By Chase Welles
There’s no doubt that compared to ’08 and ’09, retail leasing activity in the New York Metro Region has picked up, but it is tempered with an air of caution and restraint.
There are numerous, significant leases out that we expect to be announced within the next 30 days or so, as brokers and landlords work to get deals closed.
For example, I have more leases in the works than the last couple of years combined, and I know that to be typical of these times. However, new leasing velocity seems to have slowed across the city, although perhaps what we’re seeing is a flattening of activity, not necessarily a decline.
At the Real Estate Board of New York’s retail committee, we conduct round table discussions where done deals and new listings are announced. At our last monthly meeting, only four or five signed leases were announced.
Cheryl Cohen of Trend Setter Realty did three deals in TriBeCa; Gene Spiegelman of Cushman & Wakefield announced his Crate & Barrel B2 deal at 979 Third Avenue.
Although few deals were finished last quarter, at least a dozen new and tasty listings hit the market: rare product on Broadway in the 80s, new large corners on Third Avenue in the 70s, great big box sites on Ladies’ Mile, not to mention the Borders at Wall Street and Broadway.
There will be multiple offers for these sites and it will be interesting to see where rents end up, given that recent activity indicates that the rate of increase in rental rates has decreased.
A neighborhood-by-neighborhood comparison reveals more detail. The national and international flagship retail of Midtown, Soho, and Madison Avenue is largely leased up with consistent high demand for space. The Upper East Side, Upper West Side, Chelsea and the Village have availability, but little long-term vacancy.
As economic activity returned to retail leasing five or six quarters ago, the first “green shoots” were local tenants making advantageous deals. delis, hardware stores and cafes. Next came the international and national retailers and they absorbed most of the vacant “A” flagship space.
Now, with that activity abated, we notice resumed expansion by the “usual suspects,” including Starbucks, CVS, Walgreens and Duane Reade, Staples, Pret A Manger, Chipotle and others, but these deals move carefully and slowly.
The market for the various types of retail in the city is healthy with sustainable turnover and activity from many types of tenants. Though rents are still below their peaks, a broad range of tenants are looking and brokers and owners share a cautious optimism.
Chase Welles is executive vice president of Northwest Atlantic Real Estate Services.