Retailers Reconsider Pandemic-Battered Manhattan

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In the heart of Manhattan’s clothing district, a once-busy Starbucks sits empty on the corner of Eighth Avenue and 39th Street. Just down the road is a Dos Toros Taqueria that opened just three years ago, now closed. And Wok to Walk, which once served steaming containers of noodles mixed with chicken and vegetables to a bustling luncheon crowd, has also closed.

While the Delta strain of the coronavirus has once again delayed plans by many companies to bring employees back to offices en masse, workers who have trickled into Midtown are discovering that many of their favorite haunts for a quick cup of coffee and a morning muffin or sandwich are discovering. or salad at lunch are gone. A number of those that are open operate limited hours or with limited menus.

With the pandemic that has left millions of New York City office workers at home over the past year, restaurants, coffee shops, clothing stores and others struggled to survive.

By the end of 2020, the number of retail chains in Manhattan — from drugstores to clothing stores to restaurants — had fallen more than 17 percent from 2019, according to the Center for an urban future, a non-profit research and policy organization.

Across Manhattan, the number of available stores on the ground floor, normally the domain of busy restaurants and clothing stores, has skyrocketed. A quarter of the ground floor storefronts in lower Manhattan are available for rent, while about a third are available in Herald Square, according to a report by real estate firm Cushman & Wakefield.

Starbucks has permanently closed 44 branches in Manhattan since March last year. Pret a Manger has reopened only half of the 60 locations it had in New York City before the pandemic. Countless delis, independent restaurants and smaller local chains have fled.

“Midtown is clearly the hardest hit of any part of Manhattan,” said Jeffrey Roseman, an experienced retail real estate broker at Newmark. “When you think of other office-oriented areas, whether it’s all the way downtown or Flatiron or Hudson Yards, there are a lot of residential neighborhoods near those areas that have helped support those markets. Midtown is, for the most part, a one trick pony.

“It is mainly offices and hotels, which were also affected by the decline in tourism.”

However, the unrest has pushed itself further into the centre. Last week, luxury furniture retailer ABC Carpet & Home – whose flagship store has been a fixture in the Union Square area – filed for bankruptcy protection, in part because of “a mass exodus of current and potential customers leaving the city.”

But in a city where one person’s downturn is someone else’s chance, some restaurant chains are taking advantage of record-low retail rents to open a store or expand their presence in New York City.

In the second quarter, food and beverage companies signed 23 new leases in Manhattan, leading clothing retailers, who signed 10 new leases, according to commercial real estate company CBRE.

Shake Shack and popeyes Louisiana Kitchen were among the signatories of new leases this year. So did hamburger chain Sonic, which signed a lease for its first Manhattan outpost to replace a Pax Wholesome Foods location in Midtown. The Philippine Chicken Coop Jollibee, which enjoys a devoted following, is planning a massive flagship restaurant in Times Square.

Still, with so much uncertainty about when employees can fully return to Midtown offices, some companies are proceeding cautiously. The Bluestone Lane coffee shop had plans to aggressively expand into Manhattan before the pandemic and is still considering locations in Midtown. But it is now focusing on opening in more residential areas like Battery Park City, Hudson Yards and Tribeca.

“We have deliberately chosen urban residential areas for our new cafes so that we are not dependent on the return of our locals to physical office space and are well positioned for the future of hybrid work,” Nick Stone, the founder and CEO of Bluestone Lane , said in an emailed statement.

And some restaurant chains that have already reopened in Midtown are adapting their strategies to respond to what they believe are the evolving needs of customers in a post-Covid world.

On a recent weekday, a handful of customers nibbled on salads and sandwiches at Le Pain Quotidien’s Bryant Park location. The long communal tables that once dominated the front of the restaurant are now gone, while the refrigerated display cases for a selection of take-away drinks, salads and sandwiches will be expanded next year as part of a refurbishment. In May, a new app came out to pre-order and pick up food.

While the new technologies work for some customers, others long for the past.

“We used QR codes for guests to look at the menu while trying to limit contact with surfaces, but the majority of our guests want to stick with an actual menu,” said Stephen Smittle, senior vice president of operations at Le Pain Quotidien . . “They really want to feel normal. They want a server. They want to hold a cup of coffee, not a paper cup.”

Le Pain Quotidien struggled for the pandemic and asked for bankruptcy in May 2020. It was acquired by Aurify Brands, which has since reopened many of the city’s Le Pain Quotidien locations, including several in Midtown.

“Our thinking is that Midtown New York will come back to a level that may not be 100 percent prepandemic, but based on information we’ve gathered, I believe Midtown will return to a prominent level,” Mr. Smittle said. .

For Starbucks, one of the big lessons from the pandemic was that customers liked to order their drinks online and then quickly pick them up at stores or drive-throughs. Starbucks had already started offering that before the pandemic, opening a pickup location in Midtown’s Pennsylvania Plaza in late 2019.

As of early 2020, Starbucks has permanently closed 44 of its 235 Manhattan locations. But it is in the process of adding mobile pick-up points in many stores and adding more pick-up locations. The company says it expects net new store growth in Manhattan in the coming years.

Before the pandemic, Starbucks had three stores around the Columbus Circle area. It closed them and opened one big restaurant this year. Now Central Park runners pick up their pre-ordered drinks from a mobile counter and head back out, while other customers queue to place their orders and sit at nearby tables.

“We were building the concept and developing it over time,” said John Culver, president of North America and chief operating officer of Starbucks. “What we have done is seize the opportunity presented by the pandemic and accelerate the transformation of our store portfolio. Consumer behavior during the pandemic has accelerated to levels no one expected.”

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