- William C. Rudin | REBNY Chairperson
- James Whelan | REBNY President
- John H. Banks | REBNY President Emeritus
- Code of Ethics
- REBNY Residential Listing Service
- Become a Member
- Benefits & Rewards
- REBNY Action Network
- REBNY Services
- Our History
- Contact Us
- Looking for a NYC real estate broker?
- Contests & Awards
- Sponsorship Opportunities
- REAL ESTATE EDUCATION
- MEMBER SPOTLIGHT
- GIVING BACK
Spring 2019 Manhattan Retail Report
May 15, 2019
As rents continue to self-correct, deal-making has increased with tenants committing to space in key areas for both new and existing product. Amid increases in consumer spending, income growth, and employment, Manhattan’s top retail corridors continue to experience decreased rent values with heightened availability rates. In more recent periods, asking rent depreciation has slowed causing rents in several corridors to level off as transaction volumes increase. Continuing 2018 trends, Manhattan retail leases in the first months of 2019 were driven by the food and beverage industry, followed by activewear, cosmetic, and technology brands.
Manhattan retail inventory increased with new high-profile development projects such as Hudson Yards, Gansevoort Row, the Seaport District, and Essex Crossing, which all offer competitive asking rents and elevated visibility. Amid these new, prominent retail availabilities, property owners are facing pressure to reprice existing vacant retail spaces at lower asking rents. As a result, many owners are also offering greater flexibility to prospective tenants in the form of shorter-term deals, concessions, and build-outs.
The Real Estate Board of New York’s (REBNY) Manhattan Retail Report Advisory Group remains optimistic on the Manhattan retail market as they are seeing increased interest in retail space by new retailers entering the market, retailers previously deterred by high prices, and retailers looking to move to emerging neighborhoods. Retail leasing activity among e-commerce and digitally native brands are highlighting the importance of brick-and-mortar locations as distribution hubs for products and a physical extension of their marketing presence.
In spring 2019, average asking rents for available ground floor retail spaces decreased in 12 of the 17 Manhattan corridors analyzed by REBNY in its bi-annual Manhattan Retail Report, when compared to the spring of 2018.
The average asking rent on Madison Avenue, between the 57th and 72nd Streets, declined by 25 percent to $1,039 price per square foot (psf) compared to spring 2018. Out of the 17 observed corridors, Madison Avenue represented the largest year-over-year decline. According to REBNY’s Manhattan Retail Report Advisory Group, high availability rates along the corridor have led owners to continue lowering their rents and offer more short-term lease agreements. Flagship retailers across the prestigious strip are taking advantage of the softening rents by either locking in long-term lease agreements, moving to smaller-sized spaces, or migrating further south. Declining rents have fostered a healthier environment as more retail space is being absorbed at an affordable rate.
On East 86th Street, between Lexington Avenue and Second Avenue, the average asking rents declined nine percent to $365 psf compared to spring 2018. This drop was due to more expensive retail spaces along Lexington Avenue being recently leased out by Old Navy and JP Morgan Chase with remaining availabilities along the corridor being located further eastwards where rents tend to be lower.
In Upper Fifth Avenue, between 49th and 59th Streets, the average asking rent declined 22 percent from $3,900 psf in spring 2018 to $3,047 psf in spring 2019. This decline is attributed to both historically high availability rates and low absorption rates, as high asking rents are diminishing tenant demand. Despite instances of rent reductions, newer owners who purchased spaces at peak market rates are slow to adjust their prices and are struggling to fill vacant spaces. Similarly, on Fifth Avenue, between 42nd and 49th Streets, the average asking rent dropped for the third consecutive year-over-year period to $878 psf, a 20 percent decrease compared to spring 2018.
On Columbus Avenue, between 66th and 79th Streets, the average asking rent declined eight percent year-over-year to $279 psf. This represented the third consecutive year-over-year decline in rents along this corridor. Likewise, the average asking rent for Broadway, along 72nd and 86th Streets, dropped 16 percent from $325 psf in spring 2018 to $273 psf in spring 2019. Both corridors continue to undergo price corrections that have been ongoing since 2015.
In SoHo on Broadway, between Houston Street and Broome Street, the average asking rent declined nine percent from $595 psf to $544 psf year-over-year. While asking rents in this corridor softened for the second consecutive year-over-year period, this decrease was much smaller. Adjusted asking rents have incentivized deal-making by various tenants including pop-up shops, digitally native brands, and retailers such as H&M, Brandy Melville, and The North Face.
On 14th Street, between 9th Avenue and 10th Avenue, the average asking rent decreased 12 percent to $277 psf compared to spring 2018. Tourists, daytime workers, and nearby residents flock to the corridor for attractions such as The High Line, Google’s corporate campus, Chelsea Market, and Gansevoort Row. With this high foot traffic, 14th Street is viewed as the prime location for “experiential retail” concepts that cater to customer experiences, pop-up shops, fashion, and food and beverage stores.
Out of the 17 Manhattan retail corridors observed, 125th Street in Harlem posted the largest year-over-year average asking rent increase of 10 percent to $137 psf. This increase was attributed to several new spaces west of Fifth Avenue that came to market at the end of 2018, where rents tend to be higher compared to the eastside. Deal-making along the corridor has remained steady with new tenants including Shake Shack, Whole Foods Market, Victoria’s Secret, and Bath & Body Works.
In four of the 17 observed corridors, average asking rents were flat with minimal year-over-year changes. These corridors were East 57th Street, between Fifth Avenue and Park Avenue; Broadway and Seventh Avenue, between 42nd and 47th Streets; West 34th Street, between Fifth Avenue and Seventh Avenue; and Broadway, between 17th and 23rd Streets.
ABOUT REBNY’S MANHATTAN RETAIL REPORT
The rents quoted in this report are asking rents for available ground floor retail spaces. The physical components and location of a retail space factor greatly into its rental value. Attributes such as street/avenue frontage, ceiling height, and presence of below and above grade space can also affect value. Consequently, in corridors with low availability, a high-quality retail space coming to market can increase the average and median asking rents greatly. Also, in smaller corridors, a lack of available spaces may lead, in some cases, to adjacent blocks becoming of greater interest to retailers.
Accordingly, we have provided information about the retail rent range as well as asking rent information from six months and 12 months ago to provide a rich, statistical context to evaluate current market conditions. In addition, we would like to note that the surveyed corridors in this report represent the top tier retail corridors in New York City. Rents on adjoining side streets may lease for considerably less than the locations we are profiling. Lastly, as we have learned over the 18 years that we have been preparing this report, retail brokers who are active in the market are an invaluable source of information and trends that cannot be fully captured by the numbers in our report. We attempt to provide an overview of the market at a point in time that is based on the available listings of our Manhattan Retail Report Advisory Group and Retail Committee members, which include all the major retail brokers and owners in Manhattan.
The REBNY Manhattan Retail Report Advisory Group includes:
Robin Abrams, Compass
Karen Bellantoni, RKF
Matt Chmielecki, CBRE
David A. Green, Colliers International
Jordan Kaplan, CBRE
Andrew Mandell, Ripco Real Estate
Joanne Podell, Cushman & Wakefield
Fred Posniak, Empire State Realty Trust
Jeffrey Roseman, Newmark Knight Frank
Craig Slosberg, Newmark Knight Frank