New York Landlords Are Taking Retail to the Customer

If work from home takes hold after the pandemic, it could force retailers to make adjustments.

In New York, Annette Healey, executive vice president, CBRE, says some of the “big beauty players” are establishing more neighborhood stores to move closer to customers. Whether it’s a three-month experiment of a pop-up store or something else, retailers want to move closer to customers. She says landlords are increasingly amenable to these strategies.

Still, there will be a use for a flagship store. “I do think we’re going to see much more of this sort of flagship in a daytime population environment where hopefully tourists will eventually come back,” Healey said on CBRE’s “The Weekly Take” podcast.

In New York, this movement away from flagships is particularly noticeable. Right now, Healey says the outer boroughs are flourishing.

“Those markets are not super vibrant because of international tourism,” Healey says. “They’re super vibrant because they’ve got a lot of people who live there and who have needs. I think they’ve been the beneficiaries of less commuting into Midtown.”

With so many dark stores, landlords are going to have to partner with their tenants. “I think that there’s definitely been some blinking and we are seeing some much more accommodative structures,” Healey says. “For a lot of tenants, it doesn’t work because they must have their brand displayed in a way that is consistent with their overall brand package or story. And they are not going to spend that kind of money on a build-out for a short-term deal.”

In some areas of the country, spaces are being created to accommodate new retail experiences. Healey points to the seaport in Boston where companies can take over tiny homes on the green and create a brand extravaganza for a couple of months. “It’s just driven a lot of traffic,” she says. “It’s very exciting. So I think that this is something that we’re going to see on a more consistent basis, particularly in new developments.”

As the retail store model changes to a flagship with hub-and-spoke locations, leases may need to be adjusted. But Healey says it is still challenging to create systems where landlords can share a percentage of a retailer’s online sales.

Healey says her clients are also “laser-focused” customer relationships. The words health, both in a physical and mental context, come up frequently.

“There’s this sense of comfort and creating a sense of comfort for your customers that I think is going to change everything,” Healey says.

These companies are teaching their sales associates to work through Zoom and develop a deeper relationship with customers. “They said the customers love it because they’re in their own home and they have this one-on-one conversation with a sales associate who they can’t wait to get back in the store to see,” Healey says.