THE REAL ESTATE BOARD OF NEW YORK · 2020-07-22 · The Real Estate Board of New York’s (REBNY)...

THE REAL ESTATE BOARD OF NEW YORKMANHATTAN RETAIL REPORT | SPRING 2019

MANHATTAN RETAIL REPORT SPRING 2019 | 2

INTRODUCTION

As rents continue to self-correct, deal-making has increased with tenants committing to space in key areas for both new and existing product. Amid increases in consumer spending, income growth, and employment, Manhattan’s top retail corridors continue to experience decreased rent values with heightened availability rates. In more recent periods, asking rent depreciation has slowed causing rents in several corridors to level off as transaction volumes increase. Continuing 2018 trends, Manhattan retail leases in the first months of 2019 were driven by the food and beverage industry, followed by activewear, cosmetic, and technology brands.

Manhattan retail inventory increased with new high-profile development projects such as Hudson Yards, Gansevoort Row, the Seaport District, and Essex Crossing, which all offer competitive asking rents and elevated visibility. Amid these new, prominent retail availabilities, property owners are facing pressure to reprice existing vacant retail spaces at lower asking rents. As a result, many owners are also offering greater flexibility to prospective tenants in the form of shorter-term deals, concessions, and build-outs.

The Real Estate Board of New York’s (REBNY) Manhattan Retail Report Advisory Group remains optimistic on the Manhattan retail market as they are seeing increased interest in retail space by new retailers entering the market, retailers previously deterred by high prices, and retailers looking to move to emerging neighborhoods. Retail leasing activity among e-commerce and digitally native brands are highlighting the importance of brick-and-mortar locations as distribution hubs for products and a physical extension of their marketing presence.

In spring 2019, average asking rents for available ground floor retail spaces decreased in 12 of the 17 Manhattan corridors analyzed by REBNY in its bi-annual Manhattan Retail Report, when compared to the spring of 2018.

The average asking rent on Madison Avenue, between the 57th and 72nd Streets, declined by 25 percent to $1,039 price per square foot (psf) compared to spring 2018. Out of the 17 observed corridors, Madison Avenue represented the largest year-over-year decline. According to REBNY’s Manhattan Retail Report Advisory Group, high availability rates along the corridor have led owners to continue lowering their rents and offer more short-term lease agreements. Flagship retailers across the prestigious strip are taking advantage of the softening rents by either locking in long-term lease agreements, moving to smaller-sized spaces, or migrating further south. Declining rents have fostered a healthier environment as more retail space is being absorbed at an affordable rate.

On East 86th Street, between Lexington Avenue and Second Avenue, the average asking rents declined nine percent to $365 psf compared to spring 2018. This drop was due to more expensive retail spaces along Lexington Avenue being recently leased out by Old Navy and JP Morgan Chase with remaining availabilities along the corridor being located further eastwards where rents tend to be lower.

In Upper Fifth Avenue, between 49th and 59th Streets, the average asking rent declined 22 percent from $3,900 psf in spring 2018 to $3,047 psf in spring 2019. This decline is attributed to both historically high availability rates and low absorption rates, as high asking rents are diminishing tenant demand. Despite instances of rent reductions, newer owners who purchased spaces at peak market rates are slow to adjust their prices and are struggling to fill vacant spaces. Similarly, on Fifth Avenue, between 42nd and 49th Streets, the average asking rent dropped for the third consecutive year-over-year period to $878 psf, a 20 percent decrease compared to spring 2018.

EXECUTIVE SUMMARY


On Columbus Avenue, between 66th and 79th Streets, the average asking rent declined eight percent year-over-year to $279 psf. This represented the third consecutive year-over-year decline in rents along this corridor. Likewise, the average asking rent for Broadway, along 72nd and 86th Streets, dropped 16 percent from $325 psf in spring 2018 to $273 psf in spring 2019. Both corridors continue to undergo price corrections that have been ongoing since 2015.

In SoHo on Broadway, between Houston Street and Broome Street, the average asking rent declined nine percent from $595 psf to $544 psf year-over-year. While asking rents in this corridor softened for the second consecutive year-over-year period, this decrease was much smaller. Adjusted asking rents have incentivized deal-making by various tenants including pop-up shops, digitally native brands, and retailers such as H&M, Brandy Melville, and The North Face.

On 14th Street, between 9th Avenue and 10th Avenue, the average asking rent decreased 12 percent to $277 psf compared to spring 2018. Tourists, daytime workers, and nearby residents flock to the corridor for attractions such as The High Line, Google’s corporate campus, Chelsea Market, and Gansevoort Row. With this high foot traffic, 14th Street is viewed as the prime location for “experiential retail” concepts that cater to customer experiences, pop-up shops, fashion, and food and beverage stores.

Out of the 17 Manhattan retail corridors observed, 125th Street in Harlem posted the largest year-over-year average asking rent increase of 10 percent to $137 psf. This increase was attributed to several new spaces west of Fifth Avenue that came to market at the end of 2018, where rents tend to be higher compared to the eastside. Deal-making along the corridor has remained steady with new tenants including Shake Shack, Whole Foods Market, Victoria’s Secret, and Bath & Body Works.

In four of the 17 observed corridors, average asking rents were flat with minimal year-over-year changes. These corridors were East 57th Street, between Fifth Avenue and Park Avenue; Broadway and Seventh Avenue, between 42nd and 47th Streets; West 34th Street, between Fifth Avenue and Seventh Avenue; and Broadway, between 17th and 23rd Streets.

The REBNY Manhattan Retail Report Advisory Group includes:

Robin Abrams, Compass Karen Bellantoni, RKF Matt Chmielecki, CBRE David A. Green, Colliers International Jordan Kaplan, CBRE Andrew Mandell, Ripco Real Estate Joanne Podell, Cushman & Wakefield Fred Posniak, Empire State Realty Trust Jeffrey Roseman, Newmark Knight Frank Craig Slosberg, Newmark Knight Frank

REBNY would like to thank the following firms fortheir assistance in preparing the report:

CBRECompassColliers International Cushman & WakefieldEmpire State Reality TrustNewmark Knight FrankRipco Real EstateRKF

EXECUTIVE SUMMARY (CONT.)

ACKNOWLEDGMENTS


Columbus Ave | (66th St - 79th St)Broadway | (72nd St - 86th St)

$405 $403

$344 $338

$304 $298

$279

$250

$300

$350

$400

$450

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

UPP

ER W

EST

SID

E

125th St | (5th Ave - Morningside Ave)

UPP

ER M

AN

HAT

TAN

$138

$125 $124 $123 $124

$140$137

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S

2019

UPP

ER E

AST

SID

E

$455

$428

$399

$450

$400

$367 $365

$300

$350

$400

$450

$500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$1,644

$1,433 $1,446

$1,348$1,390

$1,160

$1,039

$800

$1,050

$1,300

$1,550

$1,800

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$371

$340$356

$261 $264

$233$226

S- 2016 F- 2016 S- 2017 F-2017 S-2018 F-2018 S- 2019

East 86th St | (Lexington Ave - 2nd Ave) Madison Ave | (57th St - 72nd St)

Third Ave | (60th St - 72nd St)

110

120

130

140

150

$200

$250

$300

$350

$400

$359

$341

$315

$291

$325

$306

$273

$200

$250

$300

$350

$400

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

HISTORICAL AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL


Fifth Ave | (42nd St - 49th St)

Fifth Ave | (49th St - 59th St)

$2,363

$2,170

$1,930

$2,100

$1,938$1,860

$1,936

$1,500

$1,750

$2,000

$2,250

$2,500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

East 57th St | (5th Ave - Park Ave)*No data avaliable for F-2017

MID

TOW

N Broadway & 7th Ave | (42nd - 47th St)

$3,398$3,484

$3,324

$3,900 $3,900

$2,973$3,047

$2,500

$3,000

$3,500

$4,000

$4,500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$1,368

$1,259

$1,163 $1,158

$1,097

$939

$878

$800

$975

$1,150

$1,325

$1,500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$1,625

$1,438

$1,294

$975$925 $944

$800

$1,050

$1,300

$1,550

$1,800

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

Broadway | (14th St - 23rd St)

$385 $390

$456$449

$422

$393$400

$300

$350

$400

$450

$500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$447

$390

$348

$384

$360

$378 $372

$300

$350

$400

$450

$500

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019MID

TOW

N S

OU

TH

Fifth Ave | (14th St - 23rd St)

West 34th St | (5th Ave - 7th Ave)$890

$745 $734

$633$604

$573

$613

$500

$600

$700

$800

$900

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019



Bleecker St | (7th Ave South - Hudson St)

Broadway | (Battery Park - Chambers St)

Broadway | (Houston St - Broome St)

14th St | (9th Ave - 10th Ave)

DO

WN

TOW

N

$326

$369$362

$374 $368

$338

$401

$250

$300

$350

$400

$450

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$824

$755

$812

$644

$595

$558$544

$500

$600

$700

$800

$900

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$513

$471

$373$351

$332

$293 $294

$250

$325

$400

$475

$550

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019

$348 $345$334

$323$313

$303

$277

$250

$300

$350

$400

$450

S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019



Columbus Ave | (66th St - 79th St)Broadway | (72nd St - 86th St)

UPP

ER W

EST

SID

EU

PPER

EA

ST S

IDE East 86th St | (Lexington Ave - 2nd Ave) Madison Ave | (57th St - 72nd St)

Third Ave | (60th St - 72nd St)

125th St | (5th Ave - Morningside Ave)

UPP

ER M

AN

HAT

TAN

LEG

END

2%▼

10%▲

$124 $140 $137

6%▼

8%▼

$304 $298 $279

10%▼

25%▼

$1,390 $1,160 $1,039

Spring 18 Fall 18 Spring 19

%Δ from Fall 18 to Spring 19

%Δ from Spring 18 to Spring 19

$325 $306 $273

11%▼

16%▼

$400 $367 $365

1%▼

9%▼

$264 $233 $226

3%▼

14%▼

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL



Fifth Ave | (42nd St - 49th St)

Fifth Ave | (49th St - 59th St)

East 57th St | (5th Ave - Park Ave)

MID

TOW

N Broadway & 7th Ave | (42nd - 47th St)

2%▲

22%▼

$3,900 $2,973 $3,047

4%▲

0%

2%▲

3%▼

$975 $925 $944$1,097

3%▼

2%▲

$360 $378 $372$604 $573 $613

7%▲

2%▲

$939 $878

7%▼

20%▼

$422 $393 $400

2%▲

5%▼

$1,938 $1,860 $1,936

Broadway | (14th St - 23rd St)

MID

TOW

N S

OU

TH

Fifth Ave | (14th St - 23rd St)

West 34th St | (5th Ave - 7th Ave)


Bleecker St | (7th Ave South - Hudson St)

Broadway | (Battery Park - Chambers St)

Broadway | (Houston St - Broome St)

14th St | (9th Ave - 10th Ave)

DO

WN

TOW

N

19%▲

9%▲

$368 $338 $401$313 $303 $277

9%▼

12%▼

0%

12%▼

$332 $293 $294$595 $558 $544

2%▼

9%▼



APPENDIX

AVERAGE ASKING RENT PSF – GROUND FLOOR RETAIL

Spring 19 Fall 18 Spring 18 % Fall 18 % Spring 18UPPER WEST SIDEBroadway (72nd St - 86th St) $273 $306 $325 -11% -16%Columbus Ave (66th St - 79th St) $279 $298 $304 -6% -8%

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $365 $367 $400 -1% -9%Madison Ave (57th St - 72nd St) $1,039 $1,160 $1,390 -10% -25%Third Ave (60th St - 72nd St) $226 $233 $264 -3% -14%

MIDTOWNEast 57th St (5th Ave - Park Ave) $944 $925 $975 2% -3%5th Ave (49th St - 59th St) $3,047 $2,973 $3,900 2% -22%5th Ave (42th St - 49th St) $878 $939 $1,097 -7% -20%Broadway & 7th Ave (42nd St - 47th St) $1,936 $1,860 $1,938 4% 0%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $613 $573 $604 7% 2%Flatiron5th Ave (14th St - 23rd St) $400 $393 $422 2% -5%Broadway (14th St - 23rd St) $372 $378 $360 -2% 3%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $277 $303 $313 -9% -12%West Village Bleecker St (7th Ave South - Hudson St) $294 $293 $332 0% -12%SoHoBroadway (Houston St - Broome St) $544 $558 $595 -2% -9%Lower Manhattan Broadway (Battery Park - Chambers St) $401 $338 $368 19% 9%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $137 $140 $124 -2% 10%


APPENDIX

MEDIAN ASKING RENT PSF – GROUND FLOOR RETAIL

Spring 19 Fall 18 Spring 18 % Fall 18 % Spring 18UPPER WEST SIDEBroadway (72nd St - 86th St) $250 $325 $325 -23% -23%Columbus Ave (66th St - 79th St) $248 $280 $276 -11% -10%

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $365 $375 $400 -3% -9%Madison Ave (57th St - 72nd St) $1,000 $1,160 $1,361 -14% -27%Third Ave (60th St - 72nd St) $225 $225 $275 0% -18%

MIDTOWNEast 57th St (5th Ave - Park Ave) $900 $800 $900 13% 0%5th Ave (49th St - 59th St) $3,050 $2,600 $3,900 17% -22%5th Ave (42th St - 49th St) $800 $909 $1,000 -12% -20%Broadway & 7th Ave (42nd St - 47th St) $1,800 $1,975 $2,000 -9% -10%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $600 $650 $625 -8% -4%Flatiron5th Ave (14th St - 23rd St) $400 $418 $400 -4% 0%Broadway (14th St - 23rd St) $375 $350 $343 7% 9%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $262 $300 $300 -13% -13%West Village Bleecker St (7th Ave South - Hudson St) $270 $268 $319 1% -15%SoHoBroadway (Houston St - Broome St) $544 $547 $587 -1% -7%Lower Manhattan Broadway (Battery Park - Chambers St) $413 $325 $375 27% 10%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $125 $130 $130 -4% -4%


APPENDIX

RANGE OF ASKING RENTS PSF – GROUND FLOOR RETAIL

Spring 19 Fall 18 Spring 18UPPER WEST SIDEBroadway (72nd St - 86th St) $166 _ $410 $200 _ $450 $147 _ $500Columbus Ave (66th St - 79th St) $125 _ $458 $178 _ $458 $225 _ $500

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $225 _ $475 $250 _ $475 $300 _ $500Madison Ave (57th St - 72nd St) $800 _ $1,600 $720 _ $1,700 $720 _ $2,000Third Ave (60th St - 72nd St) $160 _ $300 $165 _ $300 $140 _ $400

MIDTOWNEast 57th St (5th Ave - Park Ave) $800 _ $1,175 $800 _ $1,175 $800 _ $1,2005th Ave (49th St - 59th St) $2,000 _ $4,000 $2,000 _ $4,000 $3,900 _ $3,9005th Ave (42th St - 49th St) $500 _ $1,500 $590 _ $1,744 $635 _ $1,600Broadway & 7th Ave (42nd St - 47th St) $1,500 _ $2,350 $1,000 _ $2,350 $1,800 _ $2,000

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $447 _ $850 $314 _ $750 $371 _ $800Flatiron5th Ave (14th St - 23rd St) $295 _ $550 $285 _ $511 $285 _ $555Broadway (14th St - 23rd St) $325 _ $410 $311 _ $500 $311 _ $445

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $195 _ $375 $150 _ $700 $195 _ $700West Village Bleecker St (7th Ave South - Hudson St) $150 _ $584 $200 _ $450 $200 _ $450SoHoBroadway (Houston St - Broome St) $300 _ $978 $341 _ $1,000 $444 _ $1,000Lower Manhattan Broadway (Battery Park - Chambers St) $150 _ $625 $160 _ $600 $160 _ $600

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $90 _ $250 $76 _ $145 $76 _ $145


CORRIDOR MAPS

125th Street

E 86th Street

Mad

ison

Ave

nue

Broa

dway

Broa

dway

Broa

dway

Bleecker Street

14th Street

Broa

dway

7th

Aven

ue 5th

Stre

et

E 57th Street

Broa

dway

Col

umbu

s Av

enue

5th

Aven

ue

W 34th Street

Third

Ave

nue

UPPER MANHATTAN

UPPER EAST SIDE

DOWNTOWN

MIDTOWN SOUTH

MIDTOWN

UPPER WEST SIDE

THE REAL ESTATE BOARD OF NEW YORK · 2020-07-22 · The Real Estate Board of New York’s (REBNY)...

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