Retail coming to Philadelphia (York, California: requirements, agencies, video) - Pennsylvania (PA) - Page 456 - City-Data Forum

thedirtypirate · 05-11-2021, 08:24 AM

Quote:

Originally Posted by skintreesnail

I remember reading an article about La Colombe and the owner stated that the only reason they were able to stay in the Rittenhouse location was because they had signed a 50-year lease or something like that in the 90s when commercial retail was in bad shape and dirt-cheap. Wonder if something like that will happen again. Do these landlords hike the rent so much in the hopes of subsidizing/recouping losses for other spaces they need to fill? I don't really know anything about real estate, but increasing rent for businesses during a pandemic when businesses are leaving and retail is in dire straits is really counter-intuitive to me, unless they're in panic mode and trying to stay afloat themselves. Or maybe they're expecting to bank on a huge rebound, which just seems really risky.

I have no personal insight on this, but I would imagine a lot of this isn't being brought on by the landlord, rather it's the business looking to renegotiation a lower rent. We have already seen a few stores play musical chairs and switch storefronts presumably because they got a better deal.

skintreesnail · 05-11-2021, 08:31 AM

^^^ that makes sense, but if I were a landlord in the current climate, I think I would be willing to compromise a lower short-term lease under the expectations to increase when/if things turn around in the future. Unless I'm financially capable of doing so due to being over-extended or something like that. But then again, maybe that's why I'm not a landlord.

rowhomecity · 05-11-2021, 08:47 AM

Quote:

Originally Posted by skintreesnail

I remember reading an article about La Colombe and the owner stated that the only reason they were able to stay in the Rittenhouse location was because they had signed a 50-year lease or something like that in the 90s when commercial retail was in bad shape and dirt-cheap. Wonder if something like that will happen again. Do these landlords hike the rent so much in the hopes of subsidizing/recouping losses for other spaces they need to fill? I don't really know anything about real estate, but increasing rent for businesses during a pandemic when businesses are leaving and retail is in dire straits is really counter-intuitive to me, unless they're in panic mode and trying to stay afloat themselves. Or maybe they're expecting to bank on a huge rebound, which just seems really risky.

EDIT: found that article:

https://www.inc.com/dan-whateley/lac...9-inc5000.html

Thanks for sharing the article!

Yes.. retail is closing on Walnut primarily due to high rents and increasing rents. And these landlords do risk management that say... I can let the space stay vacant for 6 - 9 months, but if I lease it out at a 30% increased rate for 5 years I will still come out further ahead.

The whole reason why retailers are closing on Walnut and Chestnut is due to the crazy high rent increases.

Walnut back in 2019 saw the highest retail corridor rental increase of large cities in the US overall.

And now vacancy is over 50%. That is just sad, and it is all due to landlords driving them out.

It probably will take 2 years to correct the market for Walnut St and rents to lower again to what they should be. But at that point... I see so many retailers just not interested in the Center City market because they have had such a bad track record...

Im pretty sure that what will be former Banana Republic flagship at Broad/Walnut wants 100k a month for the space an increase of over 35% from Bananas old lease terms.

It is actually becoming sad that one of the largest cities in America, retail scene is being completely gutted. And again the crazy thing is about all this, foot traffic and vibrancy is basically back to normal! People want to shop, but the high rents is just driving all the retailers out. Nutso

Honestly... I won't be shocked if J. Crew closes at Liberty Square, given that Banana and Cole Haan have both closed.

Although I think Liberty Square is run by a mall partner so they have more negotiable lease terms. So lets cross our fingers. But over half of Liberty Square food court is vacant and the always busy Chick Fil A there has closed.

So if J. Crew and Express announce they are closing in the next month. I will not be surprised at all.

This has honestly gotten to a point that it is a problem and notable. It is also a major sign that what made Philadelphia valuable (its affordability) is vanishing and the creativity that follows affordability is drying up too. When the only retailers that can afford rent is a PNC Bank and Verizon Store in Center City... it sure makes it less appealing.

#greedylandlords

mdavis202 · 05-11-2021, 03:28 PM

I just noticed that Rag & Bone closed at King of Prussia. Finally a closure there instead of Walnut St LOL. But maybe that'll bode well for them keeping a Walnut St presence so they don't completely exit the Philadelphia market...also realizing the denim market might not be doing well at present.

southbound_295 · 05-15-2021, 02:21 PM

Quote:

Originally Posted by skintreesnail

^^^ that makes sense, but if I were a landlord in the current climate, I think I would be willing to compromise a lower short-term lease under the expectations to increase when/if things turn around in the future. Unless I'm financially capable of doing so due to being over-extended or something like that. But then again, maybe that's why I'm not a landlord.

To a degree, it's a cycle. In the late 60s and into the 70s Sansom St was absolutely alive with small local shops. As Boomers got kids and/or mortgages they shut down one by one. It's happening again. They will be replaced, eventually.

rowhomecity · 05-20-2021, 05:56 AM

It looks like Tumi might be closing on Walnut St.

I was in the other day and they are in the middle of renegotiating their lease which went from $12,000 a month to over $20,000 a month due to its proximity to the square.

Im not sure if anyone has been in that store in Rittenhouse but it is very very small. Its crazy to think the landlord has hiked the new lease terms over 30%.....

They said they might relocate to Chestnut or just leave the city all together for King of Prussia where costs are significantly lower.

It is not set in stone yet, but if the landlord does not renegotiate they are out.

By comparison, a similarly sized parcel in one of the luxury wings of KOP would be about 10,000 a month depending on the size of the retail space. Simon also is cutting some pretty nice lease deals to keep its malls alive and attract retailers, especially after COVID.

Landlords are destroying Walnut Retail and they just simply don't care.

The closing of Cole Haan and Zara are two very much prime examples. Both stores were ALWAYS busy. Same with Banana. I guess the new lease terms where Banana is closing was to be set at 48,000 a month.

mdavis202 · 05-25-2021, 10:21 AM

Express on Chestnut St just posted their store closing signs.

Redddog · 05-25-2021, 11:23 AM

Quote:

Originally Posted by mdavis202

Express on Chestnut St just posted their store closing signs.

Saw those on Saturday....

cpomp · 05-25-2021, 12:31 PM

Damn, even Express can't make it.

Two conclusions...

1. The rent thing is horrendous.

or

2. Combined with high rent, people in Philadelphia just don't shop or spend much money on apparel.

Redddog · 05-25-2021, 02:08 PM

It's the rent.

These places have been jamming for months. Plenty of foot-traffic. Banana was always mobbed. This express was too.

These landlords are apparently happy to drive the retail scene in Philadelphia into the ground. It's only a matter of time before someone lowers the rent, happy to get something rather than zero. But it looks like the retail scene is going to be killed off long before that happens.

It's all gonna be banks, cell phones and fast food.