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It's mostly the rent but it's also Amazon. I recently took part in a commercial real estate search in Soho, probably the biggest shopping district in NYC. The
by rm999 9y ago
It's mostly the rent but it's also Amazon.
I recently took part in a commercial real estate search in Soho, probably the biggest shopping district in NYC. The prices in this neighborhood have gone up insanely: one storefront (about the size of a large Banana Republic) recently sold for ~250M dollars, which is obviously absurd. The broker told me that a lot of these stores were taking losses on their commercial leases with the (mis)calculation that the exposure and presence were worth it. This miscalculation is everywhere, you e.g. see the same thing with banks opening locations every 5 blocks. Where the real bubble lies, IMO, is that a lot of the places are going to see competition from online and will no longer be able to justify the losses they've been taking. NYC needs bodegas, bars, and coffee shops - things we can't do online - not Bank of Americas and Banana Republics.
- bogomipz 9y ago>"It's mostly the rent but it's also Amazon." How is it Amazon, when there's no shortage of people shopping in Manhattan? The streets are filled with people carrying shopping bags, every day of the week. Almost to the point of annoyance. Between locals and tourists people are never not out shopping. >"NYC needs bodegas, bars, and coffee shops .." There's absolutely no shortage of any of those three things. Those things are so incredibly abundant it seems very odd to say the city needs more of them.
- bluntfang 9y ago>The streets are filled with people carrying shopping bags, every day of the week. anecdotes are great, but why don't you search for the numbers of brick and motor retail sales vs online sales?
- themagician 9y agoAbout 9-to-1 in just about every industry. Retail isn’t growing, but it still accounts for 80-90% of sales in almost every industry. Online sales will probably overtake brick and mortar… in 5 to 10 years—in the US. Amazon is big, but only really in he US. And only certain verticals. And only typically among affluent urban households. That’s why their stock has always been so high. Amazon has, and still has, massive growth potential. When you get everything from Amazon you assume everyone else does. But the reality is that you (and I) are an extreme minority. You forget how many people pay cash in the US. And how many people international have shit or extremely poor/expensive mail service. And how >3 billion or so people live in countries with import tariffs that are 40% or more. And while internet access is prevalent, buying everyday items online is not. It’s really easy to lose sight of how the vast majority live when you live in an urban area and work at a technically progressive company.
- x0x0 9y agoI've actually become concerned enough about Amazon's utter unwillingness to address their counterfeit product problem that we've stopped buying food, makeup, sunblock, lotion, or anything that uses electricity on Amazon. See also just this year their recall of eclipse glasses. After four tries to get name brand and working batteries for my car remote on Amazon, I gave up and purchased them at a local hardware store. It wasn't as convenient as Amazon, but it was a lot more convenient than Amazon allowing scum to sell repackaged no-name crap instead of the particular batteries I needed over and over again...
- cm2187 9y agoYou will only have this problem if you buy from the amazon market place. If you restrict your search to seller=amazon I would expect you to be pretty safe.
- crankylinuxuser 9y agoI only wish this were true. We needed a refrigerator water filter a month back. So I head to amazon and look at different products available, including cheaper. Didnt like the reviews for the 3rd party and went the samsung filter. And I see what they offer is retail price. I read the reviews and I see a trend on the comments "counterfeit", "counterfeit", and "not real product". And that was from Amazon, on a verified product's line. So I went to Lowes. They had them in stock for the same price. Except with 0 chance of counterfeit.
- cglace 9y agoBuying a water filter for my fridge from Amazon was a terrible experience. Everything was mislabeled, obviously counterfeit, or had terrible reviews. Buying from home depot was much easier.
- kevin_thibedeau 9y agoOn the flip side it is near impossible to buy standard cylinder filters at retail establishments because they are all Hawking proprietary systems.
- bogomipz 9y agoIts not an anecdote. Have you spent any time in NYC? Why do I need to search for numbers comparing brick and mortar vs online? Of course online retail is growing faster than brick and mortar but the topic here is New York City which is an outlier. NYC is a shopping destination for US, international and tri-state area tourists. People come to NYC specifically so they can shop along the retail corridors of Broadway in Midtown, Soho, Nolita and the Meat Packing Districts, The Flatiron and many others. It's seen as an experience since you can walk, shop and see landmarks like Rockefeller Center, The Empire State building, Grand Central while you do so. https://therealdeal.com/wp-content/uploads/2017/04/Manhattan_Retail_MarketView_Q1-2017.pdf https://therealdeal.com/wp-content/uploads/2017/04/Manhattan...
- donkeyd 9y agoWhen I traveled to NYC I had a bunch of stuff from Amazon delivered to my AirBnB. I would've probably bought that in stores if Amazon didn't exist. The only stuff I bought in stores was pants and shoes, since US sizes tend to be different from EU sizes.
- bogomipz 9y agoSo rather than go out and explore New York City via a shopping experience, you stayed inside your AirBnB and interacted with your computer? Why even bother visiting? I can assure there is nothing unique about the Amazon experience in NYC compared to somewhere else.
- dcarmo 9y agoIt's not like everyone have the kind of money to do NYC shopping experience (specially if you're not American.)
- bogomipz 9y agoYou don't have to spend money to wander in and out of stores and window shop on your way to other tourists attractions though. Unless you are in a rush that's kind of an organic thing in a walking city. And if you have disposable income to use on Amazon.com while you are visiting NYC then presumably you could also spend a similar amount locally.
- pavel_lishin 9y agoBut you might have more money than you have time, in which case it makes sense to ship stuff from Amazon, and use the time you'd spend buying power adapters or extra socks or whatever to go and see the Math Museum or something.
- deleted 9y ago[deleted]
- kpozin 9y ago
- Spooky23 9y agoIt depends where you are and how wealthy you are. NYC is a reflection of america. The old school Greek diner has been replaced by Starbucks and non luxury retail is largely homogenized. It’s also a much les diversified economy than it was in the past. New development of fancy building that lay empty as speculative investments starve out the storefronts.
- notyourday 9y ago> NYC is a reflection of america. The old school Greek diner has been replaced by Starbucks and non luxury retail is largely homogenized. Good. If the old school greek diner that has been in the neighbourhood since 1970s does not own the bricks is probably is a sucky diner that has not kept up with the times. It also probably means that it is way too large. Corner stores in Manhattan give you what a old school greek diner gave you food wise. The diner simply did not adapt. > New development of fancy building that lay empty as speculative investments starve out the storefronts. So? They collapse and new places go in there. That's why we have abundance of popup stores in such spaces in Manhattan and developed portions of Brooklyn ( think Williamsburg, Dumbo, Park Slope ) Most of the complains are coming from old timers, such as the ones that live in rent regulated or rent controlled apartments sometimes paying $250 a month for FOUR BEDROOM. I'm sure what they would really want is that the stores where they shop were also regulated so they could pay 3% of the prices those who showed up after them pay.
- hindsightbias 9y agoAfter 2008, banks used their windfall to become the new McDonalds - an expansionist real estate company. Easier than giving out business loans. All those new branches will disappear in a few years as real estate profits peak.
- Analemma_ 9y agoThat explanation doesn’t make any sense. Why wouldn’t they just own the property and lease it, like any other landlord?
- toomuchtodo 9y agoLaws governing investment of capital. One course is speculative, the other is “operations”.
- foota 9y agoWell if you think the market will get hotter then you would want to wait to lease it.
- ABCLAW 9y agoThe other posters aren't correct. The actual reasoning is that the banks, as tenants, impart a top-flight credit score to a substantial portion of the building's finances if the leases are designed the right way. In return for the slightly more demanding leases which allow the credit-score to functionally pass through, they receive a substantial rebate on the market rate of their leased locations over long periods, affording them cheap arbitrage opportunities - if real estate prices and rents soar, they're still locked in below market rate at the pre-boom rates. If they don't, and rates go down, they have a substantial buffer before the market value of their leasehold is negative.
- gaius 9y agohis miscalculation is everywhere, you e.g. see the same thing with banks opening locations every 5 blocks. Not necessarily. One bank I worked at discovered that people are more likely to sign up for online banking if they had the reassurance of a physical presence. That's what those branches are really for. The lower overall servicing cost of an online customer makes up the difference in the rent. They aren't full of traditional lines of tellers doing everyday transactions, they are spacious inside and you go there for advice and big items like mortgages or pensions or life insurance, sitting on a sofa sipping a coffee.
- JBlue42 9y agoAlso a decent real estate investment for the banks long-term. I think there was an article linked on HN not too long ago about that.
- Feniks 9y agoWait, banks OPEN branches in Manhattan?! Isn't internet banking a thing in NYC? Like, what would you even DO in a bank these days. They don't even carry money anymore.
- rbcgerard 9y agoWhen banks are convenient - people (and small businesses that take cash) go to them...
- jdavis703 9y agoI still don't know where to get rolls of quarters from. But that's literally the only reason I go to the bank.
- colejohnson66 9y agoYou could try a grocery store’s customer service desk/center. They may have rolls of coins that they’d use for change.
- SeanBoocock 9y agoYeah this has been the answer for me. Although my online only credit union has partnerships with local credit unions that have physical branches I can visit, it is much more convenient for me to visit a grocery store. I get charged a nominal fee - ~20 cents per roll - but in the end the convenience wins out.
- purple-again 9y agoIt’s also a prestige thing. Our NYC office is a blackhole of money our other locations subsidize. Then again the partners hold game changing meetings in those offices so maybe that wouldn’t be true if i had access to the whole picture.
- chrisseaton 9y agoI had to go in to a physical branch to show ID to open an account, to get a mortgage, and for a yearly service review with the manager. These days a branch is also just a large secure space for machines to get money out and put it in.
- robbyt 9y agoYou said it's also Amazon, but then you went on to talk about something totally different. It was a nice story... But how is Amazon contributing to greedy NYC landlords charging unsubstainable rents? Landlords would rather have empty buildings than lower rents, that fact has nothing to do with Amazon.
- rainbowmverse 9y agoI've never seen a Banana Republic. How big is that in Walmarts?
- CapitalistCartr 9y agoA Banana Republic is 0.046 standard Super Walmarts. (8300/179,000.) As an American, I recognize international standards are important.
- deleted 9y ago[deleted]
- nasredin 9y agoPfft. If you were a TRUE American, you would of course use the one true, correct and proper measuring unit. The Library of Congress.
- kevin_thibedeau 9y agoLoCs are a unit of data not area.
- SCAQTony 9y ago80.7% of the US population lives in cities. We need to decentralized this problem by making either making more "cities" or way better suburbs so businesses like the bodegas, bars, and coffee shops you mentioned can disrupt monopolies. https://www.citylab.com/equity/2012/03/us-urban-population-what-does-urban-really-mean/1589/ https://www.citylab.com/equity/2012/03/us-urban-population-w...
- chiefalchemist 9y agoTrue. But they never incur the full extent of the loss. They write it off.
- thisisit 9y agoA friend bought franchisee location for Rocky Mountain Chocolate Factory at a strip mall. Previous owners were from the baby boomer generation and had no idea how to run an effective "online" campaign. or so he thought. 8 months down the line, the sales are bad and rents are too high. He says, one of the reasons this is happening because the mall is mostly empty. People are shopping online and the foot fall is decreasing year on year. So, while I agree on Amazon or online shopping in general. I disagree on the 2nd point. Bars, coffee shops etc. will also face the same dilemma, especially if they are not in the right location. In which case, rents still play a large role.