Discount retailer Five Below plans a location on New York City's tony Fifth Avenue, CNBC reports. A Five Below spokesperson confirmed the news in an email to Retail Dive and said the store is expected to open in November.
New stores have "very high levels of productivity," according to CEO Joel Anderson, speaking to analysts last month, per a transcript from Seeking Alpha. As of June 6 this year, Five Below opened 42 stores and was on track for its 125 planned openings for the year, for a total of 750 stores nationwide by year's end.
But not all retailers in the area are happy about the discount store's impending arrival, according to the Commercial Observer, a commercial real estate publication. "It's not a Fifth Avenue-type tenant. Everyone is pissed," an unnamed broker told Commercial Observer, adding that a location south of 42nd street would have been more appropriate. "There goes the neighborhood."
While several U.S. retailers have trimmed their footprints across the U.S., Five Below and other discount stores are adding to their portfolios.
The discount chain opened 33 new stores in the first quarter, ending Q1 with 658 stores in 32 states, a footprint increase of 19% from a year ago. New store productivity was about 124%, CEO Joel Anderson said last month. Even adjusted for the timing of openings during the quarter and the calendar shift, new store productivity would still be north of 100%, he added, saying that he expects the company will end up with some 2,500 stores nationwide.
Similarly, Dollar General last year opened a "company record" of 1,315 new stores. This year it plans to roll out an additional 900 new stores, along with renovating another 1,000 stores. While on a smaller scale than Dollar General, Dollar Tree opened 130 stores in its first quarter alone and expanded or relocated 26 stores.
The planned Five Below Manhattan store, which will sport the company's new, refreshed store format, will be larger than the company's typical size, closer to 10,800 square feet, compared to its usual 8,000 square feet, according to CNBC. The company could be taking advantage of falling rents in many areas of New York City, which, particularly in shopping corridors like 5th Avenue, usually commands top dollar. The closure of so many retailers, prompted by bankruptcy in some cases, like Toys R Us, or shrinking store portfolios, is making commercial landlords even there more open to negotiation, according to the Real Estate Board of New York.
"Owners' flexibility on lease terms [has] become more consistent since the fall and retailers, who paused their search for brick-and-mortar space through transitioning market conditions, have returned to explore new opportunities," according to a May REBNY report. "Transactions and offer volume have increased, and there have also been reports of competitive bidding for spaces priced appropriately in key retail locations."