The Future of Retail and NYC Hotspots to Watch, According to ESRT’s SVP of Leasing

On June 24, Commercial Observer held the National Retail and Hospitality Forum that featured experts from all areas of commercial real estate. ESRT’s SVP, Leasing Fred Posniak joined the “Meeting Consumer Demand: How Retail Brands are Adapting & Innovating in Today’s Market” panel discussion, to share insights into the future of New York City retail. 

Learn more about NYC’s prime retail locations, hotspots on the rise, and market trends that shape demand for commercial property in NYC. 

New York City as a Retail Hotspot 

New York City is a hotspot for commercial real estate, particularly within the retail sector. Businesses aim for prime store fronts to captivate the diverse consumer base of the city, so it is crucial to identify the top commercial real estate retail hotspots in NYC. The city offers substantial growth opportunities for businesses as each neighborhood has its own appeal and consumer base. Whether it’s the vibrant streets of Manhattan or the dynamic neighborhoods of Brooklyn, each area offers more than just high foot traffic.  

In discussion of the future for retailers, Posniak stated, “New York is the most resilient city in the world, and retailers understand that.” He went on to remind the audience to “never, ever discount New York or Manhattan.”

The Three Pillars of Retail According to Fred Posniak 

With the Commercial Observer, Posniak spoke about the three consistent pillars of retail. Although all these pillars evolve over time, they remain constant. 

1. The environment: What will entice the customer to come into the store? What will entice the customer to stay? 
2. Customer service: Are your employees knowledgeable? Are they happy to help? Are they enthusiastic? 
3. The product: Is it current? Is it cool? Is it affordable? Is it something that the customer, or the public, wants? 

Posniak emphasized the importance of customer service: “A lot of retailers have actually forgotten what customer service is. You cut, you cut, you cut, and then the service lacks. And you may have the greatest product, the greatest living store in the world, but if you don’t service that customer, and if that person that’s on the floor is not knowledgeable and has no enthusiasm and doesn’t want to help you, then there are sales that are being left.”

NYC’s Prime Retail Locations 

New York City serves as a lively hub for commerce, with certain neighborhoods that stand out as the most coveted retail hotspots. Areas like Herald Square, Williamsburg, and the Upper West Side draw businesses due to their unique mix of high foot traffic, affluent demographics, and cultural significance.  

• The Upper West Side: With its upscale clientele and neighborhood charm, the Upper West Side provides a perfect setting for boutique brands to make a mark.  

• Herald Square: The famous landmarks, like the nearby Empire State Building, attract both locals and tourists. 

• Williamsburg: The youthful energy of Brooklyn and artisanal markets appeal to a diverse consumer base.  

Empire State Realty Trust recently expanded its portfolio into Williamsburg, Brooklyn. Posniak shared, “We invested [millions] into the portfolio, probably the best retail along North 6th.” He went on to discuss ESRT’s future in the area: “We see a long run here, to slowly expand.”

Key Factors to Consider for a Retail Location 

1. Visibility: In these locations, visibility is paramount as businesses in high-traffic areas enjoy increased exposure, which leads to greater foot traffic and sales. Nearby amenities, such as restaurants, parks, and entertainment options, enhance the shopping experience, and make these neighborhoods more attractive to consumers.  
2. Accessibility: Another key factor is accessibility, as proximity to public transportation and major thoroughfares are necessary to ensure easy access and a steady influx of potential customers. 
3. Understand demographics and consumer behavior: In these prime areas, it is crucial to understand the environment, especially consumer demographics and behaviors.  
   • When ESRT first expanded into Williamsburg, Posniak explained the first thing he did: “I checked into a hotel and spent two weeks, to really learn the pattern and what goes on [in the neighborhood].” Posniak stayed in Williamsburg to analyze consumer patterns and learn the area. 
   • The distinct characteristics of each neighborhood must be understood for businesses to tailor their offerings to meet the specific preferences of their target audience.

Spotlight on Retail Hotspots in NYC 

As the commercial real estate landscape in NYC evolves, several up-and-coming neighborhoods become retail hotspots with considerable growth potential. Areas such as the South Bronx, Williamsburg, Bushwick, and Astoria capture the interest of investors and retailers, thanks to their vibrant communities and foot traffic. These neighborhoods are not only popular among residents but also experience an influx of newcomers which drives the demand for diverse store fronts. 

Recent developments and infrastructure enhancements have boosted the appeal of these emerging areas. Improvements like the Second Avenue subway and enhanced bus routes make these neighborhoods more accessible. Combined with new residential and commercial projects, these developments create an environment ripe for retail expansion. Retailers now have the chance to reach a broader audience, so it is an optimal time to invest in these flourishing markets. 

ESRT’s investments on Williamsburg’s North Sixth Street have garnered attention from luxury and mid-price retailers alike, where the neighborhood is known for its high-end brands, destination dining, and trendy hotels. ESRT purchased standalone prime retail buildings, over 5,000 square feet of space, in one of the hottest markets in the United States.

Market Trends That Influence Retail Space Demand 

As consumer habits evolve, the demand for retail space in NYC experiences significant changes. Today’s shoppers seek immersive experiences rather than mere transactions which prompts retailers to rethink their store fronts. This trend has led to a preference for smaller, strategically placed stores that offer unique experiences and foster community engagement. These changes highlight the importance of the right commercial real estate retail hotspots in NYC that not only attract foot traffic but also resonate with the lifestyle of modern consumers. 

Technology plays a pivotal role in the future of retail space requirements. As consumers expect a seamless experience, digital platforms integrate with physical stores. Retailers now focus on spaces that can accommodate technology, such as interactive displays and fulfillment centers for online orders. Consequently, adaptable and technology-friendly retail spaces are in high demand, which creates partnerships with innovative commercial real estate providers who understand these needs. 

Forecasts for the future of retail in NYC suggest continued transformation driven by consumer preferences and technological advancements. Experts predict a shift towards mixed-use developments that blend retail, dining, and entertainment to create vibrant environments where people want to spend their time. Retailers that adapt to these changes will thrive because they benefit from strategically positioned locations that draw customers. When businesses collaborate with commercial real estate experts who are attuned to these trends, they secure ideal retail spaces that set them up for long-term success in one of the world’s most competitive markets. 

To learn more about the Commercial Observer panel, please visit this link.