Q&A from the Corner Office

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September 21, 2009

Q&A from the Corner Office

Jonathan Gordon knows leases and that makes him good to
know.

By Kelly Liyakasa

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Creativity in constructing a lease that works for all
parties is key in the current retail environment, said Jonathan Gordon, president
of Admiral Real Estate Services Corp. in Bronxville. As for recovery, retailers
have had to rethink their capital strategies to survive.


Q: Are retail vacancies impacting tax collection figures and what trends
are you seeing?


Gordon: “Some of the more established retailers that operate
in Westchester/Fairfield counties have reported to us that the first half of
2009 saw sales figures 15 percent to 50 percent off from 2008. The second half
of 2009 appears to be better, with sales figures somewhere around 5 percent to
15 percent down from the prior year.

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“Even with that encouraging trend, it will take a lot to recover from the
downturn. With the credit markets still being tight, retailers are having
problems getting the same credit lines that they’ve relied on for the last
decade to help them with inventory for the fall/holiday season. In order to
weather the storm, retailers have had to resourcefully adapt their inventory,
pricing and capital strategies to adjust to the economic environment.


“The temporary reduction in retail sales has translated into lower sales taxes
collected by municipalities. Retail rents have fallen from their previous
highs, and lower rents, combined with higher vacancy rates and lower risk
appetite from investors have cut values of retail properties.


“It’s not all bad news, however. Many micro-markets are faring better than
others due to their strong demographic foundations. We’ve also begun to see
increased willingness from retailers to make commitments. For instance, we are
working with a number of dynamic retailers who are actively looking for new
opportunities in a retail market that has grown exponentially during the last
14 years.  These retailers recognize the long-term health of the
Westchester/Fairfield markets and are hoping to take advantage of the current
market to secure additional locations in advance of the inevitable economic
rebound. Franchises are another bright spot. They’ve become a driving force in
this area, bringing exciting new concepts and vitality, as well as new
management talent – many franchises are being run by smart, creative people who
lost their corporate jobs in the downturn.”


Gordon may be contacted at jgordon@admiralrealestate.com