Despite the looming threat of tariffs, New York City retail availability hit an eight-year low, fueled by second-quarter deals with apparel stores, bakeries and restaurants.
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The scramble for spaces, particularly among retailers opening their first New York stores, resulted in direct availabilities reaching a record low of 195 spaces in the nine prime corridors tracked by JLL.
Among the 16 retail corridors tracked by CBRE, the number of directly available ground-floor spaces decreased by 2%.
Tenants opening their first physical stores in Manhattan accounted for more than 123K SF of retail leasing between April and June, or more than 18% of the quarterly leasing volume, according to CBRE. New-to-market tenants include claw game arcade Gatcha’s 15K SF lease at 313 Fifth Ave., Italian fashion brand Antonio Marras at 121 Wooster St. and Florida-based bistro Motek at 928 Broadway.
But despite optimism and demand for space, long-term concerns over the economy’s health are casting a shadow over NYC’s buoyant retail scene.
Average asking rents were up 2% from Q1 but down 6% year-over-year in the corridors CBRE tracks, which include lower-cost corridors like Third Avenue in Midtown and Broadway in the Financial District, in addition to areas like Fifth Avenue and SoHo.
With consumer sentiment slipping across the U.S. as tariff negotiations continue, build-out costs for new space “connected to broader economic uncertainty could impact demand in coming months,” CBRE said.
JLL's report shows asking rents continuing to rise, up from $577 per SF in Q1 to $608, a postpandemic peak. Asking rents in Manhattan's top eight submarkets, as well as Williamsburg, are still 41% below the peak prices seen in 2014.
The quarter’s largest retail leases were Old Navy’s 55K SF deal at JEMB Realty's 50 W. 34th St., Life Time’s 52K SF lease at Property & Building Corp.'s 452 Fifth Ave., and Trader Joe’s 30K SF renewal at GFP Real Estate's 675 Sixth Ave.
The gap between asking rents and taking rents — the percentage of ground-floor asking rents achieved — shrunk by 1.3% year-over-year, but deals are taking longer to close, with landlord and tenant each asking more of the other.
“Leases still require generous concession packages from owners and large security deposits from tenants to finalize several long-ongoing deals,” CBRE researchers wrote in the report.
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