Manhattan's Fifth Avenue is usually bustling with shoppers looking for luxury items or, at the very least, browsing for fun. But during the pandemic, the city's luxury shopping districts saw a major decline in foot traffic -- and revenue.
In fact, stores all over New York City have seen their revenue take a hit over the past 15 months as residents have fled the city in favor of the suburbs, and those who stayed put were holed up in their apartments, working remotely. A lack of tourists has hurt New York City retailers as well.
But it's not just above-ground stores that are struggling. New York City has a vast subway system that's usually home to several hundred retail stores. And for the past year and change, business has been sluggish to nonexistent.
Subway stores took a beating
A subway station may not seem like an ideal store location, but when we consider the number of people who normally commute throughout New York City's five boroughs, that location starts to look more strategic.
There's just one problem: During the pandemic, subway ridership declined substantially as health concerns drove more people to walk to their destinations or hop in a taxi. And the fact that so many people have been working from home means subways haven't seen the same rush hour traffic they normally would.
In recent weeks, subway ridership has increased substantially -- a sign that New York City may be on the road to recovery. However, it's still only sitting at about 35% of pre-2020 levels.
Furthermore, while subway ridership dropped across all boroughs during the pandemic, it dipped the most in Manhattan. Once again, we can thank the remote work trend for that. But that also means Manhattan subway businesses may have suffered the most.
A good 35 of the 215 retail spaces in the subway have gone out of business since the pandemic began. And now, of the 211 remaining retail spaces within the subway system, only 42 are occupied.
Normally, store closures hurt commercial landlords in a very big way. In this case, that landlord is the MTA. But either way, it begs the question of whether a retail network within the subway system is a viable thing to uphold.
Will stores stay underground?
Now that New York City is gearing up to reopen in full and more companies are making plans to bring employees back to office buildings, subway ridership could easily pick up in the coming months. Furthermore, once tourism increases, there will be more people passing through subway stations -- and potentially popping into stores for the convenience factor.
But still, the events of the past year may prompt subway store owners to rethink the idea of taking up residence underground. The reality is that the coronavirus outbreak may have permanently turned a lot of people off from taking the subway, and it could take a long time for ridership to return to pre-pandemic levels.
If subway stores move their businesses above ground, it could help fill the vacancies New York City's commercial landlords are grappling with. And that's something that could work to the benefit of real estate investors -- even if it comes at the MTA's expense.