Tourism may be down, but retailers are still making bets on Times Square.
Most recently, a souvenir shop signed a lease for 1,000 square feet of ground-floor space at 566 Seventh Avenue. The store will be paying $55,000 a month for the space, next door to the newly opened Margaritaville Resort.
On its face, a $660-per-square-foot lease for a new gift shop may not seem like a comeback story for the city’s most tourism-dependent retail corridor, where average annual asking rents are $1,480 per square foot, according to the Real Estate Board of New York.
But compared to two nearby gift shop leases signed during the pandemic — one at 516 8th Avenue and another at 681 8th Avenue — for $144 per square foot and $200 per square foot, respectively — the latest deal may presage some much-needed good news for landlords.
“New York City is New York City and it’s coming back,” said Khashy Eyn, CEO of Platinum Properties, which orchestrated the souvenir-shop lease. “This just proves the fact that the rents are rising in certain areas in Manhattan.”
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Eyn and Steven Evans — also of Platinum Properties — represented both sides in the deal. EBM Development is the landlord.
Over a dozen new retail leases have been signed in Times Square during the pandemic, but none has come close to the average asking price reported by REBNY in June (and even that represented a 10 percent decline from fall 2020 and a 26 percent drop year-over-year). In fact, not one has topped $660 per square foot, according to leasing data reviewed by The Real Deal.
The Taco Bell Cantina at 1501 Broadway led the way last year, leasing over 3,000 square feet at the base of the Paramount Building for $785 per square foot. But that deal was signed in early 2020, before Covid shut the city down.
Tenants that scored concessions after lockdown included CVS at 512 Seventh Avenue, with 10 months free on a 15-year lease; Blue Bottle at 1 Penn Plaza, with six months free on a lease of 11 years and six months; and CityMD with seven months free on a 15-year lease. The three tenants pay $350, $150 and $125 per square foot, respectively. CityMD’s rent increases to $140 per square foot after five years, and $155 after 10 years.
The closer a space is to the heart of Times Square, the higher the rent. At 732 and 740 Seventh Avenue, respectively, 16 Handles and Burgerman are paying $600 and $650 per square foot on leases signed late last year.
As tourism faltered during the pandemic, the corridor struggled to get foot traffic. An average of 373,000 pedestrians visited daily in 2019, but that number plummeted to 33,000 in the early months of the pandemic. The lack of tourism and office workers forced some stores to shutter as they missed rent payments.
But business in the area has begun to bounce back in recent months, riding an increase in domestic tourism and the return of Broadway shows. As of October, foot traffic had recovered to 227,000 average daily visitors, according to data from the Times Square Alliance.