While asking rents for retail in Harlem came down over the past year, the bright side is that asking rents on the Upper East Side went up.
According to the biannual REBNY retail report, retail rents in an area from 60th Street to 96th Street, Fifth Avenue to the East River, climbed from an average of $172 a foot one year ago to $190 in 2008.
Ironically, one of the factors that helped lower Harlem’s asking rents (see Uptown rents plunge), is the very thing that helped to bring those on the Upper East Side up: a number of new residential development complete with shiny new retail spaces to lease.
“There was new product, and lot of it that was priced more aggressively,” said Robin Abrams of Lansco Corp., who chaired the subcommittee that put together the REBNY report. She cites prices upwards of $350 and $450 a foot. “Keeping in mind that these are asking numbers,” she said.
Of course there are other reasons the Upper East Side continually shows high asking rents, the simplest being that landlords are well aware the area has what every tenant wants … an avid consumer. That makes it more recession proof than most other parts of the city.
“[The Upper East Side] includes the most affluent households in the country — a tremendous customer base that always needs to be satisfied, whether it’s an existing tenant or one that wants to expand their brand,” said Cory Zelnik of Zelnik and Co.
“The Upper East Side is one of the high-profile neighborhoods that most retailers that are doing stores in New York City look at and target,” added Abrams. “There’s competition and blocks that are heavily trafficked and have great co-tenants.”
Third Avenue has, in recent years, grown into a retail thoroughfare with so little inventory that when a space became available, tenants jumped to pay top dollar to lease it.
Abrams cites the corner of Third Avenue and 75th Street, where a bidding war between eager tenants recently pushed the price per square foot up from $375 to $400 a foot. That said, the space has yet to lease as the potential tenants balked in light of new market conditions.
And it’s important to note that the numbers in the REBNY report only include retail asking rents at the end of September.
Still, Third Avenue is holding up well compared to other areas in the city.
“Third Avenue has a much more consistent customer [than many areas of the city],” said Gene Spiegelman, executive director of retail services at Cushman & Wakefield, who has worked on the Upper East Side for the past 16 years. “Third Avenue trades better than any top mall in America.”
Nonetheless, the average asking rents on the Third Avenue corridor from 60th to 72nd Street were down over last year from $305 to $287 a foot this year.
Meanwhile, according to a Cushman & Wakefield vacancy report, inventory on Madison Avenue has jumped from 8.6 percent to almost 13 percent, nearly double since this time last year. The firm attributed that to a number of expiring leases that were signed during the boom times of the 1990s.
Since Madison Avenue historically trades at a higher price per foot than the rest of the area, logic says that it’s these vacancies that have driven up the average asking price per square foot on the Upper East Side.
Spiegelman points out, however, that the asking rents on Madison are consistent with last year.
I think that Madison could potentially drive up the average,” said Andrew Mandell a partner at Ripco Real Estate.
The REBNY report estimates the average asking rent on Madison Avenue to be $1,143 a foot, up from last year’s $1,108.
“The problem is that these are asking rents,” said Zelnik. “Anyone can ask for whatever they want.”