. The money doesn't seem to be running out and pain will not hit for another couple of years for the retail investors who placed bets on very large rents. Unfortunately the longer it takes the harder it will fall and the more these outlying areas will benefit from it, creating their own success and UNIQUE experiences leaving New York City with limited options and a long cycle of recovery. It took decades to attract people to New York City and Brooklyn and when they are gone it will take years to attract them back.