Where there is a crisis, there is opportunity. Developers are creating alternative uses for their unrented space. An emerging trend is to convert retail to office space as demonstrated by Amazon leasing the former Lord & Taylor building in midtown Manhattan. According to CoStar, 115 million square feet of retail space is expected to close this year. Some of these retail properties were facing problems long before the pandemic. Covid-19 was the final nail in their coffin.
Not surprisingly CoStar predicts an abundance of Class A office space coming to the market. This is in addition to a quarter of hotels nationwide facing foreclosures. What does this add up to? An enormous amount of space.
This is an exciting moment to look into future uses of this space. Amazon is thinking about converting retail stores (namely Neiman Marcus & JC Penny) into warehouse locations. Other developers have thought of converting hotel space into senior housing. Zoning restrictions may exist. Challenges are inevitable, and this is only the beginning.
Thinking about a creative conversion? Contact GE Grace @ 646-312-6800 or Grace@GeGrace.com for market insight and analysis.