For rent: Michael Kors’ Greenwich Avenue space
Updated 3:01 pm, Tuesday, June 6, 2017
Greenwich Avenue is not immune from the plague of national retail closings as another high-profile brand has listed its space for rent.
Luxury retailer Michael Kors has put its 1,600-square-foot space at 279 Greenwich Ave. up for rent, according to Greenwich commercial Realtor Ron Brien of Alliance Commercial Realty. The brand’s lease ends in September, said Tom Torelli of Greenwich’s Allied Property Management, and the asking price for a new tenant to take over the space is listed at $165 per square foot. “That’s a high price, but it’s also a sought-after block and a small store,” Torelli said.
The decision against renewing its Greenwich lease likely counts as one of the approximately 120 stores the London-based company announced last week it would shut.
“There’s going to be a little bit of turmoil,” CEO John Idol said in a conference call with investment analysts last Wednesday. “The ‘resets’ are clearly ... closing unproductive and unprofitable stores; secondly, to modernize our store fleet. ... We’re going to push forward renovating 100 stores as quickly as possible. Hopefully, the majority of those will happen probably in the very back half of this year.”
The announcement follows unfavorable sales numbers for Michael Kors. It lost $26.8 million in its fourth fiscal quarter ending April 1, and net earnings for the full fiscal year dropped by 34 percent from the year prior. Michael Kors stock has been trending upward since last Wednesday.
The news comes on the heels of fellow luxury retailer Ralph Lauren closing its posh Greenwich Avenue location just a few doors down in May. “The market hasn’t been this bad since 2008,” Brien said. “We’re at the number of vacancies we had a decade ago, but the rents haven’t really dropped to reflect the number of vacancies.”
Though these high-profile closures don’t reflect well on the Greenwich Avenue retail market, Brien said, the rents haven’t been decreased dramatically largely because “there’s always people who want to open in Greenwich.”
Brien cited a handful of businesses that have recently reached out to him to discuss opening in the shopping corridor. And while Greenwich Avenue rents have dropped only slightly, landlords have increased their flexibility with potential tenants, he said. “They’re becoming more negotiable,” Brien said.
Optimistically, Brien hopes the departure of these national retail brands will open up opportunities for local ones. “The downward market could open up space for mom-and-pop, local retailers who want to be on the avenue but can’t afford it,” he said.
Another resulting trend, Brien said, will be that those national brands who do operate on Greenwich Avenue will opt for smaller storefronts. “That will reshape the entire landscape of the industry,” he said.
As of April 1, Michael Kors owned 398 retail stores in the U.S. and 429 internationally, according to its 2017 earnings report. Per its CEO’s statements last week, the retailer expects to save $60 million annually with its upcoming store closures. Some of those savings will be re-invested into upgrading other stores, he said.
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