“We’re not alarmed:” Herald Square retail in reverse

Retail vacancies in area are highest in the city

Street Partnership's Dan Biederman with Herald Square
Street Partnership's Dan Biederman with Herald Square (Getty, BRV)

Retail real estate in New York City is showing signs of life. Herald Square, however, is not exactly leading the comeback.

The retail district, home to Macy’s flagship and steps from Penn Station, has fallen behind other areas in the retail recovery, Crain’s reported. The retail vacancy rate in the district is 42.4 percent. Madison Avenue’s 27.3 percent vacancy between 57th and 72nd streets is a distant second, according to Cushman & Wakefield data.

While vacancy rates are improving throughout Manhattan, Herald Square’s has gone the opposite direction. Among the tenants to depart during the pandemic were Victoria’s Secret, Banana Republic and Hooters.

The number of available retail spaces along the 34th Street corridor in Herald Square last quarter grew to 20 listings — up 5.3 percent quarter-over-quarter and 81.8% year-over-year — CBRE reported.
Among them was the 7,000-square-foot Kids Foot Locker space at 142 West 34th Street.

There have been a few deals in recent months, such as a 16,000-square-foot lease for Capital One at the former Victoria Secret’s space. But empty retail space, including more than 100,000 square feet at the base of 50 West 34th Street, remains glaring.

Dan Biederman, president of the 34th Street Partnership, doesn’t see reason to panic.

Sign Up for the undefined Newsletter

Read more

“When the economy is closed down by the government, the retail district is going to suffer the most,” Biederman told Crain’s. “A couple of tenants leave — the weaker ones. Other ones come in. We’re not alarmed. Those spaces are going to get filled.”

There could be more positive developments on the horizon for Herald Square. The landlord of the former Hooters space is in discussions about leasing it. Additionally, the plans for revamping the Penn District, about an avenue away, could eventually help Herald Square by adding office space and housing nearby. (Biederman penned an op-ed last month chastising critics of the Penn plan.)

The vacancy rate is hardly the only measure of a market. According to a recent report from Marcus & Millichap, the metro area’s average retail asking rent in March was $58 per square foot, a 2.9 percent increase year-over-year.

In March, the vacancy rate dropped to 3.9 percent in the city, according to the report. In Manhattan, vacancies dropped by 30 basis points year-over-year.

Holden Walter-Warner