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Spring 2010 Retail Report
May 21, 2010
Average asking rents have started to increase in most of the retail corridors surveyed in our Spring 2010 report. This increase reflects the nascent nation economic recovery and improving local market conditions as well. In March, the most recent data available, national retail sales were up 7.6% over last year and 1.6% month on month. New York City retail employment in March was up 1.4% year on year. Similarly, April’s consumer confidence index was at its highest since September 2008.
The uptick in average asking rents is another sign that retail market is improving. However, according to most economists, the recovery has been predicted to be slow but steady as consumers continue to reduce their high levels of debt.
Equally encouraging, our Advisory Group reports that there has been a pick-up in leasing velocity over the past six months. Inventory within prime corridors is diminishing due to this increasing demand. Fifth Avenue. East 57th Street and Times Square have been pointed out by our group as areas with an inventory squeeze and the previously quiet Madison
Avenue corridor has shown a burst of activity, resulting in the absorption of a substantial amount of the available space. Further, the return of large transactions (major retailers leasing high rent locations for a lengthy term) such as Uniqlo on Fifth Avenue and Aeropostale and Disney in Times Square is another sign of growing confidence in the market.
As you review the asking price (average, median, range) information in the retail corridors we surveyed, you will notice that some corridors lack current information or seem to have information that is not reflective of the specific submarket. These corridors generally have either no reported availabilities or the one or two stores are not representative of the space generally found in the area.
Also, you may notice that there are locations where there is a large range in ground floor asking rents. Our Advisory Group noted in these instances that the highest priced space in such corridors was found within a small section of the corridor while the average asking rent for available ground floor space at the edges of the boundary was markedly lower. In short, in some of the corridors we report on there is a premium for space located within a more select area of the retail street. Two examples of this in the Spring 2010 report are Bleecker Street and 125th Street.
We hope these observations about the report, about the local market and about the national economy provide a valuable complement to your review and analysis of our retail market report.