The Sad State of New York City's Underground Retail Trade

In Columbus Circle, only one of the 40 stores that opened in its underground market eight years ago is still open. Fulton Center, a decade-old mall in a lower Manhattan subway station, is nearly empty. In Midtown, empty storefronts line both the Port Authority and Rockefeller Center stations.

The state of retail in New York City's massive subway system is, in a word, bleak.

According to the Metropolitan Transportation Authority, nearly three-quarters of spaces on the transit network are empty, a downward trend that began before the coronavirus pandemic but has been exacerbated by it and the rise of remote and hybrid work.

For commuters, the empty storefronts created a sense of unease and urban decay. Some doors were chained shut, and their windows were covered with signs for rent. Others were strewn with discarded items such as restaurant supplies. Homeless people took over empty corners of retail areas, sleeping in stairwell cages.

For the authority, the surplus space means a continued decline in retail revenue at a time when the authority — which runs the country's largest transit system of buses, subways and trains — recently lost $1 billion in expected annual revenue with the sudden elimination of congestion pricing.

The government agency is trying to reimagine how to fill the vacant spaces, including non-commercial solutions, such as art shows and spaces for touring musicians.

For some now-closed store owners, the empty spaces represent unrealistic expectations about who will stop to shop on their way to work.

Former and current shop owners said they were drawn to the subway system because of the large number of riders who could become customers. Last year, about 3.6 million people rode the subway each weekday, a captive audience of potential shoppers buying drinks and food as well as jewelry, gifts and clothing.

Leith Hill opened an organic food store, Ellary's Greens, inside Manhattan's Columbus Circle station in 2016.

Ms Hill said the Ilarys Greens store had not made a profit since day one, even though the station was one of the busiest in the city. The store closed in 2017.

“The passengers are not there to pick up the chickens, they are running through the station to get home,” Ms Hill said.

Underground retail stores and newsstands were once thriving and were almost as ubiquitous as the subway cars themselves. Nedick's served orange drinks and hot dogs. Tycoon Luncheonette served coffee under Times Square 24 hours a day. Starting in 1904, the Grand Central Oyster Bar and Restaurant served oysters—and still does—inside Grand Central Terminal.

“It’s been amazing,” said Biana Todorovic, co-owner of Tiecoon, a tie and gift shop that had a store for two decades inside Penn Station and for several years inside Grand Central Terminal before closing during the pandemic. “Every year, we did better than the year before, but I knew it would plateau at some point.”

Shops also sprung up in public transport stations abroad, with major shopping malls and retail outlets selling sushi, jackets and snacks to commuters in London and Tokyo. These shops remain popular to this day.

By the 1980s, there were about 350 stores, kiosks and concessions operated by the transit authority. More have been built in recent years, including a four-story mall above the Fulton Street station when it was renovated for $1.4 billion in 2014.

Retailers, especially those who don’t sell food or drink, said cyclists’ habits have been changing over the past 10 to 15 years, with shoppers taking pictures of items and saying they’ll order them from Amazon, they said.

More recently, Ms. Todorovic has dealt another blow to remote and hybrid working, with fewer people commuting to work every day.

Over the years, she has stocked Tiecoon's store with items that interest repeat customers, like one man who shops twice a month for gifts before traveling to Germany for work.

“He doesn’t have to be physically in Germany anymore,” she said. “They just join Zoom meetings.”“.”

Now, there are 195 retail outlets, most of them clustered in the busiest and largest metro stations. However, the authority said only 54 are open, while another 18 are under construction and 31 are in lease negotiations. It said the authority collected about $53 million in retail revenue in 2023, down from $72 million in 2019.

Many of the rent proposals for tenants fell through when the pandemic hit in early 2020, said David Florio, the authority’s chief real estate transaction and operations officer. To keep some stores open, the authority offered retailers reduced rent, which will be phased out over the coming years.

“We are trying to get our way back,” Mr. Florio said.

Today's shoppers are looking for convenience and good deals, and there's rarely anything convenient or cheap at a subway station, said Marshall Cohen, a retail industry analyst at market research firm Circana.

“In the New York City subway world, show me one person who kills a lot of time,” Mr. Cohen said. “Would I stop in the middle of my commute to try on $200 sunglasses?”

Three days a week, Ingrid Abramovic walks through the Turnstyle Underground Market between the Columbus Circle subway station and the stairs leading to her office building, Hearst Tower. She said the last time she remembers stopping to buy something was at a wine store that closed early in the pandemic.

“At first, it was very nice,” Ms. Abramovic, editor-in-chief of Elle Decor magazine, says of the market. “But who wants to eat in an area with no windows?”

Louis Termini thought people would stop for pizza.

Mr. Termini, owner of Ignazio's Pizzeria in Brooklyn's Dumbo neighborhood, said he was persuaded to open a restaurant inside Columbus Circle Station after being told that 80,000 passengers might pass by his restaurant each day.

It opened in 2018 across from two major stores: Starbucks and Dylan's Candy Bar, both near the station's turnstiles.

Both stores have since closed, as has Mr. Termini’s pizza shop, which had only been in business for three months. He said he lost $300,000 and was so frustrated by the lack of business that he left everything behind, including the pizza ovens. The rent was also unaffordable — about $13,000 a month, he said.

“All the pedestrians were coming up the stairs and out of the station,” Mr Termini said.

Today, transit officials say they want to revamp storefronts with more food and beverage options, especially fast-food kiosks in subway corridors, mezzanines and even on sidewalks.

On the one hand, this trend is a reversal of what happened when the New York City Transit Authority removed many food and beverage retailers in the 1980s to clean up its stations. The authority is investing in upgrading utilities like water and electricity at its century-old stations to accommodate the stores.

The company is also looking for a vendor to develop and manage a major retail corridor at Grand Central Madison, the Long Island Railroad’s commuter rail station that opened last year. The New York City Transit Authority has outsourced similar retail areas elsewhere, including the recently redeveloped LIRR area at Penn Station.

But the New York City Transit Authority recognizes there is no quick or easy solution. That’s why it’s looking for entirely different uses for empty storefronts. A “street jam” for musicians recently opened next to an underground platform on Manhattan’s Upper West Side. In Midtown, a newsstand was transformed into a living art space with plants.

“Instead of seeing empty space, you feel relief,” said Sandra Bloodworth, MTA director of arts and design.

Some New York City subway retailers still think things will change. Evan Feldman opened a location of his doughnut shop, Doughnuttery, in Columbus Circle in 2018, and it’s the only original store still in business.

Mr. Feldman said the transit authority lowered his rent on the store, and he expanded his business by fulfilling food orders for nearby office buildings and accepting online delivery orders. The Black Market is under new management, which has brought in extra security guards and removed homeless people who had begun sleeping in stairwell cages.

“We’re not strong, but we’re still trying to do it,” Mr. Feldman said. “We’re flexible.”