Value retailer Five Below is moving into one of the most desirable yet pricey shopping districts in the U.S.: New York's Fifth Avenue.
The location, which will be Five Below's first in Manhattan, is set to open in November near Bryant Park in between 44th and 45th streets, the company told CNBC. It will be about 10,800 square feet, compared with an average Five Below store that's roughly 8,000 square feet.
The move comes as New York, along with the rest of the U.S., has seen a glut of vacant storefronts come back on the market. Companies like Bon-Ton and Toys R Us have filed for bankruptcy in recent months, shuttering hundreds of stores across the country as a result. In New York specifically, growth has been hampered by sky-high rents and brokers unwilling to negotiate on price and lease terms.
More recently, however, the situation has improved — landlords are more willing to accommodate and pricing pressures have eased, real estate analysts based in New York tell CNBC. This has opened up the doors for more expansion: e-commerce brands like Casper, Everlane and Allbirds are setting up shop in the city, while international retailers like Primark are increasingly interested in moving there.
According to a recent report from the Real Estate Board of New York, average asking rents declined in 9 of 17 New York corridors from a year ago during the spring. Still, rents on the upper half of Fifth Avenue — starting at 49th Street and close to Five Below's new store — were a whopping $3,900 per square foot, on average, REBNY found.
This pocket of the city, right near Times Square, can be a marketing ploy for retailers today more than anything else. Steep rent payments can be justified by the foot traffic that comes past your doors, the photo ops and the word of mouth generated simply by being there.
"This is a unique opportunity for us to establish a presence in one of the world’s most iconic and popular shopping destinations and introduce new customers to the Five Below brand," CEO Joel Anderson said.