Retailers are getting back into the game as retail inventory levels in Manhattan’s most prominent retail corridors rise and average asking rents decline.
The Real Estate Board of New York’s (REBNY) Fall 2016 Manhattan Retail Report found that average asking rents for available ground floor retail spaces decreased in 11 of the 17 corridors analyzed in this bi-annual report.
The recent, slower retail sales environment in New York City has had a softening effect on average asking rents.
Previously deterred by 2015’s record asking rents, retailers are now being attracted from the sidelines back into the market. Higher carrying costs for property owners have also prodded deal-making.
“Our Manhattan Retail Report Advisory Group is observing a pick-up in tenant interest as a result of Fall 2016’s asking rent adjustments,” said John H. Banks, III, REBNY President.
“This natural correction in the City’s market is spurring activity in the retail real estate sector.”
REBNY’s Manhattan Retail Report Advisory Group also suggests that retailers are becoming more cost-conscious, finely combing for space options that accommodate their needs.
Members noted that some retailers looking to relocate are giving more consideration to sacrificing larger store size and wider frontage for ideal placement in a retail corridor that most effectively reflects their brand.
Despite the average asking rent drops seen in other corridors in Fall 2016, robust price growth occurred Downtown in the Financial District on Broadway, between Battery Park and Chambers Street, a corridor that has benefitted from recent transportation and retail improvements. The average asking rent in this corridor posted a 20 percent jump year-over-year, rising from $308 to $369 per square foot of ground floor retail space.
According to the Manhattan Retail Report Advisory Group, retail spaces near Fulton Street have been the largest beneficiary of increased foot traffic from the World Trade Center complex and the openings of the Oculus and Fulton Center transit hub.
Madison Avenue, between 57th and 72nd Streets, on the Eastside is one corridor experiencing a shift from the increased availability of ground floor retail spaces.
As the corridor’s inventory level rose in Fall 2016, the average asking rent decreased eleven percent to $1,433 per square foot from $1,613 in Fall 2015.
Midtown South’s average asking rent in Herald Square on West 34th Street, between Fifth and Seventh Avenues, also fell eleven percent year-over-year from $836 to $745 per square foot of ground floor retail space. This decline was caused by a combination of increased supply and supply being concentrated on the south side of the corridor. Spaces on the north side of West 34th Street typically offer wider street frontage, while spaces on the south side are usually smaller and more limited in frontage.
REBNY’s Manhattan Retail Report is compiled twice per year in the Spring and Fall, and analyzes the average, median, and range in asking rents for ground floor space in Manhattan’s premier retail corridors.
Data for the Manhattan Retail Report was provided by REBNY brokers from the Commercial Brokerage Retail Committee and comprised of asking rent prices for their current, available ground floor retail listings.
REBNY’s Manhattan Retail Report Advisory Group includes: Robin Abrams, Lansco Corporation; Karen Bellantoni, RKF; Benjamin Fox, SCG Retail; Andrew Mandell, Ripco; Andrew Goldberg, CBRE; David A. Green, Colliers; Joanne Podell, Cushman & Wakefield; Fred Posniak, Empire State Realty Trust; Jeffrey Roseman, NGKF; Craig Slosberg, JLL; Alan Victor, Lansco.