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Fall 2008 Retail Report
October 20, 2008
Over the last few months, the retail market has slowed according to our Advisory Group. Reflecting this trend, the average asking price for all available retail space in Manhattan was $129, 3% lower than a year ago.
However, on the East Side, the average asking rent for all available retail was up 11% from a year ago, to $190. Midtown South reported a 6% increase to $111; Downtown, a 1% increase to $110.
Our Advisory Group noted that these asking rents are based on availabilities as of September 30 and may not reflect the turmoil in the financial markets in October. However, they added that asking prices do not fluctuate like stock prices and that we should not necessarily anticipate any dramatic shifts over the next few months. They point out that owners are likely to address a softening market by increasing the free rent period or the tenant work allowance. What they all acknowledged was that tenants are still leasing space and deals are being made.
The continuing strength in the retail market is demonstrated by the average asking rent for ground floor space in the major retail corridors. In the five new corridors that we began tracking in the spring, the average asking rent for available ground floor space on 86th Street, Columbus Avenue and Meatpacking are up compared to our initial analysis of the area in the REBNY Retail Report Spring 2008.
Here are additional highlights on the other corridors:
- Fifth Avenue between 49th and 59th Streets showed a 12% increase, to $1,400 psf for ground floor space
- Hudson Street in Tribeca jumped to $120 psf, from $75 psf for ground floor space
- West 34th Street in Herald Square (between 7th Avenue and 5th Avenue) was up to $643 psf for ground floor space, from $464 a year ago, an increase of $38%
- Broadway between 72nd and 86th Streets was up 17% to $309, from $264 a year earlier, for ground floor space
- In Upper Manhattan, the 125th Street corridor was up 11% to $125, from $113 a year ago
- Madison Avenue, between 57th and 72nd Streets was up 3% to $1,143 for ground floor space a year ago.
Our report is based on the available listing submitted by members of our Retail Committee. For this period, the number of available spaces submitted was up, due in large part to the efforts of the committee members getting their colleagues to submit their listings. It appears from our cursory analysis that we received an increased amount of lower priced space than we have in the past, especially in the Upper Manhattan area.
Some of the corridors only had lower priced space available which brought down some of their average prices. This was evident in SoHo and the Financial District. However, our Advisory Group did not think that the market has changed significantly in these locations.