Manhattan Retail Faces Stumbling Blocks In 2017
Manhattan’s retail leasing scene has looked better.
The numbers bear it out: REBNY’s most recent retail report, released in November, noted that average asking rents have fallen in 11 out of 17 of the borough’s major retail corridors. Over the summer, vacancy rates were up to 31% on some stretches of Fifth Avenue.
“There’s an overall malaise over the entire retail market,” Colliers International’s Bradley Mendelson tells the New York Post.
You can see it on the street, in some places. Several top Midtown retail properties are notably vacant, including spaces in 770 Lexington Ave, 465 Park Ave and the second-floor retail space at 1717 Broadway.
A recent piece in Forbes has even predicted disaster for much-touted new retail projects like a flagship Nordstrom department store coming to what will be the second-tallest building in the Western Hemisphere.
Not everybody agrees that times are bleak where checkout counters should be dinging.
“I take offense when people say the market sucks in every sector,” JLL retail vice chairman Patrick Smith tells the Post.
For one thing, the borough is in the midst of a shift of its retail center of gravity to the west and south, so it’s not as if deals to fill space aren’t closing. Several million SF have been leased at places like Hudson Yards, Manhattan West, Brookfield Place and Westfield World Trade Center.
And places like Howard Street in Chinatown — a formerly desolate strip — are seeing a shift toward more upscale retail and restaurants. If there is a greater malaise, Douglas Elliman’s Faith Hope Consolo sums up for the Post what may be at its root.
“Although brick-and-mortar isn’t dead yet, you need fewer stores to achieve the same sales volume,” she said.
Rent hikes some are calling astronomical also play a role. Sidewalk-level rents along the Times Square bowtie can now hit numbers above $4k/SF, when only 15 years ago that number was often about 10 times lower.
Some available retail spaces are vacant because landlords are holding them for the right tenants or preparing for new development they expect to bring the right demographic through the doors. [NYP]