Manhattan Retail Leasing, Rents Hit New Pandemic Low
Manhattan’s retail market continued to falter last quarter in the worst three-month stretch since the pandemic began.
Leasing volume was at its lowest point in at least the past three years, while asking rents have declined to a nadir for the past decade, according to CBRE's quarterly retail report.
Only 1.3M SF of retail space was leased in Q2, down 15% from Q1 when 1.5M SF was taken up. Activity was down 60% from Q2 2020, when about 3.3M SF was leased as deals negotiated before the pandemic closed, despite the deadly first wave that swept over the city, according to CBRE’s data. Decreased activity drove asking rent prices down to $615 per SF, 10.7% down year-over-year.
Some retail corridors have suffered more than others.
Among the highest drops asking rents year-over-year were along Spring Street in SoHo and in the Times Square retail corridor, where rents dropped nearly 23% and along 14th Street in the Meatpacking District, where rents dropped more than 19%.
Meanwhile, asking rents on Prince Street in SoHo increased by over 7% and asking rents in Herald Square increased by 3% year-over-year. These were the only two corridors that saw an increase, according to CBRE.
Tenants have been cashing on the so-called Covid discount, and for retailers that were priced out of leasing in Manhattan before the pandemic, declining rents provided an opportunity to secure a space in the borough.
“Opportunistic retailers are taking advantage of the tenant-favorable market conditions, successfully negotiating enhanced tenant improvement allowances, free rent, flexible term lengths and percentage-rent deal structures,” CBRE Senior Director of Research and Analysis Nicole LaRusso said in a statement with the report.
Some retailers have taken advantage of low retail property sales prices and decided to buy their own properties, rather than renting them, Bisnow previously reported.