Retail rents tumble to historic lows in New York City amid bankruptcies and store vacancies
Rents for retail space in New York City have tumbled to historic lows, dropping as much as 25% from 2019 levels, as troubled retailers like Neiman Marcus and Century 21 closed stores and vacancies soared, according to a report Friday.
The Real Estate Board of New York’s biannual report found that asking retail rents throughout Manhattan during the fall of 2020 declined in all of the 17 corridors it tracks, including pockets along the Upper East Side, the West Village and Downtown.
Taking rents, the actual rents that leases are signed at,are even lower than asking rents, REBNY said. Brokers are citing a 20% difference, on average, between asking rents and taking rents, it said.
Eight areas saw their lowest average asking rents in at least a decade, including SoHo, the upper part of Madison Avenue and upper Fifth Avenue. REBNY also found that 11 of the corridors have seen an increase in available retail space, ranging from 6% to as much as 67%, since 2019, reflecting a “substantial slowdown in Manhattan retail transaction volume” during the coronavirus pandemic.
“Historic declines in rent across Manhattan’s most prominent retail corridors show just how much the market has adjusted amid the unprecedented impacts of the Covid-19 crisis,” REBNY President James Whelan said.
In the most expensive retail district in New York City, along Fifth Avenue, from 49th to 59th streets, average asking rents declined 8% to $2,618 per square foot, REBNY found. This area is home to a number of high-end retailers including Saks Fifth Avenue, Cartier, Versace and Tiffany. More recently, it has seen several businesses leave because they can no longer afford the sky-high rent. The new figures represent a 32% drop from the corridor’s peak rent in the spring of 2018, REBNY said.