Robust job growth and an increase in tourism will encourage consumer spending in New York City this year, driving retail operations to outperform most of the nation, predicts Marcus & Millichap in a second-quarter retail research market update, released yesterday.
As the local economy improves, the report predicts, retail investment activity will speed up, most notably in single-tenant and mixed-use sectors, with easing capital markets and low interest rates encouraging REITs and institutions to acquire single-tenant assets in high-traffic corridors of Manhattan. The Financial District and Times Square on the other hand will draw keen interest from risk-weary investors seeking long-term stability.
The report estimates that developers will deliver nearly 775,000 square feet of retail space to the New York City market this year, more than 40 percent of which will come online in Manhattan. That figure is down from 2010, when approximately 1.5 million square feet was finished within in the metro area.
As REITs and institutions expand portfolios in key areas of Manhattan, local and regional investors will ultimately be priced out of contention, forcing them to the other boroughs, The median price of retail space in Brooklyn and Queens is 60 percent below that of Manhattan, according to the report. TRD