Manhattan Retail Rents See First Drop Since 2001

NEW YORK CITY-Asking rents for Manhattan retail space have dropped 11% over the past six months to $115 per square foot, the first meaningful decline since the post-9/11 downturn, according to the Real Estate Board of New York. REBNY’s “Spring Retail Report,” released on Thursday, says the decline reflects a needed market correction following a seven-year stretch of sharp increases in asking rents, which in most retail corridors reached an all-time high last fall.

“Declines in asking rents have just begun to be reported although the retail market has been feeling the effects of the recession for some time,” says REBNY president Steven Spinola in a release. Michael Slattery, SVP of REBNY, tells GlobeSt.com. “Retail asking rents have begun to reflect the effects of the recession,” he explains “Since September 2008, the turmoil in the financial sector has reverberated through the real estate industry and retail market. The decline in average asking rents is a reflection of these larger economic conditions and an anticipated correction in the market that was experiencing unsustainable rent growth.” Rents went up 54% between fall 2001 and the fall of ’08, according to REBNY.

Slattery adds, “Despite these declines and the growth in sublet space, leasing activity is still occurring in the market and new retail tenants are looking for space in New York for the first time. We expect that national retailers not presently in New York will see these declines in rent as an opportunity to enter or expand in the New York market.”