An individual carrying a protecting masks stands close to a “Store Closing” signal outdoors a retail store in New York City.
Noam Galai | Getty Images
Rents for retail house in New York City have tumbled to historic lows, dropping as a lot as 25% from 2019 ranges, as troubled retailers like Neiman Marcus and Century 21 closed shops and vacancies soared, in accordance to a report Friday.
The Real Estate Board of New York’s biannual report discovered that asking retail rents all through Manhattan throughout the fall of 2020 declined in the entire 17 corridors it tracks, together with pockets alongside the Upper East Side, the West Village and Downtown.
Taking rents, the precise rents that leases are signed at, are even decrease than asking rents, REBNY mentioned. Brokers are citing a 20% distinction, on common, between asking rents and taking rents, it mentioned.
Eight areas noticed their lowest common asking rents in at the very least a decade, together with SoHo, the higher a part of Madison Avenue and higher Fifth Avenue. REBNY additionally discovered that 11 of the corridors have seen a rise in out there retail house, starting from 6% to as a lot as 67%, since 2019, reflecting a “substantial slowdown in Manhattan retail transaction volume” throughout 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 mentioned.
In the most costly retail district in New York City, alongside Fifth Avenue, from 49th to 59th streets, common asking rents declined 8% to $2,618 per sq. foot, REBNY discovered. This space is residence to a lot of high-end retailers together with Saks Fifth Avenue, Cartier, Versace and Tiffany. More not too long ago, it has seen a number of companies depart as a result of they’ll not afford the sky-high hire. The new figures signify a 32% drop from the hall’s peak hire in the spring of 2018, REBNY mentioned.
People stroll by an indication displayed outdoors a retail house for lease as town continues Phase four of re-opening following restrictions imposed to sluggish the unfold of coronavirus on August 26, 2020 in New York City.
Noam Galai | Getty Images
Along Broadway in SoHo, from Houston to Broome streets, common asking rents suffered the most important drop of all of the corridors, falling 25% yr over yr, to $367 per sq. foot, REBNY discovered. That represented a 62% decline from the hall’s peak again in the spring of 2015.
The turmoil introduced on by the well being disaster has been significantly onerous for SoHo, which has at all times been seen as one of the vital influential purchasing districts in the nation. It’s typically the neighborhood the place worldwide manufacturers will open their first U.S. shops or the place on-line start-ups just like the sneaker model Allbirds and the baggage maker Away have appeared first to develop offline.
Vacancies in SoHo skyrocketed to roughly 33% by the top of December, from about 19.5% in the beginning of 2020, in accordance to Mark Dicus, govt director of the Soho Broadway Initiative enterprise enchancment district.
Thirty-two areas completely shut in SoHo final yr, he mentioned, with about half of these closures happening throughout the interval when New York had ordered all nonessential companies closed.
“Recovery is going to take years, not months,” Dicus mentioned. “SoHo is uniquely positioned to continue to be that authentic neighborhood and that authentic place to come and shop in New York, but it’s going to take time for those investments to be made again.”
On Bleecker Street from seventh Avenue to Hudson Street, common asking rents fell 9% to $252 per sq. foot, marking the bottom determine that REBNY has ever recorded for the world.
The smallest decline in retail rents was Downtown, in an space that’s largely residential. Average asking rents on Broadway from Battery Park to Chambers Street fell 1% to $407 per sq. foot.
According to a separate evaluation by the New York City-based suppose tank Center for an Urban Future, among the largest closures in New York City final yr stemmed from chain shops together with Duane Reade, Metro PCS, Modell’s Sporting Goods, Papyrus, GNC and Mattress Firm. The variety of chain shops in town fell 13.3% in 2020 to 6,891, it mentioned. Several of these corporations filed for chapter, and a portion liquidated fully.
And whereas it possible will take a while for landlords to fill these empty storefronts, or to correctly rezone them for brand new makes use of, consultants say this could possibly be a great time for companies nonetheless in development mode to transfer proper in. Target, for instance, signed a number of leases in Manhattan final yr, together with one for a brand new store in SoHo.
“While falling rents are an ongoing sign of the challenges facing the industry, the current environment also presents opportunities for new retailers to enter the Manhattan market or for existing tenants to lock in low rates and pursue flexible rent agreements,” REBNY’s Whelan mentioned.