By Hellen Zaboulani
The resilience of the food and beverage industry is invigorating New York City’s struggling retail-leasing market.
As reported by the NY Post, though the pandemic dealt a heavy blow to the Big Apple’s commercial leasing real estate market, food-and-beverage has been leading the path to recovery, with that lead growing last year. CBRE data shows that in 2020, Food & Beverage leases made up 28.6 percent of all retail deals in terms of number of locations, compared with 17.6 percent for the second top industry apparel. F&B led in terms of square footage too, accounting for 242,713 square feet compared to 179,076 sf for apparel uses. Data revealed that the other top categories—including financial services, jewelry, cosmetics and health care- lagged far behind.
In 2021, upcoming CBRE data shows an even stronger lead by the F&B industry. This year, it accounted for 31 percent of all retail deals, followed by apparel at 17.1 percent. Impressively, the F&B category doesn’t even include grocery, convenience or wine shops. F&B has been at or near the top of retail categories since CBRE began keeping track in 2010. F&B leases made five out of nine nominees for the Real Estate Board of New York’s “Most Ingenious Deals of the Year Awards” for retail, in which winners will be announced on Aug.5.
CBRE retail-leasing Senior Vice President Matt Chmielecki said the resiliency of F&B throughout the pandemic is even more striking considering that, “F&B deals can take months to negotiate.” But tenants have a forward-looking boldness. Chmielecki explained that now most new deals “have some sort of ramp-up period”, which has a lower base-rent for the first year or two, and percentage-rent agreements which benefit both sides. “Landlords and tenants are now on the same page. By year three of a new lease, rents will look substantially like they were before,” he said.
Still, some of the deals took lots of patients and perseverance, stalling due to the pandemic and re-negotiating slowly. As per the Post, one such example is the recent deal by American bistro L’Adresse. It is expanding from its Bryant Park location adding a second eatery at 1184 Broadway at 29th Street in Nomad. “The lease was originally signed shortly before the pandemic in February 2020,” said Joshua Singer, from the Heller Organization, who represented the tenant. “Like so many others, we had to [re]negotiate throughout the forced closures and come to an agreement beneficial to both parties.”