After a frigid three years, the market for retail space in Manhattan is warming up. Business may lag 2019 levels, but it’s good enough—and rents are down enough—to start luring merchants back into storefronts that were empty for a long time. There were more than 40 fewer “direct ground floor availabilities” on the best shopping streets last quarter, according to brokerage firm CBRE, a 17% decline from last year, and the Real Estate Board of New York declared in a July report that retail is “in a healthy place”—a statement no one would make about the office market.
“Rents are at a healthy level for both tenants and landlords,” said Matt Chmielecki a senior vice president at CBRE. “And that’s all you need.” A full recovery remains a ways off. In pre-pandemic times Manhattan’s retail vacancy rate was a bit more than 5%, a 2019 report by the city Comptroller’s Office found. Today, the Times Square Alliance says 12% of storefronts are vacant, down from 18% a year ago. The 34th Street Partnership reports the retail vacancy rate on that corridor is 14%, down from 19% a year ago.
Manhattan’s average asking rents, at $645 per square foot, remain about 20% below 2019 levels, CBRE data show, and more than 40% below the high set back in 2014. On a rolling four-quarter basis, retail leasing activity is 11% lower than a year ago and 36% below 2019 levels.
The outlook is much better on the Upper East Side. The opening last fall of Hermes’ flagship U.S. store on Madison Avenue marked a turning point for a neighborhood that was practically a ghost town three years ago. The vacancy rate along the avenue is about 12%, down from 14% a year ago, Bauer said. He’s confident it will fall more because shops selling watches, fine art, and apparel will soon open. Jeweler Van Cleef & Arpels will open on Madison Avenue this fall. You can read more here.
We hope you had a wonderful summer. Our team is optimistic about the fall residential real estate market as well! We are here to answer all your burning questions.