The New Newbury Street
By HCC intern, Jack Tuttle
We all have some idea that this pandemic we’re in has caused problems not only only for the average person but also for businesses of all sizes all over the world. Companies you’d never have thought would go bankrupt have started declaring for bankruptcy. And so have the “Main Streets” where big brand outposts generally live alongside some smaller brick and mortars. Boston's Newbury Street has been hit hard. And it’s a representation of what’s happening around highly trafficked retail streets all over the country. So I interviewed a few people about their opinions on what the new Newbury Street will look like: a president of a regional real estate investment company, my grandfather, Barry Solar, who has lived in Back Bay for 18 years, has been a real estate broker for 20 years, and previously worked as a real-estate lawyer for 33 years, and HCC Founder Rachel Solomon (Note: She is also this writer’s mom.)
Price Pressure
The high prices on Newbury Street pre-Covid, was an issue even pre-pandemic. One that led to fewer and fewer independent shops and a growing (and vanilla) representation of big brand outposts. With Covid keeping us all home and restraining our spending, rental prices on Newbury Street have become too high for a growing number of businesses. “Any clothing stores, small local quality stores, can’t afford rent so they won’t be able to maintain a spot on Newbury Street,” said Solar. “Both the sale prices and the rental prices have gone up so much.” If landlords want to see their spaces rented (and nothing’s worse than a bunch of boarded up shops in every way) something has to give. Once, high rental prices of properties could force businesses to start charging higher prices for their products. But in a world where buyers are price sensitive with new urgency and able to click off to a better deal, it's all on the landlords to make changes. “Landlords are going to have to be more flexible on rent and I’m sure they will start to get pressure from retail brands,” Solomon said. In all likelihood, even if landlords adjust, smaller shops will likely be priced out.
A Unique Experience
With people now content to staying home and order online, all of these businesses are stuck trying to compete with online prices, which often reflect the lack of overhead. So there’s renewed pressure to give consumers a reason to go out at all. “The stores with demand are what will do well if they are priced competitively or their stores have unique experiences that can’t be achieved online,” our real estate expert says. Companies that will succeed with in-store retail, will offer the combination of safety precautions and an experience that can’t be matched online. “Retailers have to get more creative about the way they view these spaces,” Solomon says. She wants businesses to start using the space they have access to to give a shopper a totally new shopping experience. “There could be in-store opportunities to customize product. A deeper dive into the history of a brand. Changing in-window art installations with an impetus to capture and share. Already many of these stores are a brand play rather than a sales play. Brands want to say they have a Newbury Street store. People go to experience the brand, touch product, and then still buy online. So what’s the way to deepen and innovate that brand experience right now?”
A Temporary Takeover
We know that the current state of Newbury Street is partially open and partially closed. But what’s next? “There will still be a desire to be on Newbury Street because of the location and great architecture,” our real estate expert says. This might bring comfort to some people knowing Newbury Street will never fall off, but what’s going to happen until things start to normalize again? Solar says things like chain “restaurants, nail salons, and banks” will take over, businesses that can afford rent even in this time because they are larger corporate businesses. Solar also believes that there will be a growth of art galleries before things become normalized again; landlords may get flexible on rent because of the desirable crowd they bring to the street.
So what’s next? For retailers, “they may have to look differently at their cost benefit analysis overall, and whether it makes sense to maintain space on a desirable street as a showplace for innovation and an opportunity to be disruptive,” Solomon says. On the landlord side, it’s time to think about making deals that drive traffic; nothing’s worse than an empty street. One approach is to make these spaces more influencer-friendly with inviting photo features like the Wynwood Walls in Miami, giving influencers and their followers a reason to come.