The Real Reason(s) Why Soho Has So Many Retail Vacancies In 2016…

I’ve been getting emails from friends and readers about the number of retail vacancies in Soho.  Racked NY posted that there are over 95 vacancies in Soho and Crain’s New York wrote a similar sentiment.  The Real Deal even used my Soho Strut tagline and claimed that ‘Soho has lost its mojo’.

I, however, am not surprised with the number of vacancies.

What most reporters aren’t writing (or thinking) is that 2016 marks the end of 5 and 15 year leases that started in 2001 and 2010.  {NOTE:  Many retail leases are 5, 10 and 15 years in length.}

Thinking back…what could have possibly been happening in 2001 and 2010?  I can think of two big events…each of which have caused a simultaneous end to many of the leases here in the neighborhood in 2016:

  1. September 11th, 2001:  Here we are, 15 years later, in 2016.  Many of the downtown neighborhoods bordering the Financial district saw long-term vacancies after September 11th.  Those vacancies were filled with 15 year leases to businesses that are now seeing their rents triple.  That is because rents were significantly deflated after September 11th.
  2. The financial crisis of 2008/2009 ended:  5 years after the financial crisis officially ended, is 2016.  Many businesses closed during the financial crisis and retail spaces remained vacant for over a year.  Those spaces that found leases, were filled with very risk averse businesses that signed short term, 5 year leases.

While I don’t disagree it seems like there are lots of empty retail spaces, I don’t think its anything to be concerned about.  And I definitely don’t think its because of greedy landlords.  Its just a natural market surplus created by September 11th and the financial crisis.

What do you think about the number of vacancies?  Email me at Danielle@sohostrut.com.