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Retail startups like Allbirds, Everlane, and more are flocking to one of NYC's trendiest neighborhoods to open stores - here's how big the trend has become
Retail startups like Allbirds, Everlane, and more are flocking to one of NYC's trendiest neighborhoods to open stores - here's how big the trend has become
Jessica TylerSep 19, 2018, 22:55 IST
Business Insider/Jessica Tyler
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Allbirds recently opened its first flagship store in SoHo.
It's the most recent of many e-commerce startups to open up in that neighborhood, including popular retail startups like Everlane and Casper.
According to Nicole LaRusso, Director of Research & Analysis for CBRE Tri-State, there are a few reasons that brands keep choosing this neighborhood, from attracting the customers that they're targeting to the dropping rent prices.
We went to SoHo to see how prevalent this trend was for ourselves.
Allbirds, once an online-only shoe retailer known for making "the world's most comfortable shoe," just opened up its first permanent flagship store in NYC.
It isn't the only store to do so. In the past year, it seems like more and more online-only stores have been opening up in downtown Manhattan. Retail startups like Everlane, Allbirds, Casper, and others which started as e-commerce only brands have been opening up their first physical retail stores in SoHo and the surrounding neighborhoods like NoHo and Nolita.
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"Being in the SoHo neighborhood makes our brand experience accessible to New Yorkers, and also to visitors from around the country and the world," Allbirds told Business Insider. "Our first SoHo store was a concept store - it was meant as a learning opportunity for us and a way to interact with customers in our largest market."
The neighborhood tends to draw a lot of startups that are willing to invest more in their physical stores, according to Nicole LaRusso, Director of Research & Analysis for CBRE Tri-State. She explained to Business Insider that SoHo attracts sophisticated and thoughtful millennials that these brands are targeting. What's more, the varied mix of brands in the area keeps the shopping experience interesting for customers.
This wasn't always the case. Between 2010-2014, there were countless empty storefronts in SoHo. Rents were high, and shoppers were starting to shift towards online shopping instead of shopping in physical stores.
According to data CBRE shared with Business Insider, rents began to drop in early 2016, and e-commerce startups began filling the spaces either permanently or as pop-ups. In some cases, like with Everlane, stores will start out as a pop up shop, and if the shop is successful, the brand will move in permanently.
We recently went shopping in SoHo, and saw how prevalent this trend was for ourselves:
To track rents and study real estate trends in different parts of NYC, CBRE divides the city into neighborhoods, and then divides each neighborhood into different corridors.
In SoHo, there are three main corridors CBRE looks at: Prince Street...
...Spring Street...
...and Broadway.
Though those are the main corridors where CBRE tracks rents, Director of Research & Analysis Nicole LaRusso told Business Insider that there are other important areas for retail, like Wooster Street. There were quite a few retail spaces for lease on that block.
SoHo has a pretty big range of stores, including fast fashion retailers like H&M, more high-end stores like Burberry, and a growing number of startups.
A lot of the startups opening in the area spill over to nearby neighborhoods like NoHo and Nolita, like Casper and Everlane.
Everlane, which opened its first physical store in January, first opened as a pop-up shop before opening its permanent shop at 28 Prince Street.
Allbirds is another example of a retailer that started exclusively online, opened a temporary storefront in SoHo shortly after, and eventually opened a permanent flagship store on Spring Street.
Being in the SoHo neighborhood makes our brand experience accessible to New Yorkers, and also to visitors from around the country and the world," Allbirds told Business Insider. "Our first SoHo store was a concept store —it was meant as a learning opportunity for us and a way to interact with customers in our largest market."
A big reason that so many retail startups are opening up shop in SoHo is the amount of open store fronts and low rent prices. There were "space for rent" spots on almost every block.
According to data from CBRE, rents having been dropping consistently in the area since early 2016, making it more affordable for smaller brands.
LaRusso also explained that SoHo tends to attract the sophisticated and thoughtful millennials that many of these startups are targeting. There's a range of customers that come to the area because of the range of types of stores, from fast fashion retailers to more high-end boutiques.
There are still a lot of vacancies in the area...
...but it's filling up fast. CBRE data shows that SoHo has eight e-commerce startups that have opened up storefronts, Nolita has four, and NoHo has one. But some of the stores might close after the holidays, LaRusso said.
While its uncertain whether this trend will continue in SoHo, CBRE explained to Business Insider that other neighborhoods like the Flatiron district and Union Square may start seeing something similar.
