Retail Rents Skyrocket in Choice Locations

NEW YORK CITY-The past 12 months has brought an 8.2% increase in retail rents for Manhattan resulting in an average asking rent of $92 per sf, according to the Real Estate Board of New York’s Fall Retail Report.

Overall, average ground-floor space asking rents for all spotlighted retail corridors saw increases of 35%, rising from $204 to $275. The increases were particularly notable in choice retail locations such as Madison and Fifth avenues. Average ground-floor space asking rents jumped 39.3% on Madison Avenue between 57th and 67th streets, rising from $491 to $684. Fifth Avenue, between 48th and 59 streets, saw average ground-floor space asking rents increase 22.6%, rising from $530 to $650, according to the report.

By neighborhood, the East Side registered the largest increase as average asking rents increased 28.8% from a year ago, rising to $143. Midtown registered a 10% increase, rising to $121, while the West Side and Midtown South registered 7% and 4.2% increases, respectively, REBNY adds.

“While the increases in asking rents are positive by any measure, these numbers are more meaningful now, given the current state of the economy,” explains Steven Spinola, REBNY president. “The report demonstrates that retailers are willing to make an investment in Manhattan and will pay top dollar for space in the most coveted retail corridors.”

According to the report, there was 14.8 million sf of available retail space in Manhattan as of Sept. 30, 2003, compared to 14.6 million sf of available retail space as of Sept. 30, 2002. The report also states the average asking rent per sf rose from $85 as of Sept. 30, 2002 to $92 as of Sept. 30, 2003. “The rise in average asking rents for ground-floor space reflects an encouraging pattern we’ve seen in the market,” says Robin Abrams, REBNY Retail Stores Committee chairperson and EVP at the Lansco Corp. “Available space in the prime retail corridors is commanding higher rents, meaning retailers are optimistic about the city’s economy.”

Conversely, Downtown Manhattan experienced a marginal decline in average asking rents from a year ago dropping from $59 to $58 and the average asking rents in Upper Manhattan stayed the same at $50 per sf, the report adds.