Changing politics, rising costs and shifting demand put NYC retail in focus. Retail in New York City may have reached yet another turning point.
National chains are reassessing their strategies, with some scaling back even in high-traffic corridors. At the same time, rising food and labor costs, softer tourism, and a slowing job market are adding layers of pressure to the city’s retail ecosystem. With a mayoral election imminent, uncertainty and opportunity are colliding in real time.
To understand where things may be headed, CoStar asked leading retail experts to weigh in. From the future of prime storefronts to the balance between independents and national players, their insights offer a candid look at the challenges and possibilities shaping New York’s retail landscape.
Topic: Politics
CoStar: With a new mayor on the horizon, what are the key issues for NYC’s retail community, and how might the election shape sentiment going forward?
Sean Moran (Cushman & Wakefield)
Sean Moran, executive director at Cushman & Wakefield: During any election cycle there is some uneasiness surrounding the uncertainty and policy changes. NYC has lived through more than 100 different mayors and while I’m sure whoever gets elected will leave their mark, the retail real estate in NYC is unlikely to be materially impacted. Retailer proformas may be impacted based on policies (for example, a higher minimum wage will impact a tenant’s profitability) and we may see some downward pressure in occupancy costs, however, based on tenant demand currently outweighing our retail real estate supply within the city, my instinct is that there won’t be any significant impact to availability rates in the retail sector.
William P. O’Brien, managing broker at M.C. O’Brien: The pending election opens up a wide range of issues, with candidates who could influence the market in positive ways — or in some potentially unsettling ways. Without a crystal ball, it’s impossible to know which.
Shlomi Bagdadi, founder & CEO at Tri State Commercial: The CRE community is watching this mayoral election very closely and are somewhat nervous about the outcome, which may affect the following: Rent rates and affordability may definitely affect the retail vacancy rate, which has been consistently improving since 2019. City taxation will have a direct effect on increasing rents, not only for retail but for all types of CRE assets. Minimum wage increase can put certain shops out of business and increase unemployment, therefore directly affecting consumer spending and repeating the cycle. City-run groceries can have a huge effect on large-box retailers and also increase the vacancy rate.
Topic: Opportunity
CoStar: Several Starbucks have recently shuttered in high-traffic NYC corridors. As national chains recalibrate, which types of tenants are best suited to step into these prime locations?
William P. O’Brien (M.C. O’Brien)
O’Brien: In many cases, these spaces will be backfilled by new food and beverage operators, particularly quick-service restaurants. The challenge will be pricing, as many landlords won’t be able to replicate prior rent levels. If quick-service tenants don’t step in, mercantile and service operators will be even more hard pressed to meet those expectations.
Bagdadi: We are actively in touch with Starbucks owners to address this exact question, and our targets are local café operators such as Devoción, Partners, and Copper Mug. Alternatively, fast-casual or grab-and-go concepts like poke bowls, juice bars and Sweetgreen/Just Salad are strong fits. These spaces already have the infrastructure that tenants typically invest in up front, so taking over helps their cash flow. Not to mention, many of these key locations were hand-selected and vetted previously by Starbucks.
Topic: Retail landscape
CoStar: With national brands reducing their footprint, are owners today more open to leasing space to more local/independent businesses, or do national names still get priority?
Shlomi Bagdadi (Tri State Commercial)
Bagdadi: Local brands with a national feel that offer the new experiential retail (i.e., Nuts Factory, Anita Gelato, Venchi) are the types of tenants that are going to take these Starbucks sites. These companies have great growth potential and much less red tape and corporate ladder to climb in order to get a deal done. This structure benefits landlords because we can get good deals for both parties completed much quicker. Those tenants wanted the ‘Grand Opening’ sign yesterday!
Moran: We have found New York City landlords to always be cognizant of the overall deal. Depending on where an asset sits in its life cycle (is there near-term debt, no debt, etc.), changes an owner’s mentality on the best economic deal versus the best credit profile of tenant versus the best retailer for the asset. The ‘right’ tenant at the base of a more than 2 million-square-foot office tower is going to be different than the best tenant in a five-story building in Soho, where the retailer accounts for the majority of the income at the property.
O’Brien: For smaller spaces, backfilling is probable, but the larger spaces are likely to languish in many cases. The retail landscape has shifted so dramatically from traditional brick-and-mortar toward online fulfillment that it has become much harder to absorb those big-box vacancies.
Topic: Local and national headwinds
CoStar: While food and beverage concepts have reigned supreme, how much do you expect declining tourism, rising food/labor expenses and a recent slowdown in job growth to impact this sector?
Moran: While tourism nationally may have slowed, we have continued to see tourism in NYC to be robust, setting records in 2024, and all indications point to a similar number in 2025. Post-COVID, we have seen landlords and tenants in the F&B space work like true partners in lease transactions, where landlord rental expectations need to align with a tenant’s sales proforma. We expect that to continue in the ever-evolving cost changes in the F&B industry.
O’Brien: There are so many variables affecting the market today, everything from local factors to serious national and geopolitical issues. If I had a crystal ball, the picture would be clearer. What I can say with confidence is that, over the long term, this is New York City. The market has always found a way to stabilize, and I believe we’ll once again reach a new normal.
Bagdadi: I’m not sure if we’re going to experience that much decline in tourism. I have to check the most recent stats, but normally F&B, in my opinion, is dependent on locals and office users at least equally to the tourists, so I don’t expect much slowdown in that sector. In my view, the success of food and beverage establishments is equally, if not more, dependent on local residents and office workers, which are now making a huge comeback to NYC with 23 million square feet leased in 2025.
In fact, we are currently observing robust demand for food and beverage spaces across New York City. There are more active requirements than available vacancies, particularly for second-generation sites. Interestingly, “key money” has made a comeback as well, with tenants willing to pay up front for turnkey spaces.