Fueled by intense investor demand and rising retail rents across the five boroughs, the New York City retail property market continued its healthy volume of activity with $445 million in sales in the third quarter, according to Eastern Consolidated’s December 2013 Retail Pulse report.
Not only did the third quarter volume more than triple from the first quarter, but if activity remains healthy, as expected, year-end retail property sales totals for New York City has the potential to reach $1 billion, with even higher totals likely in 2014.
“This year’s volume was the true reflection of New York City’s strong and resilient retail property market,” said Eastern Consolidated’s chairman and chief executive officer Peter Hauspurg.
“We’ve seen a steady increase in retail property listings because of the ravenous demand from investors who want to take advantage of robust rent growth. We expect the upward trend to continue in the coming year.”
The report also noted that even though retail property sales this year fell below the 2012 mark of $2.5 billion, those figures were skewed significantly by a one-time, fourth-quarter dash by investors who wanted to cash out their property holdings before a rise in the capital gains tax took effect in 2013.
This year, the volume of activity returned to historically normal levels, with retail property sales volume rising each quarter, and the sales price per square foot on several transactions continuing to set new records.
The Eastern Consolidated December 2013 Retail Pulse report showed average asking rents are increasing in nearly every New York City neighborhood, including Fifth Avenue from East 49th to 59th Streets, where average asking rents are at a city-wide high of $3,000 psf.
Average asking rents on Broadway and 7th Avenue, ranging from 42nd Street to 47th Street, have risen above $2,000 psf.
Having nearly doubled year-over-year, SoHo average asking rents are now more than $800 psf.
The Ferragamo Building at 655 Fifth Avenue marked the biggest retail property sale of 2013 year-to-date, at $278 million, or $5,227 psf.
Many Brooklyn neighborhoods, including Fort Green, DUMBO, Park Slope, and Williamsburg, have had tremendous growth and attracted a number of national retailers to blocks that were previously lined with mom-and-pop retail stores.
More than 45,000 retail jobs have been added in New York City since the downturn, making the sector the city’s third largest job creator.
Tourism is the City’s biggest driver of retail, with three new hotel openings in the City this year, following 21 new hotel openings last year.