To even the casual observer, the retail scene in downtown White Plains is vibrant, but with an asterisk affixed. Economic reality intersects with entrepreneurial optimism as evidenced by numerous empty storefronts that visibly dot the central city landscape.
“I say this to everybody, anyone who tells you that the last 10 months haven”™t been very difficult is not telling you the truth,” said Rick Ammirato, executive director of the White Plains Business Improvement District (BID). “My sense is that the people who survived through the winter feel like they”™ve made it through the worst part and that they”™re going to be OK.”
Two that haven”™t fared that well are: Via Quadronno, an upscale Italian eatery that closed and will be converted into a more moderately-priced trattoria; and Tango Grill filed for Chapter 11 bankruptcy protection last month.
Amid rumors of more high-end closings, Gerry Houlihan, real estate agent at Houlihan & O”™Malley Real Estate Services in Bronxville and sole owner of Houlihan Business Brokers Inc., weighed in on the shared struggle of so many business owners.
“I had a tenant who was going to open a sushi restaurant, got his approvals and ran out of money,” he said of a vacancy on East Post Road. “I”™m working with the landlord trying to get somebody in there.”
On the plus side, existing gas and power lines as well as parking requirements he deemed as “easy to get around,” make conversions attainable.
Houlihan is working on another deal “in the immediate area” to convert an existing restaurant into a new concept. Further details were undisclosed.
The restaurant industry is going through what Houlihan deemed “an industry shakeout.”
“Those going in with high price points are having a tough time because sales are down and unemployment is up,” he said. “The moderately priced people are doing fine.”
Occupancy levels are another issue.
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“I see rents going back to the mid ”™90s, wiping out 15 years of escalations,” said Martin Deitch, a founding partner at commercial brokerage Aries Deitch & Endelson Inc. in Hartsdale. “There is only so much business a tenant can do per square foot. If you cut down occupancy space ”¦ boy, does that help your bottom line.”
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In order for the industry to become healthy again, Houlihan said more closings may be unavoidable.
City officials said there is a hub of activity in the downtown district.
“If you come to White Plains at any given time, especially on the weekends, you wouldn”™t think there is a recession,” Mayor Joseph Delfino said. “The restaurants are packed.”
Places are still opening, he said.
Just weeks old on Mamaroneck Avenue, Haiku, the fifth Asian bistro and sushi bar from partners Michael Lee and Peter Diana, “has been busy.”
Panera Bread is scheduled to open at 1 N. Broadway in the White Plains Plaza, which Deitch said “is a category killer in that market.”
Apogee Pilates Studio and Fitness Center also opened during the recession, a spot Delfino called “a mammoth investment.”
Impulse Hibachi is undergoing construction on Mamaroneck Avenue and will open across the street from Asian Temptation, another spot from owner Andy Lin.
Texas-based Beal Bank will open near the Japanese eatery.
The owners of The Brazen Fox, Rory Dolan and Declan Rainsford, leased the spot directly adjacent to 179 Mamaroneck Ave.; where Houlihan noted “they will open another establishment.”
The tenant: Old and new
For storeowners in the central business district, several points cannot be denied ”“ rents are dropping due to empty space and a different kind of tenant is in demand.
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One of these new tenants is Sudhir Gupta, owner of the weeks-old Eau De Luxe on Martine Avenue, an ode to the classic Parisian perfume shop.
Having been a collector of fine fragrances for 17 years and shifting from wholesale to retail, Gupta decided to try his luck in White Plains by building a niche as a provider of discontinued, hard-to-find and internationally recognized perfume names.
“Business has been really slow because I don”™t think people know it”™s here, which is really unfortunate,” Gupta said. “Many people promised me that they”™d send friends who were looking for fragrances, but then nobody shows up.”
Gupta hopes to soon build a web site to drive buyers his way.
Totaling more than $200,000 in renovations, the high-end Eau De Luxe is a testimony of the downtown area seemingly slashing the drive for dollar-store-type deals; a discount sneaker store was its predecessor.
When one looks at the storeowner of yesteryear, Ammirato said, “For the longest time, the rents held up in White Plains because the difference between this recession and what you saw in the early ”™90s is that when the economy lessened and people were losing tenants, a lot of the landlords put anybody they could in.”
A proliferation of discount-oriented shops popped up as a result.
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“You had seen, ”˜We”™ll give you some free rent. We”™ll do this, we”™ll do that”™ just to move someone in,” he said. “Now, you”™re seeing them (landlords) come down in their actual price, but they”™re holding out for a more quality tenant.”
Bonnie Silverman, president of Silverman Realty Group in White Plains, is one of them.
“I am being very selective about my tenant mix,” she said. “I would like to see some different types of retailers, such as a wine bar or a froyo (frozen yogurt) store like Pinkberry or Red Mango. It makes for a more interesting mix.”
Big spaces
In addition to small storefront vacancies, a glut of space was left from big box bankruptcies.
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“I think the recession has hurt the national retailer more than it”™s hurt the franchisee or the small business owner,” Ammirato said. “When you look at the big vacancies we have in the city, we have Fortunoff, Circuit City, Borders ”¦ and I think their issues had more to do with their business plan and structure than it had to do with White Plains, per se.”
The BID estimated a 10.4 percent retail vacancy via a survey, Ammirato said.
Robin Herko, executive vice president of retail at Yonkers-based NAI Friedland Realty, said her guess would be “15 to 20 percent.”
She noted a number of factors could cause a fluctuation in figures.
Delfino said the retail vacancy was 7 percent before the recession and is now 10 percent.
Whatever the percentage, space means loss in sales tax revenue.
According to the New York state Department of Taxation and Finance, sales tax collected in the city of White Plains from April to June 2009 was nearly $1.1 million less than April to June 2008.
“We”™re seeing sales taxes down, obviously, but this is a unique community in that almost 62 percent of taxation comes from sources other than property tax,” Delfino said.
Also down was mortgage tax collection in White Plains. Last month, $147,646.40 was collected by the Office of the Westchester County Clerk. That”™s down $103,269.26 from the $250,915.66 collected in July 2008.
In his 12 years spent as mayor, Delfino said he has seen “high, high rents that probably tripled” during his time in office.
He said the struggle now “is based on the type of retailer they are” and that landlord and tenant must work together.
“Retail leasing rates are 10 to 20 percent down from two years ago,” Houlihan said. “In key spots, like the area between East Post Road and Maple Avenue, most people are doing well. Landlords know that. Most are $35 to $40 per square foot.”
Deitch estimated a half-million square feet of retail space could be available just in central White Plains.
He included the following spaces in his estimate: Filene”™s, 80,000 square feet; Circuit City, 34,000 or 35,000 of which neither are contiguous; Border”™s, 36,000; Fortunoff building, three floors with 60,000 square feet plus per floor; The Pavilion, 35,000 square feet.
Add in “massive amounts of vacancies at The Westchester and The Galleria,” Deitch said, which Hank Fries of Henry W. Fries Real Estate said could run “$45 per square foot,” and a 500,000-square-foot total retail vacancy rate is conceivable.
What”™s next?
The length of the recession will be the major factor in refilling the empty retail spaces.
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“Our location hasn”™t changed and the demographics of our city haven”™t changed,” Ammirato said. “What has changed is the consumer”™s willingness to spend. When you go from a zero savings rate to eight, maybe 10 percent, that”™s going to affect a city that really depends on the retail market.”
“It”™s just retail in general,” Herko said. “We can say whatever we want that we”™re coming out of a recession, but people who are unemployed aren”™t spending. Many properties will have financing issues. A lot of people who have empty retail shopping centers will give up their shopping centers. It takes more than a snapshot of downtown White Plains to realize what is going on.”
“The point I”™d really like to get across is that there is no lack of tenants looking,” Silverman said. “White Plains still has a buzz. There is still activity.”
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Hannah Loewentheil contributed to this report.
