NEW YORK CITY—Following an unprecedented rental increase between 2012 and 2014—in which average asking rents rose by 90%—the Manhattan retail market is in a period of easing, according to CBRE Group's Manhattan Retail MarketView report for the first quarter of 2017.
Of the 16 corridors tracked by the firm, 12 recorded decreases in average asking rents year-over-year, while the overall average dropped 2.7% in the past 12 months. Downward pressure on rents is coming from increasing availability, with the total number of available spaces growing by 24.4% quarter-over-quarter.
Underlying demand fundamentals here are performing well, as unemployment was down and gross metropolitan product was up. Also showing signs of strength is The Conference Board's Consumer Confidence Index. The metric improved sharply in March, increasing to 125.6 from 116.1 in February.
“Multiple trends continue to reshape the retail landscape both nationally and locally,” says Nicole LaRusso, director, research & analysis, CBRE tri-state. “Growing online retailing, which increased to 8.3% of total national retail sales in 2016, continues to put pressure on traditional brick-and-mortar operations. Retailers are also confronting the consequences of over-expansion, often at historically high rents.”
She continues, “These phenomena are compounded here by the negative impact of the rising dollar on spending by foreign tourists, a trend that has hit the luxury market especially hard.”
Discount retailers signed three of the top five transactions this quarter, while food retailers, including quick-service restaurants, cafés, bakeries and sit-down restaurants, remained active.
Of the 16 corridors tracked by the firm, 12 recorded decreases in average asking rents year-over-year, while the overall average dropped 2.7% in the past 12 months. Downward pressure on rents is coming from increasing availability, with the total number of available spaces growing by 24.4% quarter-over-quarter.
Underlying demand fundamentals here are performing well, as unemployment was down and gross metropolitan product was up. Also showing signs of strength is The Conference Board's Consumer Confidence Index. The metric improved sharply in March, increasing to 125.6 from 116.1 in February.
“Multiple trends continue to reshape the retail landscape both nationally and locally,” says Nicole LaRusso, director, research & analysis, CBRE tri-state. “Growing online retailing, which increased to 8.3% of total national retail sales in 2016, continues to put pressure on traditional brick-and-mortar operations. Retailers are also confronting the consequences of over-expansion, often at historically high rents.”
She continues, “These phenomena are compounded here by the negative impact of the rising dollar on spending by foreign tourists, a trend that has hit the luxury market especially hard.”
Discount retailers signed three of the top five transactions this quarter, while food retailers, including quick-service restaurants, cafés, bakeries and sit-down restaurants, remained active.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
