From The Wall Street Journal:
Global retailers once seemed to pay whatever it took to lease space on Manhattan’s Fifth Avenue. That doesn’t appear to be the case anymore.
The section of the avenue that stretches about 10 blocks from Saks Fifth Avenue at East 49th Street to the southeast corner of Central Park is one of the city’s major tourist attractions, boasting luxury brands like Gucci, Rolex and Tiffany & Co.
Real-estate brokers said that for years many major retailers were willing to accept thinner margins or even absorb losses at a Fifth Avenue location because the prestige and marketing power of the address was worth the cost.
But the rise of e-commerce has made it tougher for fashion houses and other retailers to justify sky-high rents when sales at the Fifth Avenue store—or for the company overall—have been in a slump.
The result: It isn’t only outdated malls and poorly-located shopping centers in the American heartland that are struggling. One of the world’s most-trafficked and premier shopping corridors is feeling the strain, too.
“A lot of these Fifth Avenue stores are emotional brand statements and almost churches to the brand,” said Oliver Chen, a senior equity analyst at Cowen Inc. But rent expense matters too, he added.
. . . .
On those prime blocks the availability rate, which reflects vacancies and expiring leases that haven’t been filled, reached 25% in the first quarter. That is down only slightly from 27.5% in the fourth quarter—the highest availability rate since Cushman began tracking the Fifth Avenue strip in 2006. In the first quarter of 2018, the availability rate was 17.4%.
. . . .
In recent months, other apparel retailers such as Gap Inc. and Tommy Hilfiger have closed their flagship stores along Fifth Avenue to focus more on their e-commerce platforms as part of a new strategy to have fewer stores, the companies said. Tommy Hilfiger also closed its store on Collins Avenue in Miami as it reshapes its retail strategy in North America.
Ralph Lauren Corp. also closed its flagship Fifth Avenue store in 2017. The space has remained vacant since.
Link to the rest at The Wall Street Journal