by Calculated Risk on 2/01/2009 05:19:00 PM

From the NY Times: Recession Has Landlords of Retail Tenants Extending Discounts of Their Own

“There are an awful lot of empty stores, but what is more damaging for the landlords is that most of the other stores are empty — not empty physically, but people aren’t shopping,” [Mayor] Bloomberg said.
...
[M]any landlords find themselves in a bind because they paid stiff prices for property in recent years and need to cover hefty mortgage payments. On average, Manhattan landlords paid $3,348 per square foot for retail properties in 2008, compared with $538 per square foot in 2004, according to the brokerage Cushman & Wakefield.
...
While New York City’s retail vacancy rate has remained relatively low at 4.7 percent, it grew faster than in any other major city between the third quarter of 2007 and the third quarter of 2008, according to Marcus & Millichap Research Services.

And rents have started to drop even on busier shopping districts like Madison Avenue, where a Grubb & Ellis report issued last month predicted that rents could fall by as much as 30 percent this year.

The problems are just beginning for New York.