New York City’s commercial retail estate landscape might finally be coming back to life.
According to a spring report from the Real Estate Board of New York (REBNY), the amount of time between unoccupied leases is improving across certain high-traffic retail sectors in Manhattan. The report found that storefront properties on streets such as Prince Street in SoHo and Upper Madison Avenue were “absorbed as international retailers, national chains and emerging retail concepts accelerated their activity.”
Average asking rents also appear to have stabilized, the study found, with nine out of 17 Manhattan retail corridors seeing their average asking rent grow since fall of 2021.
The apparent normalization comes as New York City, like other major cities, emerges from two years of a hit to tourism-induced sales and retail store vacancies. REBNY previously stated that any progress made in Manhattan’s retail markets would depend on “clear guidance” from leadership to handle increases in cases of COVID-19.
Throughout the start of 2021, retail activity in Manhattan was largely characterized by food and beverage, fitness and local services, REBNY found.
“We were just starting to see a return of international retailers along with first-time entrants previously priced out of the borough,” said Keith DeCoster, REBNY’s director of market data and policy. “Demand is now coming from multiple sources like luxury fashion and accessories retailers on Madison Avenue and in SoHo, along with home décor and furniture tenants active in multiple corridors.”
For example, Versace signed a deal to take over a 5,300-square-foot lease at 747 Madison Avenue. And earlier this month, the Barcelona-based Mango opened the doors to its new 23,000 square-foot flagship in New York City at 711 Fifth Avenue. Also in May, Century 21, a New York City-based off-price retailer, said that it would reopen its longtime Cortlandt Street flagship store in downtown Manhattan next spring.
DeCoster added that chains like Whole Foods and Petco have also added large outposts, while companies from newer niche industries such as cannabis are expanding their retail footprints as well.
“Overall, momentum across the borough has made significant headway in recent months,” DeCoster said.
The pick-up in Manhattan retail locations corresponds with a general strength in consumer spending, despite current inflationary trends, and as retailers report an uptick in foot traffic to physical stores. The U.S. Census Bureau reported in May that retail and food service sales in April 2022 totaled $677.7 billion, marking a seasonally adjusted 0.9% increase from the previous month and a 8.2% leap from April 2021.
“Despite uncertainty in the economy, there seemed to be no stopping shoppers during the last several months,” said Joanne Podell, executive vice chair of commercial real estate services firm Cushman & Wakefield and member of REBNY’s Manhattan Retail Advisory Group. “The willingness of so many retailers to commit to new stores of late underscores the resilience of consumers and brick and mortar retail.”