Everything You NEED to Know About Retail Leasing in NYC

Aviva (00:00)
this week's listener of the week is Linda Learns. Linda, thank you so much for leaving us a five star review. And for those of you listening, if you leave us a five star review below, you might be next week's listener of the week, week, week. This week on Commercial Real Estate Secrets, we have Cory Zelnik.

Cory is the CEO and founder of Zelnik and Company. Cory, thank you for being on the show today. Cory, for the listeners, who are you, what do you do? And let's get into some commercial real estate secrets.

Cory Zelnik (00:29)
Thank you for having me.

Alright, let's do it. I am Cory Zelnik. I have been in the retail leasing world for almost 35 years now. I've been in various capacities over the course of all of that time. How did I get in the business? I'll start there. Just by accident. A friend of mine was working at a company. They said they need a guy in Manhattan, which is where I'm from. They paid me $250 a week to literally walk the streets and back.

Back then, we put on a suit and tie and went to work. I walked in, guy handed me a clipboard and a pencil, and he goes, walk up first avenue from bottom to top, and then walk second avenue from top to bottom. And it was about 90 degrees on the Tuesday after Labor Day, and I was soaking wet. So I learned, what I learned quickly was the suits and tie a part of the game, but more importantly, I learned I better get better shoes.

Certainly more comfortable shoes because the whole hip cool sneaker suit thing that we have going on today was not then Was not happening so but so but I did I got into the business accidentally and I was it you know was young and I always say this I don't blame anybody for my bouncing around I don't blame my parents for not giving me the proper guidance and all of that good stuff

But through those early years, I did some bouncing around from a couple of brokerage companies, fortunately made some money along the way. Unfortunately, had to learn the hard way. had a relative and his name was Uncle Sam. So when I made that money on a 1099, I had to find out late that I had to pay some taxes. So we took some bumps and bruises along the way. We call them lessons now.

Aviva (02:20)
bad uncle.

Cory Zelnik (02:31)
And then through some good fortune, I was able to land a job with a small drugstore company. They're called CVS Pharmacy. And at the time they were tiny. They only had 1,100 stores. And so, yeah, but it was important to me at that moment in life was the salary, little bonus, benefits, and things like that.

Aviva (02:49)
Wow.

Cory Zelnik (03:00)
The bouncing around of the brokerage business did a little bit of a hurting on me. And so I was able to come through. I spent three years with CVS. At the time they hired me, it was for a real estate director's job for New York City. They had no stores in the New York City metropolitan area. And as corporations go, they hire someone for the position, they do a job, boom. And then what happened was, you go through, you start out, the first day you get in the car and the first day of work,

They tell you, now we're gonna brainwash you to make sure you forget everything you learned about real estate as a broker and we're gonna teach you the CVS way. Okay, so I get six months of training and then I'm off and running in my market and we did well. I had identified about 12 or so locations but because at the time, we know what they are today but even then at 1,100 stores they were a behemoth and

It was about building, some of these stores were ground ups. Some of them were urban here in New York City. So when I say ground up, that's in the outer boroughs of New York, Brooklyn, Queens. And so we hit a point where they said, okay, let's get them open. Let's see how they operate. Let's see how we function. And just to give you a sense of what CVS was relative to the market, I'm in New York City my entire life. My mother,

Never heard of CVS when I got the job. Okay? Because if you were in New York City, the local pharmacy was called Duane Reade. And if you were from New York City, Duane Reade was the biggest pharmacy in the whole wide world. Okay? That's a preview of what's to come. So I get this job with CVS, we identify locations, we negotiate leases, we build stores, and they say, listen, sit tight, know, go scout Long Island for us, which was

you know, sort of like a, go find something to do. And I got bored quickly. I'm, again, born and raised hyper New Yorker. And what happened was I met a gentleman who very quickly became my partner. He had a small brokerage company here in New York. His name is Jeff Winick. And he said to me, I got this thing going with this company called Duane Reade. Why don't we do something?

And as someone once said, he may be an offer I couldn't refuse. I took it on and like I said, we became fast partners. And through the next 10 years, we did over about 250 Duane Reade drugstores. They went from what was called a mom and pop 39 store chain because they were founded by a family, private equity, then publicly traded.

So we went through all of that together and it was a tremendous ride. It was a tremendous ride. And then there was a pause and Jeff and I, as they say, or at least as the documents say, we had philosophical differences and went our separate ways. 18 years later, which is today, that's how long I have my company. So 18 years.

August I formed Zelnik and Company. Continued to do retail leasing representing both landlords and tenants. I represent one of the biggest independent landlords here in New York City for the last 24 years. I represent a small Chinese QSR chain called Panda Express for about 18 years now. Great story there. Eight years.

Aviva (06:47)
Wow.

Cory Zelnik (06:52)
before we signed the first lease in New York City. Eight years. Yep. There should be a sign above my head that says patience, right? So, right, and we're still doing it today. As we speak, I could get a text message during this call, and I mean this literally, that they've approved the most expensive deal in the history of the company. I'm waiting for that.

Aviva (06:57)
What?

Holy smokes.

Cory Zelnik (07:21)
that message. So I'm hoping. So I've been doing the Panda stuff. Smash Burger is another company we've done a lot of business with over the last seven years. And more locally, and I literally just ran up from a meeting with him, there's a company here called Lenwich, which is our local sandwich salad place. And they've been in business for 35 years. They have 14 locations. We've done like six of them over the last seven or eight years.

And that's how I do my business. It's a relationship business as we all know, but I maintain these things for a very, very long time. And so that's sort of, you know, that's the nutshell of it.

Aviva (08:03)
For the brokers who are listening, how are you creating these relationships? How do you get Panda Express in on the phone?

Cory Zelnik (08:12)
Well, sometimes, you know, like they say, it's a little bit of luck that comes along with the hard work and the relationship. So what happened was there was that the people, I did business with a company called Blockbuster Video and what a blessed memories, right? I did their first two locations in New York City way back when. And through that, you meet people. so Blockbuster,

Aviva (08:28)
of blessed memory.

Cory Zelnik (08:40)
was circling the drain for a bit of time before they finally were gone. But the blockbuster real estate people took on new jobs and one of them went to run Panda Express in the region. And so I got that, you know, I got referred there. I had to pass the test, so to speak, did it. And so for the pleasure of getting that account, I spent eight years informing them about the New York City market. And...

You have to understand, Panda does no franchising. They're all corporate stores and it's family were privately held. have about 2,800 stores. The Andrew and Peggy Cherng husband and wife team, Fortune 300, hands literally in every deal. They have a McDonald's mentality, meaning

they own a large majority of the properties and they're also investors. So like I'm looking out the window at a midtown office building for all I know he owns half of it. So he's that kind of investor. And so he'd be in New York often. And so during that eight year period of keeping them informed as to the market, every now and again, someone would send me a screenshot and they said, Andrew just walked by this store.

What are they asking in rent? So I did a lot of that stuff prior to really, really kicking off the business. And so it's evolved. am with now my third real estate director, just because people have moved on or retired. I have a great relationship with the firm. And so we maintain that. And it's certainly not myself. I have a great team.

Aviva (10:06)
huh.

Cory Zelnik (10:31)
Jason, Stephanie, Brandon, who we added to the team, one of the young kids working with me now. And you know, the world, as you know, has become so data driven, and they have too. So it's a constant. know, it's just, give me the phone call, let me know. Phone call, I heard this chain is rolling out in New York City. Can you get some information on them, whoever them happens to be on that particular week?

So it's that kind of constant, it's that kind of, for lack of a better term, babysitting that you do to maintain. And so that's why I'm fortunate we do that, we do it well, and it's allowed us to stay with them and them to stay with us.

Aviva (11:20)
Wow. So how long of leases is Panda? What are these leases looking like in turn?

Cory Zelnik (11:27)
15

years, 15 years and three five year options.

Aviva (11:31)
What's the longest lease you've ever signed?

Cory Zelnik (11:35)
Well, if you if you look at options and things like that I did one one well I did I did I did a couple of 49 year net triple triple net leases with options Yeah, but you but you know for sake of Broker knowledge whoever may be listening here. I know you have a tremendous amount of followers in New York City Typically, you only get paid for the first 20

Aviva (12:00)
Okay, okay, okay.

Cory Zelnik (12:02)
So it's not

Aviva (12:02)
Alright.

Cory Zelnik (12:03)
the annuity that it sounds like. So you get paid for the first 20.

Aviva (12:09)
So I have to ask, is retail dead?

Cory Zelnik (12:11)
Please.

Ooh, what? Come on. Come on, where you been? Get out of that warehouse, will ya?

Aviva (12:20)
No, it's such a I love watching the news cycles and the media and the fear mongering because retail was dead until what 2020 2021 and then retail was back thriving alive and office is dead. And like I say on many podcasts, I never I don't quite pull out my tissue box for my local landlord. Sure, some of them but

Cory Zelnik (12:45)
Right.

Aviva (12:47)
Talk to me about retail in New York City in 2025.

Cory Zelnik (12:51)
Sure, sure. So just to go back to what you just alluded to, what happened was, and people don't realize this, is that 18, 19, prior to the pandemic, retail was circling the drain. Retail was having problems. The internet, online, social, whatever, was really affecting it. And so a landlord with a big mouth in a good way here in New York said there's a retail apocalypse. And that's sort of like caught on for a little while.

And quite frankly, that's what it was. And when the pandemic hit, it became the best excuse ever. When companies started going bankrupt, COVID, COVID. But trust me, they were circling the drain prior to that. And then what happened was through that period, was it March 15th of 2020 when it all hit and through the balance of that year and into the next year,

Aviva (13:36)
Yeah.

Cory Zelnik (13:49)
After everybody restructured or shut down things started to hit the floor and slowly slowly the curve started to work its way back up and the the bigger stronger companies started to realize there was an opportunity here. Okay, so you can appreciate you'll appreciate this because i'm sure you have commensurate rent structures where you live on matt on madison avenue in the

what we call the Gold Coast, the rents hit the floor and they were at 500 a foot. So the luxury brands saw that as an opportunity. Okay, and so through the course of let's call it 22, 23 and into 24, those rents started to go back to where they had been, which is now 1,200 and 1,500 a square foot.

And almost all of the space is taken in that particular sub-market.

Aviva (14:54)
What are the triple nets on these properties?

Cory Zelnik (14:56)
Well, most of New York City is gross, is modified gross. So they're paying increases over a base year. But some of the larger companies, and this is not to wow you with numbers because they're just the real numbers, but some of the larger brands, especially the European brands, and you may or may not have read this, so Kering that owns Gucci and Balenciaga and Prada and Louis Vuitton, what they realized was,

Aviva (15:00)
Okay.

Understood.

Cory Zelnik (15:25)
When each of these leases ended, they always got hit with some sort of fair market restructuring. So they said certain pockets in this city, most namely Fifth Avenue in the 50s, 51st Street up to 57th Street, we should buy our properties. So, So Kering bought three levels of retail.

for total of about 30,000 square feet for 963 million dollars. Okay? But they think, they think a hundred years on, number one, number two, they have the luxury, no pun intended, that if you open up with Gucci and in five years Gucci's not hot, just replace it with Balenciaga.

Just replace but you control your destiny and so they did that Prada across the street from them spent 847 million to buy their retail space to control it and There are you know smaller buildings with bigger with big numbers that have been done look LVMH Louis Vuitton one of the corners and all of this city 57th

Fifth they they owned the corner right they owned the corner and the building next door It got up zoned Okay, what that means is they're allowed to build higher so they moved out of their property for four years and they're gonna tear it down and Build it up three times as high for an LVMH headquarters building with with retail on the bottom and the the top tick

Aviva (16:53)
yeah.

Cory Zelnik (17:21)
As say on a rental in 2016 Diagonal across the street was is where bulgary is They paid close to five thousand a foot in rent in rent Drink some water drink some water Yeah Mmm, it's crazy. So some of the numbers are crazy But you know, it's still New York City. I'm a crazy

Aviva (17:36)
I know. Sorry. Just got lightheaded. $5,000. Wow. Wild.

Cory Zelnik (17:51)
fanatical about the city. I'm born and raised here. I love it. I've been talking about it. I've been talking about it through the pandemic about coming back and all this stuff. And it has, it has people getting back to work enough of the CEOs said, you know, get your ass in the office and that helps.

Aviva (18:09)
Are you seeing emerging retail uses come up in New York? The reason I say in New York, know, we're seeing, you know, pickleball coming into, but I imagine spaces are just, it's just space is different in New York City. Are you seeing new emerging retail trends and uses?

Cory Zelnik (18:25)
Yes.

Yeah, we have. We've

seen Pickleball, Pickleball, Paddle, whatever they're called. They have certain requirements that are a little bit more challenging for downtown urban with respect to column spacing and ceiling heights. But sometimes where there's a will, there's a way. You wouldn't expect, I'm a Knicks season ticket holder and you walk into Madison Square Garden from one particular entrance and you can see across the way,

that that landlord figured out a way to cultivate part of the space and there's a pickleball arena and not arena, but a pickleball courts with several of them. And so here you are, you're coming out of the subway, you're going to the Madison Square Garden and you look to your right and they're playing pickleball and you can see it, it's all glass. So you gotta pick your spots. Rents, favorable rents in New York City are challenging as you might imagine.

Aviva (19:17)
Wow.

Cory Zelnik (19:27)
But they have they have found their way. They have found their way Yeah

Aviva (19:30)
Wow.

The fluctuations in, mean, if you're born and raised in the city, the city has changed a lot. know, it's like, it's the same thing when I say retail is dead. They say the same thing with New York. New York's dead. Everybody's moving. you know, all this fear. How do you navigate the highs and the lows of living in the city?

Cory Zelnik (19:54)
Well, part of it is getting used to not believe in the bullshit. Part of my French, I know for a lot of curse here. So, right, no French. We may get hit hard when things happen. Financial crisis, you 9-11, COVID, all that stuff. But if you look at it historically, we bounce back the fastest. And the fact of the matter is, is that

Aviva (20:02)
Just no French, but you can curse.

Cory Zelnik (20:23)
Apartments, right? Everyone's leaving the city Okay The apartments are at the lowest vacancy rate. They've been like almost ever Okay, and The office space which we're all you know, you mentioned it earlier The office space is starting to turn Now because they took a chunk of it off the market. They're turning them into apartments So supply is going down

Demand is going, know, so you know basic economics and so we have a tendency to bounce back, you know, pretty pretty quickly and and we do and we do and look and we've had we've had like most major cities across the country. We have to deal with all the the criminality maybe even more than others. But somehow but somehow we figure it out.

Aviva (21:09)
Yeah. Yeah.

Hey, you couldn't convince me that New York City is not the epicenter of the world. So I know I get it. I love it. And, you know, I'm always in, you know, I pop in, pop out. I don't know if I'm going to make it to the strip mall prom this year, but maybe I don't want to leave my daughter. She's just a baby for so long. I just want to, you know, but

Cory Zelnik (21:19)
Thank you. Yeah. Are you coming back by the way? You coming in?

No?

I know, I know.

I remember those initial years, like when I went to Vegas for ICSC for those three days. just, Yeah.

Aviva (21:41)
Yeah.

Yeah.

I know, I know,

so, but we'll see, I'm on the fence. And I was like, maybe we'll schlepper, but I don't know. Anyway, Cory, what makes you happy with what you do in commercial real estate?

Cory Zelnik (21:54)
All right, okay.

What I love the most is that every single day, no matter how disciplined you are, and I'm very disciplined, every day is different than the day before. Whether it's someone interpreting a clause differently than the guy before him, or it's the fact that you could be speaking to so many different clients and their perspectives, and most importantly, learning something new every day, each tenant has different.

know ways of going about their business whether it's structurally with respect to a lease or just their day-to-day operations so I feel like I'm in I'm in all of these businesses and Tomorrow, I don't know what it's going to be but I look forward to it. So I wake up I wake up happy every day

Aviva (22:43)
Yeah.

I remember Bob Knakal said, you learn 80 % in the first year and then 20 % the rest of your life.

Cory Zelnik (22:59)
That's right. I always tell my guys, AB L, always be learning. You're always learning.

Aviva (23:05)
Yeah.

Hey, no, I feel the same way. It's humbling to just sit in the driver's seat and learn and figure out what you know, what you don't know. And there's a million ways to make money in this business.

Cory Zelnik (23:21)
Absolutely. And one of the hardest things to learn is what you don't know. And that's key. That's key. Yeah.

Aviva (23:27)
Yeah, yeah, that's interesting.

Cory, for the listeners, where can they find you, follow you, contact you, et cetera?

Cory Zelnik (23:35)
Yeah

Etc. So you can follow me on Instagram, Cory Zelnik, or Zelnik Co. You can get me on LinkedIn, Cory Zelnik, or on the Zelnik & Co. You can, if you want to go wild and crazy, every Friday at about 9.40 Eastern Time, I am on WABC Radio. You could download the app on the Sid and Friends in the Morning Show. I do a little bit of a New York chat.

whether it's about real estate or the New York Knicks. And if you want to go wild and crazy, you can call me at 212-223-2200.

Aviva (24:17)
212-223-200, no, 2200. Cory, thank you so much for being on the show today and for everybody listening. We'll see you next week.

Cory Zelnik (24:19)
2 200.