spring09 - Real Estate Board of New York...Title spring09.qxp Author maryann Created Date 6/3/2009...

Spring 2009

Stephen M. Ross,Chairperson

Steven Spinola,President

570 Lexington Avenue / New York, NY 10022 / 212.532.3100www.rebny.com

revised 6/2/09

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Manhattan average asking rents for allavailable space declined 11 percent from

the Fall 2008 to $115. Each of the borough’ssix geographic areas showed a decline in theaverage asking rent for all available space,ranging from 6 percent in Midtown to 22 per-cent on the West Side compared to six monthsearlier. Double digit declines in the averageasking rent for all available space were reportedon the East Side (12 percent), Midtown South(14 percent), Downtown and Upper Manhattan(13 percent).

These declines in the average asking rent forall space are from market highs in the fall 2008.In most cases, the average rents for Manhattanand the borough’s six geographic areas are com-parable to asking rents from a year ago.

Since September 2008, the turmoil in thefinancial markets has reverberated through thereal estate industry and the retail market.Despite this uncertainty, our Advisory Groupreports that leasing activity is occurringthroughout Manhattan. More interestingly, newretail tenants are looking at store space in NewYork for the first time. No doubt decliningprices are attracting tenants for whom the city isbecoming more affordable.

The average asking rent for ground floorspace in many of the major retail corridorshighlighted in the report likewise showeddeclines compared to Fall 2008. MadisonAvenue declined 14 percent, Broadway on theUpper West Side declined 5 percent and FifthAvenue in the 50s fell 3 percent from Fall 2008.

In a few corridors, such as Fifth Avenue inthe Flatiron District and Broadway in SoHo, theaverage asking rent for ground floor spaceshowed a modest gain. Our Advisory Groupnoted that in this economy owners are uncertainabout what is an appropriate asking rent.Hence, they do not modify the asking rentwhich could have been set as much as a yearago. Instead, they would offer a longer freerent period and a more generous build outallowance. These economic incentives varyfrom owner to owner.

A few years ago, in our meeting to reviewour report, our Advisory Group began toexpress concern about the steep rise in askingrents. They believed that asking rent increasesin the major retail corridors in Manhattan wereoutpacing overall economic growth and ques-tioned the sustainability of these asking rentincreases. Accordingly, they see the recentdecline in asking rents as an anticipated marketcorrection in a market that was experiencingunsustainable rent growth.

In our tumultuous economy it is crucial toexamine all the asking rent information—aver-age, median and range of ground floor space—in assessing the market conditions of an indi-vidual major retail corridor and evaluating ask-ing rents for individual stores.

An emerging issue identified by ourAdvisory Group is the rise in sublet space. Inearlier reports, this sublet space was virtuallyindistinguishable from space marketed directlyby the landlord and was included in our reports.Going forward, our Advisory Group will beexamining the asking rents for sublet space list-ings. Those listings that reflect market condi-tions (comparable rent with a term of 7 years ormore) in a particular location will be included.In situations where there are sublet listings withshorter lease terms we will attempt to determineif these sub-leases are likely to be converted tolong-term leases with the participation of thebuilding owner. Those listings, however, inwhich the asking price reflects economic distressof the tenant and significantly lower than otheravailable space in the market will be omitted.

The goal of our report is to provide com-plete, comprehensive information—the majorneighborhoods and prime corridors inManhattan—on the retail market. With theinvaluable assistance of our Advisory Group,we have attempted to alert the readers of ourreport to factors that are not captured by therent data. This information is critical to under-standing the market.

We hope in these challenging times you findour report informative and useful.

ExExecutivecutive Summare Summaryy

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Spring Spring Fall Fall Spring Spring % Change% Change % Change% Change20092009 20082008 20082008 From FallFrom Fall From SpringFrom Spring

20082008 20082008EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $979 $1,143 $1,066 -14% -8%

Third Ave: 60 - 72 St $275 $287 $329 -4% -16%

East 86 St: Lexington Ave - 2nd Ave $400 $475 $450 -16% -11%

WESTSIDEWESTSIDEBroadway: 72 - 86 St $293 $309 $384 -5% -24%

Columbus Ave: 66 - 79 St $257 $300 $268 -14%

MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $900 $600 n/a 50% n/a

Fifth Ave: 42 - 49 St $615 $550 $704 12% -13%

Fifth Ave: 49 - 59 St $1,631 $1,675 $1,958 -3% -17%

Broadway & 7 Ave: 42 - 47 St $941 $775 $809 21% 16%

MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $285 $276 $401 3% -29%

Herald SquareWest 34 St: 5 - 7 Ave $508 $643 $656 -21% -23%

Meatpacking14 St: 9 - 10 Ave $417 $304 $462 37% -10%

DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $251 $251 $198 0% 27%

SoHoBroadway: Houston - Broome St $452 $432 $424 5% 7%

West VillageBleeker St: 7 Ave South - Hudson St $528 $362 $397 n/a 33%

UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $119 $125 $107 -5% 11%

AAVERAVERAGE ASKINGE ASKING RENTG RENT: SELECTED MAJOR RET: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy

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20082008 20082008EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $1,000 $1,140 $1,121 -12% -11%

Third Ave: 60 - 72 St $250 $300 $342 -17% -27%

East 86 St: Lexington Ave - 2nd Ave $400 $450 $450 -11% -11%

WESTSIDEWESTSIDEBroadway: 72 - 86 St $300 $316 $325 -5% -8%

Columbus Ave: 66 - 79 St $271 $300 $288 -10% -6%

MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $600 $600 n/a 0% n/a

Fifth Ave: 42 - 49 St $506 $550 $455 -8% 11%

Fifth Ave: 49 - 59 St $1,561 $1,500 $1,958 4% -20%

Broadway & 7 Ave: 42 - 47 St $1,000 $775 $809 24% 29%

MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $250 $271 $400 -8% -38%

Herald SquareWest 34 St: 5 - 7 Ave $500 $640 $672 -22% -26%

Meatpacking14 St: 9 - 10 Ave $400 $300 $467 33% -14%

DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $200 $200 $225 0% -11%

SoHoBroadway: Houston - Broome St $480 $400 $421 20% 14%

West VillageBleeker St: 7 Ave South - Hudson St $525 $304 $332 73% n/a

UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $100 $115 $92 -13% 9%

MEDIAN ASKINMEDIAN ASKING RENTG RENT: SELECTED MAJOR RET: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy

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Spring 2009Spring 2009 Fall 2008Fall 2008 Spring 2008Spring 2008

EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $700 - $1,200 $704 - $1,667 $600 - $1,538

Third Ave: 60 - 72 St $200 - $400 $184 - $503 $300 - $350

East 86 St: Lexington Ave - 2nd Ave $400 - $400 $325 - $781 $400 - $500

WESTSIDEWESTSIDEBroadway: 72 - 86 St $236 - $325 $168 - $450 $325 - $620

Columbus Ave: 66 - 79 St $162 - $325 $131 - $447 $150 - $348

MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $600 - $1,500 $400 - $800 $0 - $0

Fifth Ave: 42 - 49 St $432 - $1,333 $300 - $800 $325 - $1,333

Fifth Ave: 49 - 59 St $1,200 - $2,200 $1,200 - $2,500 $1,915 - $2,000

Broadway & 7 Ave: 42 - 47 St $622 - $1,200 $550 - $1,000 $618 - $1,000

MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $200 - $400 $238 - $325 $300 - $556

Herald SquareWest 34 St: 5 - 7 Ave $475 - $550 $500 - $791 $450 - $830

Meatpacking14 St: 9 - 10 Ave $400 - $450 $250 - $400 $320 - $600

DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $100 - $400 $100 - $500 $75 - $400

SoHoBroadway: Houston - Broome St $333 - $550 $220 - $800 $275 - $600

West VillageBleeker St: 7 Ave South - Hudson St $393 - $667 $130 - $800 $265 - $600

UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $75 - $200 $80 - $222 $40 - $220

ASKINASKING RENT RANG RENT RANGE: SELECTED MAJOR RETGE: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy

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AAVERAVERAGE ASKINGE ASKING RENTG RENT: MAJOR RET: MAJOR RETAIL NEIGHBAIL NEIGHBORHOODSORHOODSAll AAll Avvailable Spaceailable Space (Gr(Ground found floorloor, lo, lowwer Leer Levvel, Uel, Upper lepper levvel, mezzanine)el, mezzanine)


20082008 20082008

MANHAMANHATTTTANAN $115 $129 $111 -11% 4%

EASTSIDEEASTSIDE $168 $190 $164 -12% 2%

60th Street to 96th Street, Fifth Avenue to the East River

WESTSIDEWESTSIDE $116 $147 $123 -22% -6%

60th Street to 116th Street, West of Morningside Park

MIDTMIDTOWNOWN $152 $161 $145 -6% 5%

35th Street to 59th Street

MIDTMIDTOWN SOUTHOWN SOUTH $96 $111 $96 -14% 0%


DOWNTDOWNTOWNOWN $95 $110 $103 -13% -8%

South of 14th Street

UPPER MANHAUPPER MANHATTTTANAN97th Street and higher, Fifth Avenue to the East River; $52 $60 $60 -13% -13%

116th Street and higher, West of Morningside Park

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MEDIAN ASKINMEDIAN ASKING RENTG RENT: MAJOR RET: MAJOR RETAIL NEIGHBAIL NEIGHBORHOODSORHOODSAll AAll Avvailable Spaceailable Space (Gr(Ground found floorloor, lo, lowwer Leer Levvel, Uel, Upper lepper levvel, mezzanine)el, mezzanine)


20082008 20082008

MANHAMANHATTTTANAN $83 $94 $77 -11% 8%

EASTSIDEEASTSIDE $125 $139 $125 -10% 0%

60th Street to 96th Street, Fifth Avenue to the East River

WESTSIDEWESTSIDE $88 $120 $100 -27% -12%

60th Street to 116th Street, West of Morningside Park

MIDTMIDTOWNOWN $100 $113 $83 -12% 20%


MIDTMIDTOWN SOUTHOWN SOUTH $70 $85 $76 -18% -8%


DOWNTDOWNTOWNOWN $80 $85 $80 -6% 0%

South of 14th Street

UPPER MANHAUPPER MANHATTTTANAN97th Street and higher, Fifth Avenue to the East River; $45 $50 $47 -10% -4%

116th Street and higher, West of Morningside Park

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New York City Employment (in thousands)

7

3,790

3,619

3,490 3,499

3,539

3,580

3,300

3,350

3,400

3,450

3,500

3,550

3,600

3,650

3,700

3,750

3,800

3,850

2008 2009 2010 2011 2012 2013

East Side9.6

West Side4.4

Midtown28.8

Midtown South35.4

Downtown21.2

N. Manhattan10.3

26.2%

32.2%

19.3%

9.4%4.0%

8.8%

SELECTED MARKET DATASELECTED MARKET DATA

New York City CPI (1982-1984=100)

235.8 235.1

238.9

244.3

250.1

256.2

220

225

230

235

240

245

250

255

260

2008 2009 2010 2011 2012 2013

CPI

R

Manhattan Retail Square Feet by Area (millions of square feet)

Source: NYC Office of Management & Budget

Forecast of New York City Economic Indicators


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$420.8

$406.1 $406.1

$419.4

$437.1

$456.6

$380.0

$400.0

$420.0

$440.0

$460.0

$480.0

2008 2009 2010 2011 2012 2013

Personal Income (In Thousands)

$486.2

$427.8$419.8

$433.0

$457.7

$447.6

$380.0

$400.0

$420.0

$440.0

$460.0

$480.0

$500.0

2008 2009 2010 2011 2012 2013

New York City Gross Personal Income

New York City Real Gross City Product (billions)

SELECTED MARKET DATASELECTED MARKET DATA



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$133$138

$103$113 $111

$128

$143

$155$148

$160

$178

$161$155

$170$164

$168

$186 $190

$80

$100

$120

$140

$160

$180

$200

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$115$122

$107 $109 $110 $112

$121$125

$129 $132$138 $137

$156$152

$161

$128$133

$145

$80

$100

$120

$140

$160

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$103

$92 $92 $91

$100$104

$107

$136

$127$123 $122

$128

$135

$116

$147

$107

$123

$111

$80

$100

$120

$140

$160

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Midtown

Westside

96 98

8487 85

8892

97 97

103108 106 107

118115

129

102

111

80

100

120

140

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Average Retail Asking Rents PSFAverage Retail Asking Rents PSF

Eastside

Manhattan

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$67

$60 $60 $58 $59 $58 $58 $59

$73

$82

$90 $92

$98$95

$103

$95

$110

$85

$50

$70

$90

$110

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$51

$47

$53$50

$53$50 $51 $50 $50

$47$50

$52

$60

$48

$76

$60$56

$43

$40

$50

$60

$70

$80

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Upper Manhattan

$79 $78

$70$74

$71 $70$74 $75

$78$73

$85 $85$89

$94 $96 $96

$111

$82

$60

$70

$80

$90

$100

$110

$120

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Average Retail Asking Rents PSFAverage Retail Asking Rents PSF

Downtown

Midtown South

The Retail Report provides objective, comprehensiveinformation about asking rents and market trends in

Manhattan.

Issued twice a year—Spring and Fall—the report is a project of the REBNY Retail Committee.

The report presents retail space information by geo-graphical area and focuses on the asking rent of theground floor space on the major retail streets.

Robin Abrams, The Lansco Corporation

Karen Bellantoni, Robert K. Futterman & Associates, LLC

Benjamin Fox, Winick Realty Group

Andrew Goldberg, CBRE

David Green, Cushman & Wakefield

Joanne Podell, Cushman & Wakefield

Fred Posniak, W&M Properties of New York, LLC

Jeffrey Roseman, Newmark Knight Frank

Alan Victor, The Lansco Corporation

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acknowledgementsacknowledgements

The REBNY Retail Report Advisory Group includes:

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