Empty New York City storefronts being re-employed as ad space

The availability of retail space is at an all-time high in the city, but landlords are not letting their revenue streams dry up. They’re trading in their “For Rent” signs for money-making advertisements—worth thousands of dollars a month—complete with high-tech screens to engage passersby, liven up their vacant real estate and keep the cash flowing. “Something is better than nothing,” said Daniel Sherman, a general manager at Stellar Management. “As New York makes its recovery, it’s nice to identify every income stream you can.” At the real estate firm’s One Soho Square building, it ran an advertisement for the Ford F150 pick up truck—a video ad that took up an entire window and played on loop as New Yorkers walked by the building. The company even included information about the retail space that was available at the end of the ad with the broker’s information. The ad will stay there until they can lease up the space, Sherman said. Stellar, as well as other city landlords like CIM Group, Rockpoint Group and even RXR Realty are amplifying their empty real estate with Frontrunner, a company that connects them with the advertisers and even sets up the storefront with the right technology to get the ads playing. “As you know the pandemic has not been kind to retail businesses and restaurants and has led to an increase in empty window fronts,” company founder Nathan Elliott said. “This increase in window supply has created a great opportunity...to repurpose these vacant spaces to create a temporary revenue stream for landlords while they search for new tenants.” During the second quarter of 2021, retail leasing activity in Manhattan was at 60% below where it was the year prior, according to data from CBRE. During the same quarter, availability hiked up to 290 from 275, reaching a new high and putting pressure on landlords to boost their numbers. Frontrunner partners with building owners to market their space to advertisers who can then pick and choose which addresses they’d like their ads playing at. They pay Frontrunner to place the ad and the landlords also get a check for the use of their windows. On average an installation can generate $25,000 to $30,000 per month and the landlords share in that revenue, Elliott said. Landlords typically earn between 5% and 15% of that, added Sean Moran, a broker at Cushman & Wakefield who represents several properties using Frontrunner’s services. Using cloud technology, Frontrunner can also update what’s playing on a specific screen at a moment’s notice. More from Ad Age: How ad agencies are living up to diversity promises—and where they fall short When a portion of the retail space at One Soho Square was leased, that advertisement was updated immediately to reflect the amount of space remaining at the building, said Moran. Sometimes, when he does tours with clients, he’ll have Frontrunner display their branding on the window for an added touch, he said. Compared to generic leasing signs taped to a window, these are much better from a marketing standpoint, too, he added. Stellar had started using its storefronts in this way in 2019, before the pandemic. But once the outbreak ensued and the city shut down, it became clear that the company would need to get creative to avoid any losses from their empty real estate. Other buildings utilizing their windows for advertising include CIM Group’s 1440 Broadway, DDG Partners’ 100 Franklin St. and the Stahl Organization’s 579 Fifth Ave. RXR Realty activated its available retail space at 237 Park Ave., which has been vacant since 2015 while the company repositioned the building. The current ad is for the new Space Jam movie. The company was in talks with a potential retailer to take the space and the deal died during the pandemic, but the new technology is bringing eyeballs to the store. “So much has evolved in how we look at what retail really means,” said Whitney Arcaro, an executive vice president at the firm. “As we’re coming out of the pandemic...this is the ability to really put the space into the eyes of customers and potential retailers in a more meaningful way.” The real estate firm is considering putting up ads in other vacant retail spaces it owns around Midtown South and in Brooklyn, she said. The Korein family’s building at 608 Fifth Ave., which used to be home to British clothing brand Topshop, has billboards advertising the new HBOMax film, No Sudden Move, though it’s not working with Frontrunner, the tech company confirmed. Topshop first inked a deal for a 44,000 square foot space at the building in 2014, but by 2018 had listed it for sublease and closed down the following year. A representative for the building did not respond to a request for comment. But landlords remain hopeful that a strong recovery and a return of New Yorkers and tourists back into the city will give retail the boost it so badly needs. “We’ve never had as much availability across the city and we are incredibly busy right now trying to find tenants,” Moran said. “I really see these projections being the next wave to help elevate retail spaces.”

Empty New York City storefronts being re-employed as ad space

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