Despite being in possession of a five-year lease on prime retail real estate in Manhattan’s premier retail corridor, Nike recently announced that it would relocate its Niketown store five blocks away from the current location. The company has refused to disclose the reason for the move, but reporters at Crain’s New York Business and elsewhere speculate that the move could have something to do with the current location’s landlord, the Trump Organization. At present, Niketown is located next door to Trump Tower in Manhattan.
Location, Location, Location
On the surface, the store’s location seems like it would be ideal for any retailer. Trump Tower is one of New York City’s most popular tourist destinations, and the Manhattan retail corridor is one of the best places in the world to do business. However, many businesses presently fear that moving into a Trump-associated building could have a polarizing effect on consumers, not to mention legal ramifications in some instances. For example, said Marcus & Millichap broker Eric Anton, an overseas brand moving into the space could face public scrutiny. “Any foreign group [moving in] is going to be looked at as weird,” he said to Forbes, adding, “You know, collusion or some kind of crazy…conspiracy theory.”
Anton also noted that Nike’s move might have little or nothing to do with President Trump himself. As online retailers like Amazon continue to snag larger and larger portions of retail spending each year, “I don’t know of any tenants that need that much space other than department stores, and I don’t think there are any expanding department stores,” he said. Nike spokeswoman Ilana Finley simply stated that the company had been planning the move “for years” in order to “play with new concepts” in a larger space.
The situation demonstrates clearly how important it is for real estate investors to understand every angle of a market before making an investment or, at a minimum, to work with a local real estate professional who has this insight. Failure to fully appreciate local consumer sentiment, whether those consumers are buyers, sellers, or tenants, could cause you to miss an important insight about a potential investment’s shortcomings or advantages.