Manhattan-based commercial real estate firm Cushman & Wakefield released its 2008 year-end report last Tuesday, and the outlook for 2009 is not pretty, said executive director Gene Spiegelman. But he did offer some hope.
“We’re anticipating that it’s going to be a difficult year, but we’re hoping that by the second quarter, retailers will be able to set their compasses and determine what they can do in 2010 and 2011,” said Spiegelman. “New York has fared better in 2008 and will fare better than the national scene, but clearly we see that availability rates will increase and rents will come down across all markets.”
Despite the economic tumble at year’s end, Speigelman said 2008 was a respectable year for Manhattan retail across all neighborhoods.
“The only market where we saw a mild jump from mid-year 2007 to mid-year 2008 was the availability rate on Madison Avenue, which went from just under 7 percent to 13 percent year-over-year,” he said. “Otherwise, other markets are operating in the traditional range of availability.”
In fact, according to the report, asking rents on Manhattan’s Upper West Side only dropped $2 to $334 per square foot, and vacancies actually fell from 7.6 percent in 2007 to 5.7 percent at the end of 2008.
The same was true for the Soho area, where vacancies also decreased from 8.5 percent in 2007 to 7.3 percent in 2008. Asking rents remained relatively flat, at $263 per square foot.
Not surprising, major leases were signed last year for coveted space on New York’s Fifth Avenue, where asking rents continue to creep above $2,000 per square foot.
In February of last year, Speigelman transacted a deal for the new 19,000-sq.-ft. Diesel store on Fifth Avenue, where the Gucci flagship once stood. The firm was involved in five other transactions with footwear companies last year alone, including the new Ugg location on Columbus Avenue, leases for Timberland and Via Spiga in Soho, and a renewal of Allen Edmonds’ lease on 43rd Street. Several upcoming deals are likely, said Speigelman.
“We’re talking to companies like Skechers, Adidas and Puma. Footwear is a very important part of our business,” said Speigelman.
While next year will prove to be difficult, Spiegelman said footwear shops in Manhattan are well positioned.
“Shoes are affordable, they make you feel good, and footwear fits in well with the fashion mix [in New York],” he said.
“It’s not going to be pretty, but our downside is more tempered,” he said. “New York is supply-constrained — the demand for space usually outstrips the inventory.”