NEW YORK, NY –The Real Estate Board of New York (REBNY) today released its H2 2023 Manhattan Retail Report, which examines activity along major retail corridors in the borough from July to December 2023. The latest iteration of the biannual report shows that despite robust demand from retailers, rent levels in most retail corridors across Manhattan have still not reached pre-pandemic peaks. With sustained tourism and consumer expenditures, demand from a wide range of retailers was steady in the second half of 2023. In turn, brokers are cautiously optimistic for 2024.
Rent averaged 20% to 30% below its pre-pandemic levels in nearly all corridors in H2 2023, as tourism and office visitations still trail 2019 levels. Additionally, retailers face persistent obstacles to business set up and operations, including acute staff shortages, lengthy permit and buildout schedules, quality of life issues and much higher borrowing costs.
Despite these challenges, several large transactions in the most competitive neighborhoods resulted in rising rents and strong performance for the retail market in the second half of 2023. Average asking rents grew year-over-year during H2 2023 in 12 of the 17 corridors analyzed in this report. Leasing was the most competitive in SoHo, Madison Avenue and Flatiron. Activity improved but was less intense in areas like Times Square, Upper Fifth Avenue and Midtown East.
Movement of global luxury brands on Madison Avenue accounted for some of the most notable activity over the last six months of 2023, with John Lobb’s move to a larger space at 700 Madison Avenue, Dolce & Gabbana’s leasing of the former Hermes Women’s Store at 693 Madison Avenue and Ann and Sid Mashburn opening their first Manhattan brick and mortar at 926 Madison Avenue.
In SoHo, a mix of luxury brands, fast fashion and streetwear are fueling demand, in addition to a few food and beverage and art galleries adding to the mix. Notable transactions include 375 Showroom at 76 Wooster Street, Hauser & Wirth at 130 Prince Street and ba&sh at 121 Prince Street.
REBNY Retail Committee Members note that luxury retailers in Manhattan are bucking the trend of subdividing larger stores. An uptick in larger spaces signed by luxury brands reflects growing demand for enhanced customer experiences and amenities like cafes and curated art exhibits.
“While still significantly below 2019 levels, the Manhattan retail market is showing signs of resurgence.” said Keith DeCoster, Director of Market Data and Policy at REBNY.
“With slow but steady growth in tourism activity, commuter foot traffic and office visitations, retailers are absorbing larger footprints and landlord concessions are becoming less common.”
Brokers providing feedback for this report noted signs of slight moderation in leasing in recent months but expect consumer spending and retailer demand to stay relatively strong next year. Improvement in office attendance and commuter foot traffic is generating optimism for the retail sector. A Grand Central Partnership analysis of Placer.ai data found that the number of visitors to the Grand Central BID from Long Island zip codes spiked from four million in 2022 to 6.3 million in 2023 (through the first week of December.) REBNY’s analysis of Placer.ai location data in 350 Manhattan office buildings found that while excluding the week of Thanksgiving, average visitation rates in November 2023 were in line with their highest levels since 2019.
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ABOUT THE REAL ESTATE BOARD OF NEW YORK
The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association. Founded in 1896, REBNY represents commercial, residential, and institutional property owners, builders, managers, investors, brokers, and salespeople; banks, financial service companies, utilities, attorneys, architects, and contractors; corporations, co-partnerships, and individuals professionally interested in New York City real estate. REBNY conducts research on various civic matters including tax policy, city planning and zoning, rental conditions, land use policy, building codes, and other city, state, and federal legislation. REBNY regularly publishes market data, policy reports, and broker surveys. In addition, REBNY provides for its members: informational, technical, and technological resources; networking and charitable service opportunities; qualifying and continuing education courses; professional education programs, seminars, and designations; career-changing awards; legal advice; and a wide range of additional member benefits. For more information, please visit www.rebny.com.