Although still considered one of the area’s choicest retail addresses, Boston’s Newbury Street has seen an increase in vacant space.
One might call it a sign of the times, literally.
After benefiting as much as any area from the prolonged boom of the 1990s, Boston’s eclectic Newbury Street is witnessing the appearance of “for lease” placards in growing numbers. Although most observers insist the eight-block strip remains among the most sought-after addresses for retailers anywhere and forecast a quick rebound, the dour economy and drop-off in consumer spending do appear to be taking a toll of late.
“The vacancies are coming up left and right over there,” said one retail broker, who added that some landlords are putting out feelers to gauge demand should they opt to toss a struggling tenant aside. In other instances, stores are leaving on their own, including the recent departures of Lulu’s Lost and Found, Rodier, Caffe Romano and Henry Solo. According to the broker, who requested anonymity, high-end stores have been impacted especially hard by the tighter purse strings of the spending public.
Retail space is currently vacant in such properties as 33, 35, 81, 114 and 133 Newbury St. The former home of Country Road Australia has the biggest portion available, with some 8,000 square feet scattered in two buildings at 138 and 140 Newbury St. Broker Thomas Brennan, who focuses exclusively on Newbury Street retail, estimates that there are between 18 and 20 empty storefronts currently on the street.
Brennan, who has been leasing space on Newbury Street for 17 years, acknowledged that the availabilities are higher than one would normally see, although he added vacancies tend to increase in January and February. Even with the recent struggles, Brennan said the situation is far less onerous than what Newbury Street experienced during the 1990-91 recession, when leasing activity shut down almost completely.
“In 1991, if I got one call a week, I was happy,” said Brennan, who works for Charles Talanian Realty. “This time, I have brokers all over the United States calling me looking for space [on Newbury Street] … I’m not scared at all.”
Indeed, Brennan said Newbury Street now has an international allure, explaining that “a lot of foreign retailers feel very comfortable” on the street. Brennan recently leased space at 135 Newbury St. to Poggenpohl, a German kitchen cabinet maker. On the investment front, there has been a strong presence of German money on the street, while Brennan recently brokered the sale of the famous Exeter Street Theatre building at 181 Newbury St. to a Thailand buyer.
The downturn marks the first bump in the road for Newbury Street in a decade. After struggling for much of the 1970s and early 1980s, the strip of retail that cuts through the heart of the Back Bay became a popular destination for shoppers from throughout suburban Boston and beyond. Since recovering from the 1990-91 recession, the street has only gained in its acceptance among shoppers. Among the well-known retailers whose shingles line the sidewalks are Nike, Giorgio Armani and Banana Republic.
‘Cutting Edge’
As for the current situation, Brennan said he is particularly encouraged that space is not staying unoccupied for long. He found a tenant for the Lulu’s hole at 121 Newbury St. in a week, for example, while a sign advertising space at 168 Newbury St. was only up four days before Brennan landed a tenant. “The better windows and the better locations are not going to stay vacant for long,” he said.
Broker Mark Browne concurs with that outlook. The principal of Browne Realty Advisors said most of the vacancies on Newbury Street these days are in secondary locations, with retailers still anxious to compete for the top spots. He just renewed Ann Taylor at 18 Newbury St., for example, with the 5,900-square-foot space fetching an impressive $190 per square foot. Browne also leased 3,000 square feet to Puma, which will open a store this spring at 333 Newbury St.
Newbury Street “will do fine,” Browne said. “You’re naturally going to have turnover, but people really want to be there.” Although he would not disclose the name, Browne said he is currently working on a 3,000-square-foot lease with a nationally known tenant.
The broker who has received landlord inquiries said it has generally been prompted by the tenant either missing a rent payment or asking for rent concessions to reflect the changed economic climate. In most instances, the broker said, landlords are reluctant to make concessions, instead feeling there is enough interest to find a replacement if the retailer does ultimately fail.
Brennan said he has yet to see any significant decline in rental rates, an analysis backed up by the Ann Taylor rate. Brennan also stressed that some of the space which is coming up on Newbury Street has more to do with retailers’ overall problems and not the district itself. The closing of both Rodier and Country Road Australia were part of a national shutdown of those chains, he noted.
“Some of these people needed to be weeded out,” he said. “You have to stay on the cutting edge; otherwise, you aren’t going to make it.”
