NEW YORK CITY-While some sectors around town have lagged, such as office, the retail sector's star is on the rise. In the Real Estate Board of New York's spring 2013 retail report, released Tuesday, showed that Manhattan's high profile shopping corridors have thrived in the last six months. In addition, the success of these areas is leading retailers to branch out beyond traditional retail streets, according to the report.
REBNY attributes the growth to a number of market conditions, according to president Steven Spinola. “There are several factors that continue to drive interest in the prime corridors—namely, pedestrian and tourism traffic, the desire for a prestigious address and brand association,” he says in an announcement of the report. The announcement also ties the growth to rising consumer confidence, an improving job market, a growing economy and, a related development, rising asking rents.
Further, he continues, “Our Advisory Group reports a lot of interest from luxury and fast fashion brands and tenants from Europe, Asia and South America, who are eager to gain a foothold in the city or expand their already-established presence.”
According to the report, average asking rents saw the biggest jumps along the following corridors: “lower Fifth Avenue,” as the report dubbed the span between 42nd and 49th streets, rose 21% since spring 2012 to $1,092 per square foot, while the Flatiron shopping corridor, along Broadway between 14th and 23rd streets, saw a significant increase in asking rents, the report states, with a 50% increase to $322 per square foot since last spring.
Similarly, the announcement of the research states, in the Flatiron corridor along Fifth Avenue, between 14th and 23rd streets, asking rents rose 37%, to $413 per square foot since spring 2012. Asking rents in Times Square, on Broadway and 7th Avenue between 42nd and 47th streets, jumped 55% to $2,175 per square foot as a result of limited supply and the city's high number of visitors.
Meanwhile, the REBNY announcement states, since fall 2012, the limited supply of vacant quality space, combined with rising rents in major corridors, has led retailers to “push the boundaries of established high-end retail areas outward.” The trend has continued this year, causing large asking price increases in corridors such as Fifth Avenue south of 49th Street, Broadway in the Flatiron district, Bleecker Street between Seventh Avenue South and Hudson Street, and Broadway in Soho, where asking rents increased 36% to $750 per square foot. The Financial District corridor on Broadway between Battery Park and Chambers Street saw increases of 29% to $232 per square foot, the report states.
Notes Spinola in the release, “Rising asking rents in traditionally prime corridors such as Upper Fifth Avenue are indicative of a strong market. We haven't seen any actual transactions close in the corridor from 50th to 59th Street between fall 2012 and March 31, 2013, the closeout date for data for our report,” he says. “Our Advisory Group reports that this area has some of the best space available for a large flagship location, so property owners are willing to wait for the right tenant and the right price.”
And in another interesting trend, stores on arguably the toniest portion of Madison Avenue, between 57th and 72nd Streets, have been playing a form of retail “musical chairs,” REBNY's announcement states, where lease transactions are taking place before space even comes to market. For example, Berluti moved from the 70s to the former Anne Fontaine store between 61st and 62nd Streets, J. Mendel moved three blocks north from 723 Madison to double its size at 787 Madison while Loro Piano expanded into an adjacent space on the avenue. As these retailers satisfy their space needs, the announcement says, they are demonstrating a commitment to an area that has been successful for their business.
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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.
