ICSC 2023: Newmark’s Ariel Schuster On New York’s Retail Comeback
In a time of much uncertainty for the retail sector, there are no signs of any slowdown at Newmark (NMRK) with the brokerage giant closing a number of high-profile leases the past few months and a large pipeline ahead.
Ariel Schuster, vice chairman at Newmark, has been at the front lines of many of these deals.
His impressive resume includes representing Barnes & Noble in its planned reopening on Manhattan’s Upper East Side at 1556 Third Avenue after the company’s previous bookstore on East 86th Street shuttered in the summer of 2020.
Schuster spent some time with Commercial Observer at the annual ICSC conference in Las Vegas explaining why he is bullish about the future of retail and the recovery of New York from the COVID-19 pandemic.
Schuster’s comments have been edited for length and clarity
Commercial Observer: What is the sentiment at ICSC 2023 so far?
Ariel Schuster: The sentiment is great so far. Last year’s sentiment was good, but this year it is even better. There is a lot of energy and a lot more retailers are here, so you’re seeing real deal-making happening. I’d be curious to see the attendance numbers, but my sense is that it’s definitely up from last year.
You represent a number of retail tenants in addition to large landlords. What’s most important to tenants now when inking leases?
A lot of it has to do with space and efficiency. Efficient stores are more important than they ever were. Three-level stores are tough to operate, so I think our retailers are really focusing on getting efficient space. More generally speaking, retailers want to be where other successful retailers are, so a big part of our job is getting the data on sales numbers and trends. I think that’s what helps drive these decisions.
One big tenant lease you led recently was Barnes & Noble returning to the Upper East Side. What does this deal indicate for the state of physical bookstores and brick-and-mortar retail?
I love Barnes & Noble. It’s one of my favorite stores. I go with my daughter every Saturday in the Upper West Side. I think there are a lot of people like me — where bookstores are super important to them — and Barnes & Noble has done a great job since they were bought a few years ago in making things less cookie cutter. If you read about what the CEO has done, he allows each store manager to buy the books. As opposed to having a person buy books for the whole country, each area has their own order. So the Upper East Side customer is different from the Upper West Side or Tribeca.
As it pertains to real estate, they’re also nimble and thoughtful. They don’t have to have it exactly the same way each time. We knew we would need to get back to the Upper East Side as they used to have a store at 86th Street, so it was all about finding the right deal and the right rents so they could be successful. We’ve definitely seen Barnes expanding, and they’re doing a great job. Their sales are up and the stores look great. I think it is just another good example of retailers needing stores and not relying just on online.
What is the retail outlook for large cities like New York in particular that were hit hard by the COVID-19 pandemic?
We’ve seen New York come back already in areas like SoHo, Flatiron and Madison Avenue, so we’re kind of in the seventh inning of this game already. It took 18 months for New York to come back and there’s been a lot of leasing. We’re not talking about things that are about to happen because things have already happened. Different cities are reacting differently.
We do some work in Chicago, we do some work in San Francisco and in L.A. They’re not all coming back in the same way, but New York — where I do most of my work — is back no doubt.
How is the rest of 2023 shaping up at Newmark in terms of retail deals?
Our team came back to the office in September of 2020, five days a week, and I think that has helped get us where we are now where we have a bigger market share than we ever had just by pure virtue of out-hustling our competition. We know what our pipeline is, which we reviewed around two weeks ago, and we’re going to have a great end to 2023. And I think 2024 is going to be even better.
Andrew Coen can be reached at firstname.lastname@example.org