Don't blame the city’s landlords for feeling nostalgic for the good old days. “A couple of years ago, it was really a matter of whoever would pay the most money,” says Andrew Moger, founder and CEO of Branded Concept Development (BCD), a firm that finds space for chains like Five Guys Burgers and Fries, builds out locations for Crumbs Bake Shop and oversees everything from lease negotiation to construction. “If a business crapped out, there was always someone right behind it to take the space.”
Times obviously have changed. But as the dust settles on the era of overleveraged, underfunded businesses, the commercial real estate market is quietly—and intelligently—on the rebound. “As is typical, New York was the last to feel the trouble and the first to come out of it,” says Cory Zelnik, founder and CEO of Zelnik & Company. As the man who oversaw the expansion of both CVS and Duane Reade before striking out on his own, Zelnik knows how to spot a market turnaround, and he’s noticed a “tremendous pickup” in business as he helps landlords fill storefronts from Soho to Washington Heights.
“You’re in a market now where landlords don’t play favorites,” says Zelnik, making it the perfect time for newer companies—ones with strong financials and actual business bona fides—to get a foothold in what is still the country’s most desirable market. Indeed, a number of businesses are striking while the iron is hot. “In terms of opportunity, I think this is a moment for restaurateurs and retailers that we won’t see for a long time,” says Moger, whose Five Guys hopes to add two more stores to its New York roster (and sign two more leases) by the end of 2010. “You have relatively low start-up costs, construction costs are considerably lower than they have been and real estate prices are at an all-time low.” And that’s good news for everyone from mom-and-pop stores to international chains (think Topshop and AllSaints) looking for a Manhattan outpost.
But the best news may be that humbled landlords and tenants are adopting a more stable business model, creating a flight to quality that has both sides relying on common sense instead of pie-in-the-sky projections. “Landlords are taking more time to get familiar with their tenants’ business to understand what they can afford,” says Zelnik. Moger, meanwhile, has seen a trend of landlords passing up bigger paydays to accommodate high-quality tenants.
Still, New York real estate hasn’t gone completely Kumbaya. “Everybody’s got their eye on the prize,” says Zelnik, “and that’s getting a deal done.” BCD, 115 E. 23rd St., 6th Floor, 212-260-5210; bcdevelopment.com; Zelnik & Co., 424 Madison Ave., 212-223-2200; zelnikco.com
