New York City retailers and landlords are continuing to adjust to a rapidly changing environment, with rents falling in nearly all of the major shopping corridors in Manhattan.
Fifteen of the borough’s 17 major retail corridors saw year-over-year declines on the asking rents for ground floor retail space, according to the Real Estate Board of New York’s fall Manhattan retail report. The declines are the most widespread since REBNY started running the report 18 years ago.
Overall, the 15 corridors saw an average rent decrease of 25% since 2015, according to the report. The biggest drop was on the average asking rent on ground-floor retail space in Greenwich Village on Bleecker Street between Seventh Avenue South and Hudson Street, which plummeted 37% from $468 per SF in the fall of 2015 down to $293 per SF in 2018.
The were just two corridors to see increases over the previous year: Harlem’s 125th Street corridor, where the average ground-floor asking rent increased 15% to hit $140 per SF, and the Upper West Side’s Broadway corridor between West 72nd Street and West 86th Street, which saw a jump of 5% to hit $306 per SF.
However, those increases were because new developments have brought more expensive ground-floor retail spaces to the market.
“The ongoing shifts in retail asking rents and lease structures in Manhattan have been a byproduct of a natural fluctuation in the market, as well as a changing retail industry,” REBNY President John Banks said. "These changes will resolve hurdles faced by brick-and-mortar retailers, but time is required for this process to continue. When markets are allowed to correct naturally without overbearing intervention, they will be more resilient and adaptable in the long run.”
Around the world, retailers and landlords are working out how to deal with the changes in the way people shop. In New York City, some landlords are filling space with pop-up tenants and becoming increasingly flexible in their lease terms. Even still they have been forced to significantly drop their rents to fill space.
