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REBNY’s Manhattan Retail Report: Asking Rents Slightly Soften in Seven Corridors Amidst Increased Supply
November 25, 2015
Retail property owners find upside in evolving market, as retailers make commitments
Manhattan’s retail leasing market has finally seen some softening, with ground floor asking rents decreasing in seven of the 17 premier retail corridors analyzed in the Real Estate Board of New York’s (REBNY) Manhattan Fall 2015 Retail Report. The upside to the break in rent increase is that deals are getting done and retailers are making commitments rather than delaying decisions.
“Manhattan is continuing to achieve robust asking rents and experience strong leasing activity, particularly in retail corridors experiencing significant residential development and a resurgence of neighborhood vitality,” said John Banks III, REBNY President. “New York City is one of the world’s greatest shopping destinations and the softening of retail rents over the last several months has provided an opportunity for retailers to make moves.”
While the average asking rent in most corridors increased compared to last year, the increases were not as extreme as in previous reports. And although the number of asking rent decreases was greater than those in past reports, none were more than six percent. The most notable decrease was in the Madison Avenue corridor between 57th and 72nd streets, in which the average asking rent fell from $1,709 per square foot to $1,613 year-over-year.
“According to our Retail Advisory Group, the softening we’re experiencing, particularly in the Madison Avenue corridor, is symbolic of current market trends and not emblematic of any weakening of interest in this corridor, or changing market fundamentals in the corridor,” added Michael Slattery, Senior Vice President for Research at REBNY. “The decrease is instead owed to the increased amount of supply available in the corridor and landlords becoming eager to keep their spaces occupied.”
Broadway on the Upper West Side is another example of a corridor where more spaces came to market, leading to a softening of asking rents with ground floor space between 72nd and 86th streets decreasing four percent year-over-year to $361 per square foot. Herald Square also saw a six percent decrease in ground floor average asking rents year-over-year to $836 per square foot.
The retail corridors that continue to see strength are ones with increases in residential development and a resurgence of neighborhood vitality.
- One of the strongest performers is Midtown South, especially in the Broadway Flatiron District between 14th and 23rd streets, where the average asking rent increased 42 percent to $510 per square foot year-over-year.
- The East 57th Street corridor between Fifth and Park Avenue saw a 28 percent average asking rent jump year-over-year to $1,600, while Third Avenue, between 60th and 72nd streets, saw an increase of 26 percent to $335 per square foot.
The Financial District also had a strong showing after realizing the effects of recent revitalization and tenancy efforts. Within the past year, the neighborhood has undergone infrastructure upgrades, including the opening of the new Fulton Center Transportation Hub; experienced an increase in new shopping destinations and dining areas, especially around the World Trade Center and Brookfield Place; and has seen an uptick of TAMI sector tenants, which has led to more people mingling in the area after work.
Ground floor retail average asking rents along the Broadway Financial District corridor between Battery Park and Chambers Street increased 16 percent from last fall to $308 per square foot.
REBNY’s Retail Report compiles data about asking rents for available space provided by a broad cross-section of the city’s leading retail brokers. The report is compiled twice a year in the spring and fall.