SOURCE: Real Estate Board of New York (REBNY)

Real Estate Board of New York (REBNY)

November 09, 2011 12:10 ET

NYC Retail Report: Traditionally Strong Retail Corridors Create Spillover, Boosting Rents in Adjoining Areas

5th Avenue Is City's Retail Powerhouse Leading the Charge With Tourists Still Creating Demand

NEW YORK, NY--(Marketwire - Nov 9, 2011) - As the country and the world struggle with economic uncertainty, New York City's retail market continues to perform well in its traditionally strong retail corridors and primarily residential neighborhoods according to a new report. Increasing demand for space in areas that see a lot of tourist activity, such as Fifth Avenue between 49th to 59th streets, has created spillover into adjoining retail corridors, just south between 42nd and 49th streets, significantly boosting asking rents.

According to the Real Estate Board of New York's (REBNY's) Fall 2011 Retail Report, Fifth Avenue has seen greatest increases in asking rents and demand. Traditionally, Fifth Avenue between 49th and 59th streets experience a competitive market, as they did this period with a 17 percent increase in the asking rents to $2,633 per square foot since Spring 2011 and 11 percent since Fall 2010. However, due to such high interest in this corridor, the adjoining corridor of Fifth Avenue between 42nd and 49th streets has seen substantial increases from spillover demand with a 31 percent uptick to $675 per square foot since Spring 2011 and 35 percent since the same time last year, due in part to the addition of major international retailers such as Swatch, Michael Kors and Dolce & Gabbana.

Herald Square and the Flatiron District have also enjoyed the strength of the Fifth Avenue corridor with asking rents increasing 15 percent and nine percent, respectively, since Fall 2010. Recent additions to Herald Square include Spanish retailer Mango, and L'Occitane and a pop-up Uniqlo store have opened in the Flatiron Fifth Avenue Corridor.

The Third Avenue corridor between 60th and 72nd streets and the Madison Avenue corridor between 57th and 72nd streets have attracted interest from big name fashion retailers with asking rents rising by four percent and eight percent, respectively. Retailers Anthropologie and Uniqlo recently joined the Third Avenue corridor, and Tory Burch and Bottega Veneta made the move to Madison.

"Tourists continue to visit New York City, and particularly areas such as Fifth Avenue, a world-renowned shopping destination. Even in tough economic times, these areas will perform well and will increase demand for adjoining areas, creating a spillover effect," said Steven Spinola, REBNY president. "Similarly, in traditionally residential neighborhoods, retailers will compete for prime space as they seek to position themselves ahead of their competitors."

Neighborhoods that are mostly residential saw strong upticks in asking rents from stiff competition. The East 86th Street corridor has seen a renaissance with the arrival of a Fairway supermarket driving demand with a 36-percent increase since Fall 2010 and 20 percent since the spring. The Columbus Avenue corridor from 66th to 79th streets, for example, where very limited retail space was available, saw a two-percent drop since Spring 2011 because most of the prime locations have been taken.

Outside the corridors there is still a limited demand for space. The average asking rent for all available space in Manhattan has declined. The average Manhattan asking rent for all space is $112; down three percent since Spring 2011 and five percent since Fall 2010.

The report compiles data provided by a broad cross-section of the city's leading retail brokers.

Other report highlights:

  • In the West Village, in the Bleecker Street corridor from 7th Avenue to Hudson Street, asking rents went down 24 percent both year-on-year and since last spring.

  • In Harlem, in the 125th Street from River to River corridor, asking rents increased three percent since Spring 2011 and 10 percent since Fall 2010.

  • In SoHo, on Broadway from Houston to Broome streets, asking rents increased two percent since the spring but decreased four percent since last year.

For the full report visit www.rebny.com.

About The Real Estate Board of New York
The Real Estate Board of New York is the city's leading real estate trade association with more than 12,000 members. REBNY represents major commercial and residential property owners and builders, brokers and managers, banks, financial service companies, utilities, attorneys, architects, contractors and other individuals and institutions professionally interested in the city's real estate. REBNY is involved in crucial municipal matters including tax policy, city planning and zoning, rental conditions, land use policy, building codes and legislation. In addition, REBNY publishes reports providing indicators of market prices for both the residential and commercial sectors. Please visit us online at www.REBNY.com.

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