A friend of mine told me last weekend that he thinks the two biggest issues in NYC right now are the rise of homelessness and the proliferation of vacant retail spaces. One is about not having a space to live and the other is about a glut of vacant space. Interesting dichotomy.
I was walking home from the gym this morning and passed this sign on a vibrant shopping street in our neighborhood.
It got me thinking about what this glut of vacant real estate is all about. Is it the result of so much commerce moving online that retailers can’t make a profit selling out of a store anymore? Is it the result of rents being too high and when landlords bring them down, we will see the spaces fill up again? Is it a combination of both? And can technology help address this problem?
We are seeing an avalanche of startups that are taking the fractional ownership idea popularized by Airbnb and WeWork and applying it to new and different areas. For example, popup stores instead of long term leases.
We are also seeing retailers using technology to attract shoppers into their stores and supplement the the inventory they have on hand.
I do believe that in person shopping has a place in the online era, but I also believe that too many retailers are stuck in an old model that is not working anymore. The Gotham Gal, who started her career in retail, has been blogging about this topic for over a decade and saw this change coming long before the stores started going vacant.
My guess is that we are in the early innings of a long and painful restructuring of retail, ground floor real estate, and the shopping experience more broadly. And I think we will be seeing more signs like the one I photographed this morning in the coming years.
But that doesn’t mean there isn’t opportunity in the midst of this painful process. In fact, it means there is a lot. And those entrepreneurs that seek to help the shopper, the retailer, and the landlord will have the greatest opportunity to reshape this sector and build large and lasting businesses.