The precipitous decline of rental rates in Manhattan's retail market might be nearing its end, based on one key indicator.

Prices have now dropped 23% from their peak in 2014, according to a CBRE study of average asking rents in 11 retail submarkets in the borough. In hindsight, several indicators show how unsustainable that peak was.

From 2010 to 2014, retail asking rents more than doubled among the submarkets CBRE studied, while brick-and-mortar retail sales increased by 36%. That means retailers were being offered leases almost three times more expensive than the growth their stores could support, and they were largely taking them because the environment was so competitive.

During the 2014 peak, retailers were signing leases with rents at an average of 96% to 98% of asking price, indicating that they had very little negotiating leverage in the ultimate landlord's market. Today, the average taking rent is 82% of asking price, which is a return to 2010 levels.

The gap between asking rents and retail revenue has narrowed to a 17% difference, which roughly matches where the market was in Q3 2011. That could very well mean stabilization is right around the corner.

The landscape will not simply reset, as certain submarkets had higher peaks and others have fallen harder from their own highs. The area surrounding Grand Central Terminal showed the most growth from 2010 to 2014, jumping from an average of $420/SF to a peak of $1,366/SF. It has since dropped, but only to $1,023/SF, perhaps indicative of a more permanent, fundamental change in its status.

Meanwhile, the Herald Square submarket increased asking rents 121% from $446/SF in Q1 2010 to its 2014 peak of $988/SF. It has seen the steepest decline of any submarket tracked by CBRE since, dropping 42% to $575/SF. Without tracking the ups and downs, one might see a seven-year increase of $129/SF as slow-and-steady growth, much like retail sales would have justified all along.

“This adjustment is bringing rent growth between 2010 and 2017 closer to the trajectory of retail sales growth, which has expanded steadily in recent years," CBRE Research Director Nicole LaRusso said. "Taken together, these two trends suggest that the market might be coming closer to alignment between what tenants can afford to pay and the revenue they can achieve.”