NEW YORK CITY-New York City's retail resurgence of the past few years is likely to continue, according to Eastern Consolidated's just released bi-annual report, “The Retail Pulse.” More and more owners are putting their retail assets on the market, the report states, enjoying record pricing as a result of heightened demand. Other indicators are also working in the sector's favor.
The city added 4,700 retail jobs in Q1 2013, the third highest job growth of any industry after health services and social services; the retail and restaurant industries combined added 87,000 jobs, or nearly half of the total job gains in the city, since 2009; and retail/restaurant employment gains were spread across all five boroughs. Also, tourism remains strong and retail asking rents continue to rise in every neighborhood, the report states.
“The growth in retail and restaurant jobs has been a key factor in helping New York City emerge from the recession,” says Barbara Byrne Denham, Eastern Consolidated chief economist who authored the report, “with some neighborhoods benefitting more than others. The burgeoning boroughs of Brooklyn, Fort Green, DUMBO, Park Slope and Williamsburg have attracted a wide range of national retailers to blocks previously lined by mom-and-pop stores.”
The biggest driver in the retail/restaurant sector is clearly tourism, the report states, due in part to new openings in the hospitality sector. Three new hotels debuted in Q1 2013 after 21 new hotels in 2012 and 15 in 2011. Also of note, the hotels that have opened range from high-end boutiques to budget/limited service, offering tourists more options and keeping pricing low compared to 2007 and 2008 when demand exceeded supply.
Too, the report indicates that retail asking rents, which are driven by increased demand for housing, have been the reason for rising rental rates on Manhattan's Upper East and West Sides—areas that typically don't attract as many tourists. However, Downtown asking rents still trail the rest of Manhattan.
“New York City employs 113,000 more people than it did at our previous peak in August 2008, and our retail industry has grown by 15% since 2009, compared to the national growth rate of 4.8%,” adds Denham in the report. “And restaurant employment in New York City has grown by 23% since 2009, compared with the national average of 4.8%.”
“Overall job growth,” she continues, “especially in the retail/restaurant industries; tourism; and the growth of housing in Manhattan extending to the outer boroughs, are all driving New York City's retail renaissance, and we see no reason why that upward trajectory will not continue in the months ahead.”
Although the report's statistics confirm that the first quarter of 2013 was disappointing, with sales volume falling significantly, this was expected given the race at the end of 2012 to close deals before the capital gains tax increase. A number of deals that would have normally closed in the first quarter of 2013, were finalized in the in the fourth quarter of 2012. Comparatively, sales volume for Q1 2013 looks paltry next to the volume reported for Q4 2012.
“Sales volume did indeed fall in the first quarter, but nevertheless investor interest continues to be strong, and with prices climbing every day, more sellers are bringing properties to the market,” concludes Eastern Consolidated chairman and CEO Peter Hauspurg. “While we will not see the same fourth quarter 2012 volume in the next quarter or two, the statistics will soon start to reflect the high demand we are seeing in the market.”
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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.
