As vacancies soar, commercial space owners fight cutting rents
A bad time to sell things is an even worse time to own property where things get sold. Thus the news that retail sales dropped “unexpectedly” in April means retailers are dropping as well. Here in Boston take a walk down posh Newbury Street and you will see many storefront “for rent” signs.
Other high enders are feeling the pinch as well:
- Retail rents on Manhattan’s Fifth Avenue, the world’s most expensive commercial strip, declined 15 percent in the first quarter from a year earlier as a drop in consumer spending crimped sales. (Bloomberg)
- In the City of London office rents in the U.K.’s main financial district are falling to 1991 levels. About 9 million square feet are available there and that may climb to 12 million by the end of 2009. According to CB Richard Ellis Group Inc. almost 19 percent of all City offices may be vacant next year. (Bloomberg)
And, not surprisingly, the troubles aren’t limited to the lux set. Vacancy rates at malls and shopping centers in the top 76 U.S. markets are the worst in the last 10 years: 7.9% for malls and 9.5% for smaller, open-air shopping centers, the Wall Street Journal reports.
Yet most retailers that ask for concessions don’t get them, retail landlords say. Several are responding to those retailers’ pleas by requesting financial data to prove they need a rent reduction to stay in business.
When owners do grant concessions they are trying to get something back — such as extending the length of the lease. Fascinating to watch a business try to swim against the rule of supply and demand.
Constantine von Hoffman is a veteran business journalist and social media consultant. He write the blog CollateralDamage, a satirical look at marketing and business.