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Manhattan Retail Leasing Activity Finally Turns Positive After Deep Decline

Retail along Madison Avenue on the Upper East Side

Retail leasing volume picked up in Manhattan for the first time since the pandemic hit. 

A total of 1.6M SF of retail space was leased between July and October, a 4.4% increase from the three months prior as asking rents continued to fall, according to a CBRE report released this week.

“While the spread of the delta variant and short-term inflation concerns have dampened some optimism, the city’s economic fundamentals continue to strengthen with further improvement expected as vaccine efforts move forward, and more people return to pre-Covid routines," the report states.

Areas that rely on tourists for foot traffic — such as Times Square, which saw just four new leases in the quarter — saw the sharpest decline in rent.

Even as Broadway reopened, the Theater District was hit hard; along Broadway and Seventh Avenue between 42nd and 47th streets, asking rents dropped 5.7% since June and 19.2% since last year, per CBRE. In Herald Square between Fifth Avenue and Seventh Avenue on 34th Street, rents dropped 12% since the second quarter and 12.4% year-over-year.

Meanwhile, in residential neighborhoods on the Upper East and West sides, which had the largest share of new leases, rents increased — 7.3% up over the second quarter on Broadway between 72nd and 86th and 19% up on Third Avenue between 60th and 72nd streets, per CBRE. 

While Wegmans signed the largest lease of the quarter — 89K SF at Vornado Realty Group’s 770 Broadway, the former site of the Astor Place Kmart — food and beverage retailers were the most prolific deal-makers overall, doing 24 leases across more than 76K SF. 

Retailers that paused their leasing plans amid the uncertainty of the coronavirus pandemic began looking this quarter, Bisnow previously reported.  

“Retailers that actually put their expansion plans on hold … have decided to re-enter the market in Manhattan,”  Ripco Real Estate Vice Chair Esther Bukai said in August.