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Vacant storefronts ending up in chains
A "For Lease" sign hangs in a vacant store window along Milwaukee Avenue in the Wicker Park neighborhood of Chicago.
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Bob Moon: Another small ray of economic hope today: The government reports retail sales rose in the last month at the fastest rate in three-and-a-half years. Even so, new accounting estimates from Deloitte point to another chilly winter for retailers, which probably means some good buys for holiday shoppers.
Of course, the recession means bargains for business owners, too. Empty storefronts are driving down the rent for retail space. And as Sally Herships reports, New York City is an example of how the retail landscape is changing as a result.
SALLY HERSHIPS: The Aphrodisia Herb Shoppe is on New York City's Bleecker street. With its wooden floors and glass jars full of chocolates, oils and spices it looks like a magic store from Harry Potter.
JOANNE PELLETIER: A little pinch of the alderwood salt.
Joanne Pelletier has run Aphrodisia for the last 30 years. A couple doors down are stores like Murray's Cheese and Amy's Bread. But with the recession, the neighborhood is changing.
PELLETIER: We used to have like two fish stores, three bakeries, big vegetable market.
But now those stores are gone. Pelletier says Bleecker Street's old customers started grocery shopping at Trader Joe's, or Whole Foods instead. And that's forced more mom and pops out of business. But empty stores means dropping real-estate prices. So as local stores go under, national chains are moving in, snapping up square footage.
JONATHAN BOWLES: I wouldn't be surprised if we've seen double the number of national chains then a decade ago today.
That's Jonathan Bowles. He runs a think tank called Center for an Urban Future. Bowls says 30 percent of the big name stores in New York used the past year as an opportunity to expand. Stores like Staples, Game Stop and Victoria's Secret all opened new locations. Dunkin' Donuts opened 88 new stores. Bowles says big retailers can do this because they have deep pockets to carry them through the recession.
JOANNE PODELL: Landlords are going to tell you the same thing. They like to know that whoever they sign the lease with will stay through the term.
Joanne Podell is a commercial realtor. We're at the mall. Actually we're on Third Avenue in Manhattan. But Podell says there are so many brand-name businesses here, realtors call it "The Mall." She says landlords will lower rents, after all times are tight. But owners want the right tenants.
PODELL: And the right tenant means to them good financials, a corporate signature, where there's a significant amount of net worth.
In other words, a national chain. A national chain can also mean big bargains for shoppers. Jonathan Bowles says while he prefers supporting independents, he also likes saving a buck.
BOWLES: I've got a two-year-old son, and we go out to Babies"R"Us to buy diapers and occasionally I shop at Target. It's much more convenient to do so.
Bowles says more big-name stores could be good for New York. He says New Yorkers like him used to bargain hunt in the suburbs. Now more tax dollars are staying in the city. But he says, depending on the neighborhood, the arrival of so many big chains could change the city's character.
Back downtown, Aphrodisia owner Joanne Pelletier doesn't know if the Aphrodisia Herb Shoppe will make it.
PELLETIER: It would be a miracle if I'm still here next year. It would be a shame, because there's a heart and soul here and a love, that I think would be sorely missed.
Jonathan Bowles says while some national chains are snapping up retail space, not all of them are able to take on the Big Apple. It's fast-food joints and discount stores, he says, that are increasingly moving in.
In New York, I'm Sally Herships for Marketplace.
Retail space is considerable overdeveloped in California and there is much more pain to come. What people need to realize is that for local municipalities sales tax is one of their biggest sources of revenue. This in turn cause them to try and coax all the retail devleopment they can into their city by giving subsidies and tax breaks to developers.
When times were good, all this development and retail business was being supported by consumer spending, which in turn was supported by credit and home equity. That's all over now and the bleeding will continue.
Your story on closing small businesses on Bleeker Street got it backward.
The bakeries, groceries, and small retailers who gave the street it’s life didn’t go out of business because of the economic downturn. The process started long before, when landlords looking to cash in on retail frenzy began quadrupling rents, to the point that no small businessman could afford them. That cleared the storefronts for an onslaught of high end boutiques selling three dollar cupcakes, four hundred dollar sunglasses, and the same Ralph Lauren and Marc Jacobs clothing sold at any suburban mall. When the economy crashed, pricey boutiques stopped renting, and many of the stores on the street stay shuttered.
It wasn’t the recession that made it impossible to find a laundry or a reader and advisor on Bleeker. It was the mythical prosperity that preceded the recession.
