Quote:
Originally Posted by eschaton
I have to wonder if part of the reason is that in high-cost areas like Manhattan, the value of the property as an asset far exceeds its value as a cash generator.
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Yes. And the institutional ownership structures have no incentive to take any tenant. They'll wait for 10 years if that's what it takes, no problem. They're trying to cultivate an image and have no short-term cash flow concerns. The soverign wealth fund of Bahrain doesn't care about a vacant space.
As long as I've lived in NYC, long before Amazon, top-tier corridors like Fifth and Madison have had higher vacancies than downscale retail corridors in, say, the South Bronx and Jamaica.
There's also an issue that the big growth users (food and fitness) are disliked by residential buildings. Wealthy residents don't want gyms and food in their buildings, because of off-hours traffic and perceptions about noise and vermin. This is starting to change, but generally speaking, a luxury building will wait 10 years for a fancy handbag boutique over immediately leasing to a crossfit gym or restaurant.
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