The Manhattan retail leasing market is still in a corrective period. The increased rents of previous years are receding. Deals are still getting done, but they favor parties willing to be flexible with deal structure, uses, asking rent adjustments, and increased concession packages.
The correction may prove healthy for both the short and long-term viability of the Manhattan retail leasing market. In the near-term, retail property owner representatives in our Manhattan Retail Report Advisory Group say that rent adjustments offer a chance for quality retailers to explore markets that were previously too expensive. Other retail brokers in our Advisory Group add that this is an environment for price discovery in a market that is still learning about the effects of online retailing. With stable personal consumption fundamentals and retail demand, our Advisory Group sees this period of declining average asking rents as an opportunity for owners and retailers to find a new equilibrium rent level that promotes long-term tenancy.