The outlook for malls across the U.S. has been less than optimistic. Still, according to an article in the NY Post, retailers can’t resist the allure of New York. As per a new report from the Real Estate Board of New York, the Big Apple’s dense population and expendable incomes continue to secure its spot as a prime location for new stores and attractions. Of course, it helps that NY landlords have aggressively warded off vacancies by lowering rents, and offering flexible deal terms, build outs and concessions that were unthinkable a few years ago.
“The broad based decline we observed in ground floor retail average asking rents is indicative of the challenges the national retail market is facing,” said John Banks, President of the Real Estate Board of New York which issued the report. “Nevertheless, our advisory group remains optimistic as owners entertain more flexible lease terms, with notable trends and activity among food tenants and retailers opening fewer and/or smaller stores.”
The REBNY Spring 2017 Manhattan Retail Report lists retail rental rates in 14 of Manhattan’s 17 high profile shopping corridors have declined. The poshest parts of Bleecker Street between Seventh Avenue and Hudson Street have fared the worst of all the Manhattan markets. Rents there tumbled 27 percent from $513 per foot to $373 per foot since last spring, and nine vacancies remain.
On Broadway in the Flatiron, rents dropped 22 percent to $348 per foot, a decline that served to fill most of the vacancies. Rents also fell 18 percent in both Herald Square and the now less-pricey Times Square to $734 and $1,930 per foot, respectively.
In Tony Madison Avenue between 57th and 72nd Streets building owners lowered the asking rents by 12 percent to $1,446 per foot, down from $1,644 last spring. Nonetheless, there are still 33 vacancies in this area.
On Columbus Avenue rents plummeted 15 percent to $344 per foot, and the number of empty stores increased from 8 to 14. Third Avenue has also seen a jump in vacancies to 34 from 15 a year ago. Asking rents there are down only 4 percent to $356 per foot. On the West Side, in Broadway from 72nd to 86th streets, rents have fallen 12 percent since last spring to $315 per foot , with 21 vacancies.
Last fall Broadway’s Soho between Houston and Broome Streets saw an 8 percent rent drop to $755 per foot. That price decrease attracted renewed interest and so rents rose again this spring to $812 per foot and are now standing at only 1 percent less than the $824 per foot asked in spring 2016.
Still, Fifth Avenue’s appeal hasn’t expired. Strong rental growth persists in both the Flatiron’s Fifth Avenue stretching between 14th and 23rd Streets, and along Broadway’s expanse downtown from Chambers Street to Battery Park. In fact, from spring 2016, asking rent for ground floor retail space have increased 18 percent to $456 per foot in the Flatiron District, and 11 percent to $362 per foot in the Lower Broadway corridor. While demand remains high, speculators forecast that rental prices may soften even here, as the number of available storefronts has risen from seven to 17 since last fall.
“This report is a recognition that rents are stabilizing,” said Robin Abrams of Lansco. The vacancies and price drops will likely to boon interest from global retailers. From May 22 to the 24th, Las Vegas is hosting the International Council of Shopping Centers Recon. The event is the world’s largest Real Estate convention and attracts 37,000 attendees from 58 countries. Other potential tenants who may jump at the chance of dwindling rental rates are shy pop-up stores and on-line retailers.
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