Tourists or locals coming from or going on a trip? Guess that doesn't matter...what matters in NYC, first and foremost, are those tourist dollars, or Euros, or whatever it is they want to spend here..
Here is an article from the net from Crain's New York Business on just what a tourist town NYC has become:
New York is Tourist Town
City's millions of visitors are rewriting its retail map
The going was tough as Terry Pillow rushed to a meeting at the Fred
French Building on Fifth Avenue and 45th Street back in December.
“The sidewalk was so thick with tourists and shoppers, it was like wading through molasses,” Mr. Pillow recalled.
But instead of being irritated—as many New Yorkers are at their tourist-clogged sidewalks, museums and restaurants—Mr. Pillow, the CEO of Seattle-based Tommy Bahama Group, was thrilled. His company had just leased 8,500 square feet in the French Building, where asking rents were $450 a square foot.
[Watch a related video about how tourism is reshaping NYC neighborhoods. ]
“More shoppers' feet on the ground means more business for us,” said Mr. Pillow, who expects to have the casual apparel chain's New York flagship open in time for the 2011 holiday season. “There were less-expensive locations, but this is where our main clientele—tourists and vacation-minded New Yorkers—are shopping.”
Welcome to Tourist Town. New York drew a record 48.7 million -visitors last year and expects to draw 50 million in 2012, and it's counting its blessings (and curses) as a result.
For example, in its year-end report for 2010, real estate brokerage and consulting firm Cushman & Wakefield concluded that all those sightseers have combined to generate higher store rents, growth in the footprint of major shopping districts and a hotel boom.
Others experts see a growing tourism cycle.
For many retail landlords, tourism kept rents from collapsing during the recession, as they did elsewhere. In the country's top 10 retail markets, rents per square foot fell an average of 9% from their 2008 peak to last year's nadir, but New York's decline was just a third of that.
In addition, the report from Cushman & Wakefield said, the strength of the city's tourist sector has helped retail rents here rebound more rapidly.
That's what has happened in shopping magnets like Fifth Avenue in midtown and the SoHo section of lower Broadway. In both cases, per-square-foot rents are nearly back to their 2008 peaks of $2,500 and $600, respectively.
The primary tourist shopping destinations are the clearest beneficiaries of the $31 billion visitor dollars spent here last year—$5 billion more than in 2006 and just $1 billion less than the 2008 record, according to NYC & Company—but the impact is felt everywhere. More than 15 million tourists made it to Brooklyn in 2010, for instance, according to the office of the borough president.
Sean Hennessey, chief executive of Lodging Advisors, a consultant to hotel investors and developers, is one of those who have noted the trend.
“We're seeing a significant increase in tourists who are not only willing to take a 20-minute subway or cab ride outside Manhattan but who are saying, "I want to see Williamsburg and Park Slope and Dumbo, along with Times Square and Central Park and Fifth Avenue,' “ Mr. Hennessey said.
Back in the Times Square Bowtie, space is in such high demand that average rents have already surpassed their previous peak.
“The Bowtie will be rivaling Fifth Avenue's rents soon,” predicted Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman.
Brokers also pointed out that popular shopping areas are expanding. For example, the prime Fifth Avenue strip now extends south from its traditional boundary at 47th Street to 42nd Street, and Times Square is overflowing toward Eighth Avenue.
“Retail rents are all about foot traffic, and 50 million tourists make for a lot of shoppers, albeit concentrated in the few areas that draw big crowds,” said Michael Slattery, senior vice president at the Real Estate Board of New York.
Mr. Slattery noted, however, that Manhattan retail rents overall remain well below their peaks of several years ago.
Meanwhile, the need of those 50 million visitors to sleep somewhere has boosted hotel occupancy rates to the mid-80% range.
“It's a figure that the rest of the country and most of the world would envy,” said travel and hospitality expert Bjorn Hanson, the dean of NYU's Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management.
“Tourists are the reason we've maintained close to 90% occupancy rates even as our business clientele declined by more than 20% over the last three years,” said David Duncan, the Denihan group's chief financial officer.
Aided by hoteliers who aggressively slashed rates, the city's occupancy remained reasonably robust during the downturn, dipping to 73% in 2009, before climbing back to 80% last year.
That resurgence occurred despite the arrival on the market of new room inventory, as properties including the Trump SoHo, The Standard, the Ace and the Chatwal opened in Manhattan.
Hotels also began raising rates last year, with the average hitting $330 in December, 8.9% higher than those in 2009, according to NYC & Company.
Rates are likely to be back at peak levels by next year, forecast Arthur Adler, CEO of Jones Lang LaSalle Hotels, Americas.
That's good news for Eddie Hidary, chief operating officer at Hidrock Realty, who has temporarily turned from developing office towers to building two midtown hotels for Marriott.
“There isn't a lot not to like about the hotel market now,” Mr. Hidary said.
Despite the projected addition of 6,500 hotel rooms over the next three years, he said: “Even then, we don't have enough for tourists.”
AS RECENTLY AS TWO YEARS AGO, major retailers were still leery of the Crossroads of the World. They were unconvinced that the 37 million or so people gawking at the neon billboards or catching a Broadway show were interested in serious shopping. But big names are now clamoring for a place in the Bowtie, the area's heart of five and a half square blocks.
Family-friendly venues and teen fashion are the prime shopping features of Times Square. “It's now considered the best bang for retailers' buck, with signage opportunities, an extended shopping day—some stores are open until 2 a.m.—and 365,000 pedestrians each day who've shown they're willing to spend real money,” said Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman.
Brad Mendelson, executive vice president at Cushman & Wakefield, brokered the pioneering deal that brought Toys “R” Us to 1514 Broadway a decade ago. “National and international retailers see that all those tourists are anxious to spend money here, and now the rush is on to open big flagship stores,” he said.
SHOPPING OR STROLLING on Fifth Avenue is a classic New York experience for locals and out-of-towners alike, which is why retailers are willing to pay eye-popping rents to be there.
“It's about branding and building a business,” said Terry Pillow, CEO of casual apparel retailer Tommy Bahama, which will open a flagship location at 551 Fifth later this year.
Another case in point: Japanese fast-fashion sensation Uniqlo, which is paying $300 million over 15 years to take its place alongside Tiffany, Cartier, Apple and H&M on the world's priciest shopping corridor.
With sightseers walking past Rockefeller Center on their way to places like Bryant Park and the public library, an influx of national brands has boosted the profile of the strip's lower end. Asking rents have followed suit, recently climbing to $500 a square foot.
SOHO'S STYLISH CACHET is encompassing a stretch of Broadway above Houston and trickling south, toward the knockoff-watch stalls on Canal Street. Prada and Bloomingdale's co-exist with The Gap and Forever 21.
“SoHo's always gotten the edgier, fashion-conscious New Yorkers, and now that you add all the tourists, it's a great opportunity,” said Daniel Pang, North American president of teen clothier Who.A.U., which opened at 575 Broadway, at Prince Street, just before last Christmas.
Mr. Pang didn't flinch at the cost of space. “Rents are growing because business is growing,” he said.
“The sidewalk was so thick with tourists and shoppers, it was like wading through molasses,” Mr. Pillow recalled.
But instead of being irritated—as many New Yorkers are at their tourist-clogged sidewalks, museums and restaurants—Mr. Pillow, the CEO of Seattle-based Tommy Bahama Group, was thrilled. His company had just leased 8,500 square feet in the French Building, where asking rents were $450 a square foot.
[Watch a related video about how tourism is reshaping NYC neighborhoods. ]
“More shoppers' feet on the ground means more business for us,” said Mr. Pillow, who expects to have the casual apparel chain's New York flagship open in time for the 2011 holiday season. “There were less-expensive locations, but this is where our main clientele—tourists and vacation-minded New Yorkers—are shopping.”
Welcome to Tourist Town. New York drew a record 48.7 million -visitors last year and expects to draw 50 million in 2012, and it's counting its blessings (and curses) as a result.
For example, in its year-end report for 2010, real estate brokerage and consulting firm Cushman & Wakefield concluded that all those sightseers have combined to generate higher store rents, growth in the footprint of major shopping districts and a hotel boom.
Others experts see a growing tourism cycle.
A reliable sector
“New York has proved during this last big downturn that it's one of the few places you can really count on for tourism, and that's bringing in a lot of new hotels and a lot of retailers,” said Robert K. Futterman, chief executive of real estate firm Robert K. Futterman & Associates.For many retail landlords, tourism kept rents from collapsing during the recession, as they did elsewhere. In the country's top 10 retail markets, rents per square foot fell an average of 9% from their 2008 peak to last year's nadir, but New York's decline was just a third of that.
In addition, the report from Cushman & Wakefield said, the strength of the city's tourist sector has helped retail rents here rebound more rapidly.
That's what has happened in shopping magnets like Fifth Avenue in midtown and the SoHo section of lower Broadway. In both cases, per-square-foot rents are nearly back to their 2008 peaks of $2,500 and $600, respectively.
The primary tourist shopping destinations are the clearest beneficiaries of the $31 billion visitor dollars spent here last year—$5 billion more than in 2006 and just $1 billion less than the 2008 record, according to NYC & Company—but the impact is felt everywhere. More than 15 million tourists made it to Brooklyn in 2010, for instance, according to the office of the borough president.
Sean Hennessey, chief executive of Lodging Advisors, a consultant to hotel investors and developers, is one of those who have noted the trend.
“We're seeing a significant increase in tourists who are not only willing to take a 20-minute subway or cab ride outside Manhattan but who are saying, "I want to see Williamsburg and Park Slope and Dumbo, along with Times Square and Central Park and Fifth Avenue,' “ Mr. Hennessey said.
Traversing the river
Business owners in the boroughs can attest to that. Natasha Samoylenko is one of the owners of Trunk, a boutique on Jay Street in Dumbo that opened in October 2009. Foreigners are an important part of her shopper base and in fact make up about half of her customers, Ms. Samoylenko said. Retail rents in Dumbo have recovered from $45 a square foot in 2009 to as high as $80 now.Back in the Times Square Bowtie, space is in such high demand that average rents have already surpassed their previous peak.
“The Bowtie will be rivaling Fifth Avenue's rents soon,” predicted Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman.
Brokers also pointed out that popular shopping areas are expanding. For example, the prime Fifth Avenue strip now extends south from its traditional boundary at 47th Street to 42nd Street, and Times Square is overflowing toward Eighth Avenue.
“Retail rents are all about foot traffic, and 50 million tourists make for a lot of shoppers, albeit concentrated in the few areas that draw big crowds,” said Michael Slattery, senior vice president at the Real Estate Board of New York.
Mr. Slattery noted, however, that Manhattan retail rents overall remain well below their peaks of several years ago.
Meanwhile, the need of those 50 million visitors to sleep somewhere has boosted hotel occupancy rates to the mid-80% range.
“It's a figure that the rest of the country and most of the world would envy,” said travel and hospitality expert Bjorn Hanson, the dean of NYU's Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management.
High occupancies
The Denihan Hospitality Group, which owns seven Manhattan hotels, is keenly aware of the power of the city's tourist economy.“Tourists are the reason we've maintained close to 90% occupancy rates even as our business clientele declined by more than 20% over the last three years,” said David Duncan, the Denihan group's chief financial officer.
Aided by hoteliers who aggressively slashed rates, the city's occupancy remained reasonably robust during the downturn, dipping to 73% in 2009, before climbing back to 80% last year.
That resurgence occurred despite the arrival on the market of new room inventory, as properties including the Trump SoHo, The Standard, the Ace and the Chatwal opened in Manhattan.
Hotels also began raising rates last year, with the average hitting $330 in December, 8.9% higher than those in 2009, according to NYC & Company.
Rates are likely to be back at peak levels by next year, forecast Arthur Adler, CEO of Jones Lang LaSalle Hotels, Americas.
That's good news for Eddie Hidary, chief operating officer at Hidrock Realty, who has temporarily turned from developing office towers to building two midtown hotels for Marriott.
“There isn't a lot not to like about the hotel market now,” Mr. Hidary said.
Despite the projected addition of 6,500 hotel rooms over the next three years, he said: “Even then, we don't have enough for tourists.”
TIME SQUARE'S SHARP BOWTIE
AS RECENTLY AS TWO YEARS AGO, major retailers were still leery of the Crossroads of the World. They were unconvinced that the 37 million or so people gawking at the neon billboards or catching a Broadway show were interested in serious shopping. But big names are now clamoring for a place in the Bowtie, the area's heart of five and a half square blocks.
Family-friendly venues and teen fashion are the prime shopping features of Times Square. “It's now considered the best bang for retailers' buck, with signage opportunities, an extended shopping day—some stores are open until 2 a.m.—and 365,000 pedestrians each day who've shown they're willing to spend real money,” said Faith Hope Consolo, chairman of retail leasing and sales at Prudential Douglas Elliman.
Brad Mendelson, executive vice president at Cushman & Wakefield, brokered the pioneering deal that brought Toys “R” Us to 1514 Broadway a decade ago. “National and international retailers see that all those tourists are anxious to spend money here, and now the rush is on to open big flagship stores,” he said.
A LONGER WALK ON FIFTH AVENUE
SHOPPING OR STROLLING on Fifth Avenue is a classic New York experience for locals and out-of-towners alike, which is why retailers are willing to pay eye-popping rents to be there.
“It's about branding and building a business,” said Terry Pillow, CEO of casual apparel retailer Tommy Bahama, which will open a flagship location at 551 Fifth later this year.
Another case in point: Japanese fast-fashion sensation Uniqlo, which is paying $300 million over 15 years to take its place alongside Tiffany, Cartier, Apple and H&M on the world's priciest shopping corridor.
With sightseers walking past Rockefeller Center on their way to places like Bryant Park and the public library, an influx of national brands has boosted the profile of the strip's lower end. Asking rents have followed suit, recently climbing to $500 a square foot.
STRETCHING LOWER BROADWAY
SOHO'S STYLISH CACHET is encompassing a stretch of Broadway above Houston and trickling south, toward the knockoff-watch stalls on Canal Street. Prada and Bloomingdale's co-exist with The Gap and Forever 21.
“SoHo's always gotten the edgier, fashion-conscious New Yorkers, and now that you add all the tourists, it's a great opportunity,” said Daniel Pang, North American president of teen clothier Who.A.U., which opened at 575 Broadway, at Prince Street, just before last Christmas.
Mr. Pang didn't flinch at the cost of space. “Rents are growing because business is growing,” he said.
A version of this article appears in the March 14, 2011, print issue of Crain's New York Business.
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