The empty storefront is the new bank branch.
With Citigroup’s acquisition of Wachovia and JPMorgan Chase’s Washington Mutual takeover, more storefront bank branches citywide will come into play, according to retail brokers. (Washington Mutual alone has 148 branches in the five boroughs.) Much like the bank consolidations of 1991 and 1996, when Chemical Banking Corp. merged with Manufacturers Hanover Corp, and then Chase purchased the resulting conglomerate, some of those bank branches will close.
Pity the landlord who just signed a new bank branch for his ground-floor retail space.
“What happens with those leases that were just signed?” said a frustrated Faith Hope Consolo, chairwoman of the retail leasing and sales division at Prudential Douglas Elliman, who said she has been deluged with calls from landlords frantic for information. “There’s going to be too much overlap. We don’t have a crystal ball as far as what branches they’ll keep. And there’s the possibility of more space on the market when we already have a lot of space.
“Could it have come at a worse time?” she added. “It’s just, sunny days have turned into sad days.”
Be that as it may, for New Yorkers who don’t make their living owning and leasing retail space, and who haven’t benefited from the arms race between banks pushing corner retail rents into the stratosphere, there’s a definite silver lining.
“There was a stretch of time when they were just running to outbid each other,” said another retail broker. In March, the Real Estate Board of New York reported that ground-floor retail asking rents in Manhattan averaged $111 a square foot annually, up 3 percent from the year before. “In some markets they grossly overpaid to get a position. Now what? You’re going to have much smarter tenants, and they’re going to put it to these guys.”
And maybe New York streets will achieve some actual retail diversity (and by diversity we don’t mean shiny plastic blue and yellow Chase and WaMU facades brightening up the same block).
“I think it will be good for the market,” said Jeffrey Roseman, executive vice president of Newmark Knight Frank Retail. “The banks will be flexible in subleasing the space. They’ll be able to sell it to a clothing store, a cafe. I think the biggest concern, besides for the banks bringing up the rental numbers the past few years, has been that it’s sort of destroyed the fabric of the neighborhood.”