- A slowing global marketplace has affected the rent prices in some of Manhattan's more luxurious corridors.
- New space previously unavailable to the market has opened up new business and adjusted rent averages.
Rent prices in New York reached record highs last year, but there is always a balance. According to the Real Estate Board of New York’s latest report, rent prices are beginning to fluctuate and adjust to the slowing global retail market. This caused retail spaces to move at a slower pace, and asking prices for space slipping away from the upward momentum.
John H. Banks III, president of REBNY, said that although there is a slowdown, there is still demand for retail real estate. He emphasized the effects of a slowed-down global economy, adding that the next 12 months will be “a decisive period in which we may see more asking rent price adjustments with the movement of this market cycle.”
The Manhattan Retail Advisory Group sees the overall view that retailers are seeing more space open up in other pockets of New York. As this is the case, MRAG sees retailers not moving as aggressively with capital expansion and relocations as they perhaps would in a different market.
Prices in different corridors
In the Financial District, ground floor retail space has increased from $234 per square foot to $326 per square foot. This 39 percent increase gives credit to the transportation improvements gained with Fulton Center and the World Trade Center Transportation Hub.
In the Spring of 2015, ground floor space on Madison Avenue between 57th and 72nd Streets went for $1,700 per square foot; the asking price has dropped 3 percent to $1,644. REBNY alludes that the drop is due to some luxury retailer’s trepidation in the face of an unstable market resulted in delayed leasing space. Couple this with available spaces on the low end of the price spectrum, and the average dips.
However, new opportunities have opened up on Bleecker Street. These previously unavailable spaces have offered more supply and caused the asking rent price to increase. Locations that have been established may not have raised prices, but new spaces may have pushed the average a bit higher. On Bleecker Street between 7th Avenue South and Hudson Street is going for $513 per square foot. This time last year it was going for $481.
The report does offer a disclaimer that in some corridors of Manhattan, popular storefront space has been filled. This attracts more clients to the area, which in turn opens up the opportunity for businesses on side streets adjacent to the corridors examined. These can play a role in raising asking rent prices, but the factors were ultimately not examined for this report. The idea being that adjacent street retail space may rent for less, thus lowering the overall perception of value in a given area.