The Manhattan retail market is evolving with an uptick in year-over-year leasing activity despite an increase in retail supply. Outlook remains positive with new operators entering the market and heightened interest in retail spaces. High asking rents have begun to drop, resulting in an uptick in leasing activity and a stabilizing market. Manhattan retail leases in the second half of 2019 were driven by e-commerce proof of concept uses such as food/beverage, service, and medical offices.
Despite traditional storefront retail lessening its footprint, other types of brick-and-mortar uses continue to be in demand as new retailers are becoming more innovative in their uses. Omni-channel retail is effective for digitally native brands that require showrooms to showcase their products/services, which act in conjunction with their e-commerce and marketing efforts. An increased presence of pop-ups and promotional spaces indicate that brands are offering unique in-person experiences to attract both online and in-store shoppers. Other uses such as bookstore cafes and daytime co-working spaces reflect that consumer demand is shifting in favor of modern storefront uses.