Nine of 17 corridors saw asking rents rise as tenants face supply chain, labor issues
Manhattan retail rents are on the rise but remain below pre-pandemic peaks.
Of the 17 major Manhattan retail corridors analyzed for a report by the Real Estate Board of New York, nine had average asking rent per square foot grow from Fall 2021.
In the wake of the pandemic, supply chain issues, soaring prices, and staffing shortages have kept retail tenants stuck in a slow recovery. The report also said major concessions and accommodations scored by tenants in 2020 and 2021 are largely no longer.
The sector’s battered recovery is uneven across the borough’s neighborhoods and retailers. Harlem is the closest to its pre-recession peak, falling short by just 5 percent. At the other end of the spectrum, SoHo is more than 60 percent below its prior highwater mark.
“In early 2021, food and beverage, fitness, and local services dominated activity in Manhattan,” Keith DeCoster, director of market data and policy at REBNY, said. “We were just starting to see a return of international retailers along with first-time entrants previously priced out of the borough.”
Demand is now coming from multiple other sources like luxury fashion and accessories retailers on Madison Avenue and in SoHo, according to DeCoster, whose comments come after Canada Goose signed an 8,100-square-foot lease at 689 Fifth Avenue and Versace’s 5,300-square-foot lease at 747 Madison Avenue.
Other major Manhattan retail leases signed over the last six months include Petco’s nearly 30,000-square-foot lease at 44 Union Square, Din Tai Fung’s 26,400-square-foot lease at 1633 Broadway Avenue in Midtown, and Food 52’s 26,000-square-foot lease at 902 Broadway Avenue in Flatiron.
Fifth Avenue between 49th Street and 59th Street had an average asking price per square foot hit $2,775, a 6 percent increase from Fall 2021, but an 8 percent decrease year over year.
Downtown — on Bleecker Street between 7th Ave South and Hudson Street — the asking price per square foot hit $226, a 10 percent decrease from Fall 2021, and a 6 percent decrease year over year. Farther uptown — Madison Ave between 57th Street and 72nd Street — the asking price per square foot reached $769, a 3 percent increase from Fall 2021, but a 1 percent decrease year over year.
Leasing is still lagging in Times Square and on Fifth Avenue, according to the report, even as the corridors saw noteworthy transactions like the return of Planet Hollywood to Times Square and Swarovski’s planned flagship at 711 Fifth Avenue. Seven new retailers, including City Winery, signed leases at Grand Central Station, which was encouraging for office-dependent districts like Midtown East.