Consolo assures Owners that retail is recession-proof

Real Estate Weekly, Jan 17, 2001

With the volatility of the stock market, many in the real estate industry are wondering what this means for the health of New York's commercial real estate market. "I don't feel nervous," said retail real estate broker Faith Hope Consolo, as she addressed the members of the Associated Builders and Owners of Greater New York, Inc.

Consolo, the guest speaker at the ABO's monthly luncheon held last week at the National Arts Club, believes a lot will depend on what the Federal Reserve and the new presidential administration will do in the upcoming months. She suggested they act quickly and believes the Fed should cut interest rates twice in order to buoy the current economic climate.

But regardless of the Fed's action or inaction, "as long as landlords don't panic things will be fine," Consolo said. "We might not see the bidding wars over deals we saw this last year, but we'll see a market that will continue to be viable."

Consolo contributes her optimism to two key factors: a shortage of retail space in New York and the number of retailers from all over the U.S and Europe who desperately want to be in New York.

"The fact remains that anybody who's anybody wants to be in New York," said Consolo.

"Retailers realize that one store in New York is better than 12 stores anywhere else."

Conoslo also discussed the recent bankruptcy of and foreclosure on major retailers such as Bradlee's and Montgomery Ward. Many industry executives have taken these closings as a sign of a slipping economy. Consolo believes that these failures were a result of poor management and slow reaction to current market trends by individual retailers, rather than a result of diminished buying power on the part of consumers.

"When people ask me my opinion about what's going to happen to the Bradlee's site on 14th Street, I say, 14th Street now has the potential to get a different great, new retailer," said Consolo.

On the subject of other bankruptcies, including dotcom failures, Consolo was equality bullish. "Yes, bankruptcies and foreclosing are happening," she noted, "but they are just freeing up space. For every company that folds, five other companies want that space."

"New York is a different city today then it was in 1990," she continued. "Today, we have strong companies with solid fundamentals. If we remain optimistic we'll be fine," she added.

"This strength can be seen in the recent growth and expansion of neighborhoods," said Consolo. "Places where retailers traditionally had no interest in setting up shop are now lined with new stores. From the Garment District, up through Times Square and even into Harlem, new residential buildings, restaurants, and retailers are opening with great success." In commenting on the oddity and unpredictability of the real estate market, Consolo remarked, "Ten years ago who thought that one of the largest retailers in Time Square would turn out to be Toys 'R' Us?"

"Over all the real estate industry in New York remains strong," said Consolo. "But if I'm wrong and it isn't we'll go back to creative brokeraging. We'll work smarter. We'll work longer hours. Though I don't know how that's possible."