The value of Hudson's Bay's Saks Fifth Avenue flagship store in Midtown Manhattan has more than halved in five years, that is according to a new Bloomberg report.
Filings show the building at 611 Fifth Ave. was assessed for $1.6 billion in 2H19, has plunged by 60% in value since it was last appraised at $3.7 billion in 2013.
A Hudson's Bay spokesperson told Bloomberg that the decline in valuation is mostly due to "the performance of the store relative to expectations in 2014, changes in market rents on New York's Fifth Avenue, and the changes in the retail landscape."
Ahead of the holiday season, consumers are pulling back, and this is most evident in Manhattan's retail industry.
Average asking rents for retail space across Upper Fifth Avenue, between 42nd and 49th streets, saw one of the steepest drops in retail rents in Q3, dropping 25% YoY.
Lower Fifth, Broadway, Madison Avenue, SoHo, and Herald Square retail rents over the same period were in free fall. This is a reflection of the weakening consumer base. There were several outliers, Upper Fifth and Times Square retail rents over the same period marginally declined. Meanwhile, the Meatpacking district saw rents jump 7.3% in Q3 YoY.
Patrick Smith, vice chairman at JLL's retail brokerage, said plunging rents in some of NYC's most popular shopping districts is a bad omen.
A random walk down Manhattan these days and you'll find vacant retail shops, as landlords begging for tenants slam rents lower.
The Real Deal has said Manhattan's Upper East Side is "facing a retail vacancy epidemic."
Manhattan Borough President Gale Brewer has said more than 188 vacant shops can be found along Broadway.
Douglas Elliman, a real estate brokerage, has said 20% of Manhattan retail is likely vacant, up 7% since 2016
Manhattan's retail rents and retail vacancy problems are a result of weakening consumer trends.
Hudson's Bay Saks Fifth Avenue flagship store will likely take another sharp drop in value during the next recession.