For at least a decade, national retailers’ ranks grew annually across the city.
That chain reaction has now concluded.
The number of chain stores tallied across the city fell 0.3 percent since 2017, which marks the first time the sector lost locations from one year to the next since the Center for an Urban Future think tank began tracking national brands 11 years ago.
The decline was driven by changes in Manhattan, where merchandisers have closed up shops and contributed to a 2.3 percent dip in chain outposts borough-wide, according to a report released by the center Wednesday morning. The other boroughs each gained at least three chain stores, which the center defines as companies that have a minimum of two locations within the city and one outside of it.
"In the past, whether the economy was growing or sagging, chain stores continued to grow, and that didn’t happen this year," said Jonathan Bowles, executive director of the center. "We’ve yet to see a real estate crisis for chain stores, and there are still many chains that are expanding in New York City, but this is the second year in a row that we’ve started to see the impact on merchandise retail . . . It may be the beginning of something bigger."
A record number of national retailers — 124 — reduced their footprint over the last 12 months, the report found. Mid-tier companies that sell apparel, accessories and other merchandise have been concentrated in Manhattan, Bowles said. That segment seems particularly bruised by the rise of e-commerce and shuttered outposts have swept across the borough. For instance, Aerosoles vacated all 13 of its outposts; Sunglass Hut, eight; and BCBG Max Azria, seven, the report said.
Rental rates in Manhattan also propelled the departure from the borough, where commercial tax increases may be passed onto businesses already dealing with higher minimum wages and, in some cases, franchise dues, according to Scott Plasky, first vice president of the real estate firm Marcus & Millichap.
"They’re not making money. So for a lot of these guys, it’s just easier to pull out of Manhattan," Plasky said. "You can rent space in Queens and Brooklyn in some places for $35, $50, $70 (a square foot). It’s double that in Manhattan for some of the tertiary locations."
National brands tended to move into Manhattan first, making it relatively saturated and a less attractive destination for the 99 companies that added locations this year, according to Bowles. He said the other boroughs welcomed more chains, with cellphone companies and beverage and dining chains having a particularly prolific period. AT&T opened 58 stores; Metro PCS — now called Metro by T-Mobile — gained 28 outposts; and Sprint expanded its footprint by 26 locations, according to the report.
"That may be part of their strategy: being in everybody’s eyes," Bowles said, noting cellphone companies’ decisions may be driven more by visibility than sales. "As an overall share of the chain stores, I would say, probably in the boroughs, (it’s) food and cellphone stores to a larger extent."
Other growing brands included Starbucks, Dunkin’ Donuts, Burger King and Chipotle, according to the analysis.
Still, a significant portion of national food brands slimmed their local portfolio, with roughly three dozen such companies closing locations, the center found. There are more food outlets than needed, and the competition has been challenging for many chains, according to Clark Wolf, who founded a food and restaurant consulting firm called Clark Wolf Consulting.
"Now there’s food everywhere, and it’s good food, but it’s in airports and train stations, libraries and museums and all of that stuff," Wolf said. "This is a time when people want transparency, and they want originality, a genuine experience. So chains are just less successful at that."
Sandwich shops have been particularly hard hit, with Subway closing 103 locations in the city, according to the report, which noted several of its peers pared back their portfolio, including Au Bon Pain, ‘Wichcraft and Panera Bread.
"For a lot of years sandwich shops sold some pretty lousy stuff, and it was OK," Clark said. "And then suddenly it wasn’t."
By the Boroughs:
Bronx: 1,000 (2018), 980 (2017)
Brooklyn: 1,715 (2018), 1,712 (2017)
Queens: 1,778 (2018), 1,775 (2017)
Manhattan: 2,904 (2018), 2,971 (2017)
Staten Island: 452 (2018), 438 (2017)
Note: The figures come from the Center for an Urban Future’s examination of how national chain stores it chronicled in 2017 have changed in 2018.
Retailers that experienced significant growth from 2017-18:
1) AT&T added 58 stores, for a total of 118 outposts
2) Metro PCS/Metro by T-Mobile added 28 stores, for a total of 472 outposts
3) Sprint added 26 stores, for a total of 107 outposts
4) T-Mobile added 16 stores, for a total of 252 outposts
5) Starbucks added 15 stores, for a total of 327 outposts
Note: The figures come from the Center for An Urban Future’s examination of how national chain stores it chronicled in 2017 have changed in 2018.
Retailers that experienced significant decline from 2017-18:
1) Subway lost 103 stores, for a total of 330 outposts
2) Aerosoles lost 13 stores, for a total of 0 outposts
3) Sunglass Hut lost 8 stores, for a total of 16 outposts
4) McDonald’s lost 8 stores, for a total of 207 outposts
5) BCBG Max Azria lost 7 stores, for a total of 4 outposts
Note: The figures come from the Center for An Urban Future’s examination of how national chain stores it chronicled in 2017 have changed in 2018.
