Manhattan retail real estate slows due to rising rent and sluggish sales
Slow retail sales have effected real estate prices in Manhattan.
The Real Estate Board of New York’s (REBNY) Manhattan Retail Report for Spring 2016 shows that ground floor retail rents are declining in 10 of the 17 corridors surveyed. Many believe that this adjustment is a response to the significant increase in rents over the past few years, but the slowdown in retail growth seemed to have led to more available retail spaces and less competition.
The report states, “Many of these retailers are seeing uncertainty in the market, anticipating that this will impact the retail leasing market, and proceeding with caution when pursuing new leases with the idea that asking rents will adjust from the historic highs of 2015. Comparatively, lease renewals are still being completed briskly in Manhattan as established brands with steady sales remain confident.”
The Manhattan Retail Advisory Group believes this year will be a decisive period for the retail leasing market, and if sales remain sluggish and retail jobs decline then the number of vacant stores will increase.
The asking rent in SoHo on Broadway between Houston and Broome Streets declined 16% from $977 to $824 per square foot, Herald Square on West 34th Street between 5th and 7th Avenues dropped 11% from $1,000 to $890 per square foot and Madison Avenue between 57th Street and 72nd Street decreased 3% from $1,644 to $1,613.
The West Village and Financial District Corridor have stood up against the retail headwinds increasing 7% and 39%, respectively. The Financial District had a great increase due to “improvements with the completion of the Fulton Center and World Trade Center Transportation Hub, in addition to new residential development in this area and in nearby Downtown Brooklyn and South Brooklyn,” according to the report. The increase can also be attributed to Westfield World Trade Center mall.
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