As Manhattan misses office workers and international tourists, retail rents in the borough are struggling to meet pre-pandemic levels.
Average asking rents in 13 of Manhattan’s retail corridors registered year-over-year declines, according to a Fall 2021 report by the Real Estate Board of New York. Nine corridors experienced either an increase or no change in average asking price per square foot since spring 2021.
“While there are some encouraging signs in the current Manhattan retail data, continued progress is contingent on key economic and public health factors over the coming months,” REBNY President James Whelan said in a statement.
It may be good news to retailers on the hunt for a new space. At 43 percent, there are twice as many spaces with an average rent under $300 per square foot from the 28 percent recorded in Fall 2019.
Times Square registered its lowest rent in more than a decade, with an average asking price per square foot of $998. That’s a 29 percent decline from Spring 2021 and a 39 percent decline year-over-year.
On the other hand, Fifth Avenue between 49th and 59th streets saw an average asking price per square foot of $2,628, a 12 percent decrease from Spring 2021. That number is unchanged year-over-year.
Herald Square has also been hit hard. Average asking price per square foot reached $390, a 20 percent decrease from spring 2021, and an 11 percent decline year-over-year.
For those corridors that did see a jump in asking prices, the increase was slim.
In the case of 3rd Avenue between 60th and 72nd streets, the corridor saw average asking price hit $214, a 15 percent increase from Spring 2021, but just a 1 percent increase year-over-year. Bleecker Street between 7th Avenue South and Hudson Street similarly had a 4 percent incline from Spring 2021 and a 1 percent decrease year-over-year.
However, there’s some indication of hope. Cushman & Wakefield reported 1.1 million square feet of leasing in the first two quarters of 2021 — the first time transaction volume reached 1 million square feet since the last two quarters of 2019.
Visitors in Times Square remained below 2019 levels, but reached 200,000 per day in July 2021. NYC & Company estimates tourism will reach 34.6 million visitors in 2021, with 2.8 million visiting from other countries. That forecast is still down from the 66.6 million tourists total and 13.5 million from other countries recorded in 2019.
Still, corridors that rely on office workers continue to struggle with little foot traffic. According to an October REBNY report, just under 30 percent of retail storefronts in the Grand Central and Midtown East business districts — home to 15 percent of the city’s office stock — remained vacant this summer, more than double the 10 to 15 percent vacancy rates seen before the pandemic.