Those anticipating a downward correction in the Manhattan retail market will have to wait for another quarter.
Ground-floor retail availability declined across 16 of Manhattan’s shopping corridors in the first quarter from the previous period, according to a CBRE report. The decrease, from 222 available spaces to 206, marked the seventh consecutive quarter with a drop in availability.
Rents in the corridors also remain on the rise. In the first quarter, the average asking rent was $638 per square foot, a gain of 3.7 percent from the fourth quarter and 8 percent year-over-year. It was the borough’s third straight quarter of increasing asking rents.
The rolling aggregate of square footage leased in the previous four quarters was 2.8 million square feet, up 14.5 percent from the year before. That velocity was also up 5.4 percent from the previous quarter, a flip after the fourth quarter disrupted five straight quarters of gains.
The most active neighborhood was Flatiron/Union Square, where 12 deals were signed for roughly 100,000 square feet. The biggest among them was J. Crew’s 27,000-square-foot renewal at 91 Fifth Avenue. Soho was the only other neighborhood to post double-digit deals for the quarter.
The apparel industry reigned supreme once again in the first quarter, boasting 27 deals for 243,000 square feet. The biggest lease in the sector — and overall biggest retail lease in the first quarter — belonged to LVMH, which took 43,000 square feet at 4 East 57th Street. Food and beverage companies had more than a dozen more deals than apparel, but for roughly 100,000 fewer square feet overall.
Other top deals for the quarter include Barnes & Noble renewing 35,000 square feet at 557 FIfth Avenue in Grand Central and the TMPL fitness clubs signing a 28,000-square-foot lease at 200 Madison Avenue, also in Grand Central.
Despite consistent gains in the retail sector, there’s still a chance for the other shoe to drop. The possibility of a recession remains a boogeyman for the industry, as well as supply chain issues and rising interest rates from the Federal Reserve.
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