Manhattan retail market rises again, but momentum wanes

Availability down, asking rents up: CBRE report

(Photo Illustration by Steven Dilakian for The Real Deal with Getty)
(Photo Illustration by Steven Dilakian for The Real Deal with Getty)

The Manhattan retail market continued its upward swing in the fourth quarter — barely.

Across 16 of Manhattan’s shopping corridors, ground-floor retail availability dropped slightly from the previous quarter, according to a CBRE report. The decrease, from 229 available spaces to 222, though small, was the sixth straight quarterly improvement.

Rents in the sector also improved modestly. In the fourth quarter, the average asking rent was $615 per square foot, up 1.2 percent from the third quarter and 2.9 percent year-over-year. Tempering the positive news for landlords, the report notes, was that concessions were still a large part of the picture in closing leases.

The rolling four-quarter aggregate of square footage leased was 2.5 million square feet — 11.6 percent above 2021 levels — but the quarterly lease volume decelerated 9.7 percent from the third quarter, breaking a streak of five consecutive quarterly gains.

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The highest leasing velocity belonged to Soho, where more than 269,000 square feet were snapped up across more than 50 transactions. The biggest deal in the corridor was Capital One’s 13,000-square-foot lease at 555 Broadway. Noho and Nolita also posted relatively high leasing velocity in the quarter.

The apparel industry notched the highest annual leasing volume among sectors, with 546,000 square feet leased for 2022, including 107,000 square feet in the fourth quarter. Adidas’ 39,000-square-foot renewal at 610 Broadway was the quarter’s largest deal, and Epicerie Boulud’s 23,000-square-foot food and beverage lease at One Madison Avenue was tops among new agreements.

Glimpses of progress were also evident in the Real Estate Board of New York’s latest retail report, which noted an increase in foot traffic across the borough’s retail corridors.

The year’s gains could well be wiped away by a recession, which remains a cloud hovering over much of the nation’s economic outlook. Other obstacles retailers are contending with include staffing shortages, supply chain problems and delayed buildouts. But so far the economy has largely withstood the Federal Reserve’s rate increases.

Rising rates can be a problem for retailers if they curtail consumer spending, but that has not happened in the current cycle.