The Real Estate Board of New York (REBNY) recently released its Fall 2021 Manhattan Retail Report. The report highlights improved rental volume as well as longer rental commitments from retailers. While food and drink tenants are still dominant, international fashion tenants are also becoming more active in Soho and Madison Avenue, a key step up from the previous quarter, when local service-oriented neighborhoods were the biggest. more active.
Retailers are increasing their activity in response to the energy and activity they see in more parts of the city, as residents, tourists and some office workers return, according to the report. New Yorkers were eager to get out and see all the city has to offer, as evidenced by improved foot traffic, Broadway ticket sales and other basics. Manhattan retail sales, for example, have increased for two consecutive quarters, reaching $ 38.3 billion in the third quarter of 2021.
Tenants benefit from the relative affordability of retail space and the flexibility of leases. Rents are still adjusting in most hallways. REBNY reported that average asking retail rents across Manhattan have seen year-over-year declines in 13 of 17 reported corridors. On the other hand, nine corridors have experienced an increase or no change in the average asking price per square foot (PPSF) since spring 2021.
The report predicts continued rental improvements over the next six months, assuming the return of international tourists and a more robust return to the office take place in early 2022. This will be critical for lagging corridors that rely on tourists. and daily commuters for demand. Preventing a widespread outbreak of COVID variants and addressing quality of life issues will be critical.
“While there are encouraging signs in current Manhattan retail data, continued progress hinges on key economic and public health factors over the coming months,” said REBNY President James Whelan , in a press release. “As we head into early 2022, the real estate industry looks forward to working with the new city administration on issues critical to the city’s economic recovery, such as improving public safety, creating good jobs and safe reception of office workers and tourists. “
Manhattan’s top brokers have noted increased confidence in the industry’s recovery. This is in line with the recent survey of commercial brokers in REBNY’s Third Quarter 2021 Quarterly Real Estate Broker Confidence Index, which showed that the current conditions index for commercial brokers rose 74% to 36. , 11 in the third quarter of 2021. However, even as brokers express the continued optimism and the retail market continue, industry executives recognize that effective management of the Omicron variant of COVID-19 this winter will play a vital role in maintaining momentum for the city’s overall economic recovery.
“With New Yorkers and visitors returning to restaurants, theaters, shopping malls and office districts, we are seeing significant retail rental activity in some of the busiest retail corridors. view of Manhattan, ”said Robin Abrams, vice president of Compass, in a statement. “Many other leases are signed in Soho, on Madison Avenue, the Flatiron District and other areas that had seen much less activity during the height of the pandemic. It is especially exciting to see many of these tenants, including local, national and international retailers, commit to long-term leases and generate even more optimism, as we now look forward to seeing a large range of stores, restaurants and other new concepts to open in 2022. “
“It has been amazing to see the Manhattan retail market come back from a period of low rental activity to an environment in which there is increasing optimism and competition for transactions,” said Joanne Podell. , executive vice president of retail services at Cushman & Wakefield, in a statement. “While it is very important for the city to effectively manage COVID throughout the winter, we expect continued demand for higher quality spaces in the months to come. The next challenge ahead will be to bring more of this exciting activity back to the central business districts. “
REBNY’s Biennial Manhattan Retail Report is a joint effort of the REBNY Manhattan Retail Advisory Group and the REBNY Team. The report provides an overview of the borough’s main commercial corridors based on the information available on ground-floor retail rents. All data comes from the respective companies of each member of the REBNY Manhattan Retail Advisory Group. The report includes the average price per square foot, median price per square, lowest price per square foot, and highest price per square foot for each of the 17 retail corridors tracked.
Download the full Manhattan Retail Fall 2021 report here.