REBNY Research reports that the Manhattan retail leasing market is proving to be an outlier against the national retail slowdown. Increased interest from retailers has spread throughout Manhattan, showing that there is confidence in Manhattan retail overall.
As the market’s natural retail correction continues, Manhattan rental rates for 72% of listings and 72% of comps from the first half of 2017 fell below averages ($325/s.f. and $358/s.f., respectively), with less than 4% and 6%, respectively, above $1,000/s.f. for ground-floor space, reports JLL Research. The decline in retail rental rates has sparked interest in Manhattan leasing opportunities, states JLL’s Aaron Lee, Senior Analyst.
According to REBNY, interest has not been limited to a few corridors, nor has it been concentrated where new residential development is occurring, indicating that the Manhattan retail market should not be included with the perceptions of e-commerce’s and struggling suburban shopping centers’ negative effect on the future of brick-and-mortar retailing.
JLL Research reports that five of the top 10 retail markets by asking rent are along Manhattan’s West Side, a potential indication that increased activity in the office leasing sector is driving Manhattan retail leasing. Demand for amenities―including retail outlets―should continue to grow as office product delivers and employees move in.
Despite questions about the future of retail, Lee states that New York, among other dense markets, continues to perform in accordance with shifting market dynamics, driving the emergence of pop-up shops (e.g., Bonobos and Veuve Clicquot) and experiential retail (e.g., Nike and Samsung) to compete with online shopping alternatives. Retailers are proving to be differentiators as markets compete to attract and retain high-value talent.