The holiday season is expected to bring a much-needed boost to a beleaguered retail sector.
With underlying fundamentals of demand, high employment and increasing wages all improving, holiday shoppers are expected to spend over $1 trillion in stores.
“The positive local and national economic conditions and the prediction for a strong holiday shopping season ahead are creating great opportunities in New
York, ” said Nicole LaRusso, Director of Research & Analysis, CBRE Tri-State.
The news comes as retail asking rents across the city continue to fall. During the third quarter, Manhattan’s average retail asking rents across the 16 busiest retail
corridors fell 8.4 percent year-over-year to $802 per s/f, according to CBRE’s 3Q
report. With vacant storefronts, landlords were forced to adjust their pricing and 44 percent of available retail locations lowered their asking rents, the report added.
Jewelry, apparel and food concepts were responsible for 484,000 s/f in lease activity through 75 transactions iover the third quarter, according to CBRE; Despite only four leases, the jewelry industry accounted for roughly 16 percent of s/f leased over thequarter with more than 80,000 s/f in deals.
“The luxury and jewelry industries were very active during the third quarter,” said Andrew Goldberg, a vice chairman with CBRE. “Tiffany and Co., Balenciaga and Celine all signed deals during Q3, helping to bolster the sector’s leasing activity.”
Plaza District continues its reign as the most active neighborhood with 100,000 s/f leased in the third quarter. But SoHo saw the largest number of transactions
with 13 deals.
While there’s still notable activity, landlords will have to continue adjusting if they want to fill their vacancies, according to LaRusso.
“The Manhattan retail market continues to search for the right level with respect to rent, as landlords show ongoing willingness to negotiate lease rates and terms in order to secure tenants,” LaRusso said.
A new report from Deloitte predicts holiday shoppers will spend $1.1 trillion in brick and mortar stores this year – up five percent on last year.
The ecommerce sector is expected to take in between $128 and $134 billion — up 16.6 percent on last year.
“With more of the consumer spend going to e-commerce, success in the market will increasingly rely on retailers pivoting to an omnichannel approach, with close integration of e-commerce within the bricks-and-mortar retail store, and online brands seeking out space for in-real-life stores,” said LaRusso.
“Retailers who are innovative and nimble will continue to find that the New York market is a great place to do business.”
“Every retailer has to figure out what they can afford pay to be in a particular location and how they are going to best respond to the changing dynamics of the market.”
The report comes as two major retailers, Sears and Mattress Firm went out of business. On October 5, Mattress Firm filed for Chapter 11 bankruptcy, which allows the company to restructure to keep the business alive.
The nationwide mattress retailer faced strong competition from the likes of online startups like Casper and Tuft & Needle as is occupied 3,200 stores throughout the country.
Sears also filed for Chapter 11 bankruptcy on October 15. After years of under-performance at its brick-and-mortars and failing to adapt to the online retailing world, the company closed 46 stores and will shutter another 142.