Perhaps no commercial district in Manhattan has been hit harder by the financial havoc caused by the pandemic.
In the chic neighborhood of SoHo, more than 40 stores have closed during the pandemic. More than a quarter of the offices, once among the most desirable and expensive in New York City, are empty, the highest vacancy rate in Manhattan. The international tourists who fueled the area’s economy vanished a year and a half ago.
Perhaps no commercial district in the American city hardest hit by the pandemic’s financial devastation has been hurt more than the picturesque district of ornate cast-iron buildings, art galleries and designer boutiques that made it one of the country’s hippest neighborhoods.
As New York climbs out of the depths of an economic free-fall, it has notched some major milestones lately. In-person classes have resumed at the city’s schools, Broadway theaters have reopened and 300,000 municipal workers have returned to their offices for the first time in 18 months.
But on SoHo’s cobblestone streets, the economic scars have not yet healed, a sign of how vulnerable New York is to a contagious disease that has unraveled an urban economy built on face-to-face interactions in offices, restaurants and stores.
The sidewalks are bare. “For Lease” signs hang in one storefront after another. Employees far outnumber shoppers in most boutiques, and many shops have slashed their hours, opening as late as noon in some cases and closing earlier than they did before the pandemic. The neighborhood’s 8,000 residents cannot make up for the loss in tourists.
“The pandemic has affected us in a bad way,” said Connie Gharibian, the finance director at Hudson Furniture, a high-end furniture designer that decided not to renew the lease on its Wooster Street showroom after people started staying home in March 2020. “The traffic there was just not enough to keep us going.”
Just a few years ago, SoHo was one of the world’s hottest retail districts, packed with luxury brands like Chanel, Gucci, Louis Vuitton and Ralph Lauren that paid some of the highest rents in the country. Shoppers spent $3.1 billion in SoHo and neighboring NoHo in 2016, according to a report by HR & A Advisors, second only to Fifth Avenue in Midtown Manhattan in total retail revenue.
Tourists swarmed Broadway’s overflowing sidewalks and bobbed in and out of stores like Dean & Deluca, Nike and Uniqlo. Social media influencers clogged narrow side streets, snapping pictures for posting on Instagram. Shoppers lined up outside stores early on Fridays, eager to buy items on sale.
Almost overnight, the shoppers, notably those from overseas, evaporated, proving how heavily the stores relied on them.
“Without tourists, it’s dead down here,” said Carlos Garcia, the manager of Mystique Boutique, a locally owned clothing store on Broadway that now closes at 7 p.m., two hours earlier than it used to.
Starting in November, travel restrictions will be eased for international visitors who are vaccinated, but city officials say it could take until 2025 for overseas tourism to return to previous levels.
SoHo was facing challenges even before the pandemic, given the steady decline of brick-and-mortar retail. But the problems have worsened amid the recession set off by the pandemic and the accompanying explosion in online shopping.
One of the largest real estate companies in New York, Vornado Realty Trust, recently sold two properties in SoHo, along with several on Madison Avenue, at a $7 million loss. Only a third of the buildings’ storefronts were occupied, the company said.
Still, property owners and neighborhood business leaders say there is reason for optimism. Foot traffic has risen in recent months, as has the number of subway riders at SoHo stations. New retailers are moving in, including the sporting goods brand Wilson’s first flagship store, and some start-ups are leasing office space, though often for less money at shorter terms.
“Retail rents had gotten too high,” said Jeffrey Gural, the chairman of GFP Real Estate, which owns several SoHo buildings. “In some cases, they were taking the space for marketing, knowing they weren’t going to be profitable stores. Those days are over.”
Before the neighborhood’s current travails, many residents and business owners were locked in a bitter dispute with the city over a proposed rezoning that would allow for 3,200 new apartments, including hundreds of below-market-rate units. The proposal has stirred up concerns, common in SoHo for decades, that any change would disrupt the character of an area that young artists put on the map a half-century ago.
The rezoning, which was proposed by Mayor Bill de Blasio and has been under city review for months, faces an uncertain outcome with the City Council. Several members have said they oppose it and have demanded revisions, raising doubts that it will get a vote before Mr. de Blasio’s term ends in December.
Eric Adams, the Democratic mayoral nominee in New York City, has voiced his support for using rezoning to address the city’s affordable-housing challenges, including in wealthy neighborhoods in Manhattan. “We need to look at those sacred cows like SoHo,” Mr. Adams said in a recent interview on the “The Ezra Klein Show,” a podcast produced by The New York Times.
Mr. Gural said he supports the rezoning because an influx of new residents could help save the retail district. “The people living in SoHo have to suck it up and recognize that the city has changed and the artists have moved out,” he said.
No other Manhattan neighborhood saw its offices empty out faster after the pandemic began. The roughly 25 percent of office space that is available for lease, according to the real estate company Savills, is nearly triple the vacancy rate before the pandemic. Many companies have abandoned their spaces as they have decided to make remote work a permanent feature even after the pandemic eases.
Like many businesses that chose to locate in SoHo, the online retailer Boxed was drawn by the bustling streets, open lofts and industrial architecture. The company’s employees first returned to the office in September, although doing so was not mandatory.
“It’s such a shame because right before the pandemic, this was a vibrant neighborhood,” said Chieh Huang, the company’s chief executive. “It was really a wonderful time, and it really has swung in the opposite direction.”
Mr. Huang said that Boxed was committed to SoHo, but that it was also adapting to hybrid work and had begun to hire employees who live elsewhere and can work remotely full time.
“I just don’t see a world within the next five years where we snap back to five days a week at the office,” he said.
New York has some of the most coveted and recognizable retail strips anywhere. Fifth Avenue has long attracted the largest brands in the world, and Madison Avenue became a prime location for luxury retailers. The pandemic has ravaged both corridors.
For years, the biggest retailers ignored SoHo. It was a gritty area, home to factories in the early 20th century and then, starting in the 1960s, a refuge for artists of all stripes who were drawn by its cavernous lofts and cheap rents. Tourists caught on, flocking to galleries and hanging around after to marvel at the buildings’ industrial columns, pressed-tin ceilings and bare brick walls.
European designers discovered the neighborhood in the 1990s, beginning a decades-long migration downtown for high-end retailers that transformed the neighborhood into a global shopping mecca. By the early 2000s, SoHo had become unaffordable for most mom-and-pop stores as well as for residents without millions of dollars.
The retail peak probably came in February 2014, when Prada renewed the lease on its 10,000-square-foot store at Broadway and Prince Street for $1,000 a square foot. It was the first retail lease south of Midtown to reach that figure.
Prices have plummeted since then. The current asking price for SoHo storefronts is $274 a square foot, down from $350 right before the pandemic, according to the real estate services firm Cushman and Wakefield.
Nearly 27 percent of the neighborhood’s retail space was available at the end of July, according to the most recent data available; the figure was 23 percent at beginning of last year, the firm said. Brands like Victoria’s Secret, Frye and Missoni have closed their stores.
By the time Prada and Louis Vuitton arrived in the late ’90s — Prada with three stores by 1999 — Doug Cohen had been operating several boutiques in the area for years.
He eventually owned 14 stores in SoHo at a time when rent was relatively inexpensive. One, between Grand and Canal Streets, cost him $5,000 a month then, he said, before skyrocketing to $40,000 a month in recent years. He closed the store during the pandemic.
“The big guys come in, and we can’t compete with them,” he said. “It’s still a nice neighborhood, but it’s turning into any American place with brand names and none of us mom-and-pop stores.”
Mr. Cohen said that before the pandemic, his stores struggled to turn a profit as rents rose, competition increased and the threat of online shopping intensified. He now has just one store in SoHo, Mystic Boutique.
“Corona was the cherry on top,” he said.
SoHo Catered to Free-Spending Tourists. What Happens Without Them? - The New York Times
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