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Mixed Bag of Retail Rents Still Good News for Everyone
May 30, 2012
Retail space has tightened in Manhattan’s prominent shopping corridors according to the Real Estate Board of New York’s Spring 2012 Retail Report. Asking rents on Madison and Fifth avenues have seen significant increases and the demand for prime store space continues to raise asking rents and prestige of these retail corridors.
One of the most noteworthy developments according to REBNY’s Retail Advisory Group has been the relentless ground floor asking rent increases for retail space on Lower Fifth Avenue between 42nd and 49th Streets. Asking rents were up a whopping 75 percent to $900 per square foot since spring of last year.
REBNY’s Retail Advisory Group attributed this surge in asking rents to two factors. There is a lack of space on Upper Fifth Avenue, which caused a spillover effect for the available space on Lower Fifth Avenue. There is also a high degree of pedestrian traffic on the avenue.
On Madison Avenue between 57th and 72nd streets, asking rents were up 31 percent to $1,203 since spring of last year.
Other prime shopping corridors that experienced a rise in asking rents discussed in REBNY’s Spring 2012 Retail Report were:
- East 86th Street between Lexington and Second avenues where, with few listings, asking rents were driven up 23 percent to $410 per square foot since last year.
- Herald Square on West 34th Street between Fifth and Seventh avenues, where asking rents increasing 23 percent to $558 per square foot compared to last year.
- Upper Fifth Avenue between 49th and 59th streets saw asking rents rise 22 percent to $2,750 since last year, again attributed to the lack of prime available space in that corridor.
- In SoHo on Broadway between Houston and Broome streets -- where only a few prime spaces are still available -- asking rents were up 11 percent to $551 per square foot compared to last year.
Two other Manhattan corridors benefitting from the lack of available space were the Columbus Avenue (66th- 79th) and Bleecker Street (7th Ave South – Hudson Street) corridors.
Data from REBNY members showed that no space was available on the Columbus corridor as of the report’s cutoff date. The average asking rent of $149 per square foot of all space (ground floor and other) on the Westside was the highest for the area since REBNY started the report in the fall of 2000.
Average asking rents increased 22 percent since the fall of 2011 to $452 per square foot in the Bleecker Street corridor. According to REBNY’s Retail Advisory Group, landlords and brokers are reporting strong demand for stores at the southern end of Bleecker and the higher asking rents for this section are signaling a potential expansion of this prime corridor.
Overall, Manhattan asking rents for all space were up 2 percent since the fall of 2011 and down 1 percent compared to a year ago. Despite annual increases in all of the report’s prime Eastside corridors, average asking rents for all space on the Eastside declined 13 percent since the spring of 2011. REBNY’s Retail Advisory Group attributed this partly due to the slow recovery in the retail sector and the soft demand for space outside the major corridors.
During the height of the retail market, banks and other large space users were known to bid up the better spaces and push demand to store space outside the major corridors. Now, without this competition, and the slow recovery in the retail sector, landlords have been unable to attract tenants or increase asking rents in these areas.
Despite the challenges in some areas of Manhattan, the demand for the main corridors will continue to trickle down and likely spread out to increase asking rents in the future.
REBNY’s Spring 2012 Retail Report compiles data about asking rents for available space provided by a broad cross-section of the city’s leading retail brokers. The next retail report comes out in fall 2012.
In other REBNY News:
Attention sales brokers, mortgage brokers, accountants and bankers, REBNY is holding its First Finance Cocktail Party from 5 to 7 p.m. on Thursday, June 7 at Club Metropolitan, 146 West 57th Street. Tickets cost $35. For more information, contact Desiree Jones at firstname.lastname@example.org.
Come help celebrate the presentation of the Real Estate Industry’s Highest Honors for Commercial Retail Brokers when REBNY’s Retail Committee presents its Most Ingenious Retail Deal of the Year Award at the 14th annual Cocktail Party from 5:30 to 7:30 pm on Tuesday, June 12 at the 101 Club, 101 Park Ave. Register at REBNY.com and for more information, contact Desiree Jones at email@example.com.
After being canceled due to inclement weather, REBNY’s Spring Golf & Tennis Outing has been rescheduled for Thursday, June 28. It will be held at the North Shore Country Club, a beautiful newly-renovated golf course, tennis courts and clubhouse spearheaded by one of REBNY’s esteemed members Donald Zucker. The event includes a full day of golf or tennis with breakfast, lunch, cocktails and dinner at the North Shore Country Club located in Glen Head, Long Island. Golfers pay $425 and tennis players pay $315. For more information, contact Kathleen Gibbs at firstname.lastname@example.org or 212-616-5246.