Some of the highest retail rents in the world, exceeding $3,500 per square foot, can be found in New York City. According to a September 25, 2013, article in The New York Times, the 10 blocks on Fifth Avenue between Central Park and Rockefeller Center (49th to 59th Street) is the most competitive – - and expensive – - shopping district on the planet, followed by Lan Kwai Fong in Hong Kong, the Champs-Elysees in Paris, and New Bond Street in London.
With the economic environment steadily improving, demand for retail space in districts throughout the Big Apple is heating up. To say the least, things are getting brighter.
Which leads me to what I think are the most interesting points made in the article by Times retail reporter Stephanie Clifford. The story’s headline, “A Premium for a Storefront in the Sun – - Retailers Pay More For Side of Street Shoppers Prefer,” could be taken right out of Chapter 5 in my memoir Threshold Resistance.
The chapter, titled “Creating 100 Percent Locations,” explains how I designed my enclosed malls to capture the best characteristics of traditional shopping districts, while minimizing the negatives that contributed to Threshold Resistance. The Times article reveals something good merchants and developers have known for centuries: store owners want to be on the sunny side of the street and so do shoppers.
The article points out, “As Manhattan rents rise over all, retailers are vying for prime locations, and are paying a premium for areas like the east side of Fifth Avenue – - the sunnier side of the street . . . Shoppers generally gravitate to the sunny side of the street, and natural light helps showcase retailers’ goods.”
One of the advantages a well-designed enclosed shopping center offers retailers and shoppers are two sunny sides of the street, day and night. In fact, by eliminating the street all together, along with the dangerous vehicular traffic it carries, customers can “oscillate” freely between the shops on both sides of the corridor. That translates to higher sales per square foot for the merchant and higher rent per square foot for the landlord.
The article also sates: “Counterintuitively, retailers like to set up shop next to direct competitors, so customers can wander from one like-minded store into the next.” That’s certainly not “counterintuitive” to any good merchant or developer. “Adjacencies,” is the term we use to describe the critical function of placing the stores in a shopping center in the ideal locations – - again, for both the retailer and the shopper – - to break down (you guessed it) Threshold Resistance.
If you have a moment, read the article – - and then revisit Chapter 5 in Threshold Resistance to get the rest of the story!