THE REAL ESTATE BOARD OF NEW YORK MANHATTAN RETAIL REPORT | FALL 2018 INTRODUCTION EXECUTIVE SUMMARY Asking rents in the Manhattan retail leasing market continue to adjust after reaching unsustainable levels The Manhattan retail market’s orderly correction three years ago. Declines have been widespread across continued this fall with per square foot (psf) ground floor Manhattan’s top retail corridors since spring 2015 and retail average asking rents declining year-over-year in our Manhattan Retail Report Advisory Group stated that 15 of the 17 high-profile corridors that the Real Estate the market still faces many challenges. However, owners Board of New York (REBNY) surveys bi-annually. There and retailers have been increasingly responsive to the were four more corridors in decline in fall 2018 than in new retail environment. fall 2017, and this period marked the highest number of corridor declines in the Manhattan Retail Report’s As discussed in previous reports, the existing hurdles in history. the Manhattan retail leasing market have been a by- product of a natural fluctuation in the market as well as The two corridors with year-over-year increases were: a changing retail industry. These issues will be resolved Harlem’s 125th Street corridor, between Fifth Avenue with shifting rents and lease structures, but time is and Morningside Avenue, where the ground floor retail required for this process to develop. Changes in retail average asking rent increased 14 percent year-over- markets take more time to manifest due to the impact year to $140 psf and the Upper West Side’s Broadway of longer-term factors. Examples include a retailer’s corridor, between West 72nd and West 86th Streets, timeline for strategizing a business plan, securing where the ground floor retail average asking rent rose financing, and planning improvements to a retail space five percent year-over-year to $306 psf. These increases to fit their business needs. were caused by changes in the profile of available ground floor retail spaces along these corridors, not an With this long-term view in mind, it is worth looking upward revision of asking rents for existing supply. at the market now and comparing it to where it stood three years ago. Currently, there are 15 corridors, out The West Village average asking rent of $293 psf on of 17, with lower average asking rents for ground floor Bleecker Street, between 7th Avenue South and Hudson retail space than what they were in the fall of 2015. The Street, was a 17 percent decrease from last fall. This average overall decline in these corridors is 25 percent was the first period that the average asking rent in this when compared to three years ago. Ten of the 15 corridor fell below $300 since we started tracking the decreases were over 20 percent and three were over 30 corridor in the spring of 2008. Among the largest of percent. these declines was the 37% drop of the average asking A natural correction in retail rents has been well rent for ground floor retail space in the West Village on underway over the past three years and both owners Bleecker Street, between 7th Avenue South and Hudson and retailers have been responding accordingly. Lease Street, from $468 psf in the fall of 2015 to $293 psf in the terms are more flexible, owners are accepting more fall of 2018. short-term deals, improvement allowances are more generous, and retailers are trying different concepts for Upper Fifth Avenue, between 49th and 59th Streets, the new retail market before they agree to a long-term experienced a significant average asking rent decrease deal. of 24 percent this fall leaving the average asking rent on the corridor at $2,973 psf. This drop was caused by increases in availability and the types of spaces available in the corridor. In previous periods, there were limited availabilities in the corridor and any available spaces were at the higher end of the market. MANHATTAN RETAIL REPORT FALL 2018 | 2 EXECUTIVE SUMMARY (CONT.) ACKNOWLEDGEMENTS Average asking rents psf in the Eastside on Madison The REBNY Manhattan Retail Report Advisory Group Avenue, between East 57th Street and East 72nd Street; includes: in the Meatpacking District on West 14th Street, between Robin Abrams, Compass 9th and 10th Avenues; and in SoHo on Broadway, Karen Bellantoni, RKF between Houston and Broome Street, continued to Matt Chmielecki, CBRE decline this fall. The Madison Avenue corridor notched Andrew Goldberg, CBRE its seventh consecutive year-over-year drop to $1,160 David A. Green, Colliers International psf. Average asking rents on the Meatpacking District’s Jordan Kaplan, CBRE West 14th Street and SoHo’s Broadway both fell for the Andrew Mandell, Ripco Real Estate sixth consecutive year-over-year period to $303 psf and Joanne Podell, Cushman & Wakefield $558 psf, respectively. Fred Posniak, Empire State Realty Trust Jeffrey Roseman, Newmark Knight Frank We must reiterate that the rents quoted in this report Craig Slosberg, Newmark Knight Frank are asking rents for available ground floor retail spaces. Alan Victor, The Lansco Corporation The physical components and location of a retail space factor greatly into its rental value. Attributes such as REBNY would like to thank the following firms for street/avenue frontage, ceiling height, and presence their assistance in preparing the report: of below and above grade space can also affect value. Brookfield Property Group Consequently, in corridors with low availability, a high Buchbinder & Warren Realty Group quality retail space coming to market can increase CBRE the average and median asking rents greatly. Also, in Colliers International smaller corridors, a lack of available spaces may lead, Compass in some cases, to adjacent blocks becoming of greater Crown Retail Services interest to retailers. Cushman & Wakefield Empire State Realty Trust Accordingly, we have provided information about the Jack Resnick & Sons retail rent range as well as asking rent information JLL from six months and 12 months ago to provide a rich, The Lansco Corporation statistical context in order to evaluate current market Newmark Knight Frank conditions. In addition, we would like to note that the Ripco Real Estate surveyed corridors in this report represent the top tier RKF retail corridors in New York City. Rents on adjoining Rose Associates side streets may lease for considerably less than the SCG Retail locations we are profiling. Lastly, as we have learned Sholom & Zuckerbrot Realty over the 18 years that we have been preparing this Sinvin Real Estate report, retail brokers who are active in the market are Walker Mall an invaluable source of information and trends that cannot be fully captured by the numbers in our report. Photo Credit by Luca Bravo on Unsplash We attempt to provide an overview of the market at a particular point in time that is based on the available listings of our Manhattan Retail Report Advisory Group and Retail Committee members, which include all the major retail brokers and owners in Manhattan. MANHATTAN RETAIL REPORT FALL 2018 | 3 RETAIL AVERAGE ASKING RENTS PSF Broadway Columbus Ave (72nd St - 86th St) (66th St - 79th St) $410 $430 $390 $405 $403 $390 $410 $390 $370 $361 $359 $375 $370 $350 $341 $344 $325 $350 $338 $330 $315 $330 $310 $304 $291 $310 $298 $290 $290 $270 $270 $250 $250 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018F-2018 F-2015 S-2016F-2016S-2017F-2017 S-2018 F-2018 Madison Ave Third Ave East 86th St (57th St - 72nd St) (60th St - 72nd St) (Lexington Ave - 2nd Ave) $1,800 $380 $371 $363 $500 $356 $1,700 $360 $455 $1,700 $340 $450 $1,644 $335 $450 $1,613 $340 $430 $428 $1,600 $320 $399 $400 $400 $300 $367 $1,500 $1,433 $1,446 $280 $264 $1,390 $261 $350 $1,400 $1,348 $260 $240 $1,300 $300 $220 $1,200 $200 $250 F-2015S-2016F-2016S-2017F-2017 S-2018 F-2018 F-2015 S-2016 F-2016 S-2017F-2017 S-2018 F-2018 F-2015S-2016 F-2016 S-2017 F-2017S-2018F-2018 East 57th St Fifth Ave (5th Ave - Park Ave) (42nd St - 49th St) *No data avaliable for F-2017 $1,700 $550 $1,625 $1,600 $1,600 $510 $1,600 $500 $1,500 $1,438 $447 $1,400 $450 $435 $1,294 $1,300 $390 $400 $384 $1,200 $360 $1,100 $348 $350 $975 $1,000 $900 $300 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 S-2015 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 Fifth Ave Broadway & 7th Ave (49th St - 59th St) (42nd St - 47th St) $922 $950 $2,450 $2,390 $2,363 $850 $2,350 $733 $713 $750 $2,250 $646 $650 $2,170 $650 $2,150 $2,100 $530 $550 $2,050 $1,930 $1,938 $450 $1,950 $329 $1,860 $350 $1,850 $250 $1,750 F-2015 S-2016 F-2016 S-2017F-2017S-2018F-2018 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 MANHATTAN RETAIL REPORT FALL 2018 | 4 RETAIL AVERAGE ASKING RENTS PSF Fifth Ave Broadway (14th St - 23rd St) (14th St - 23rd St) $195 $200 $550 $510 $180 $171 $500 $167 $157 $156 $447 $160 $450 $148 $148 $140 $390 $400 $384 $378 $360 $348 $120 $350 $100 $300 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018 West 34th St (5th Ave - 7th Ave) 125th St (5th Ave - Morningside Ave) $950 $145 $890 $900 $140 $140 $138 $836 $850 $135 $800 $132 $745 $734 $750 $130 $125 $700 $124 $124 $125 $123 $633 $650 $604 $120 $600 $573 $550 $115 $500 $110 F-2015 S-2016 F-2016S-2017F-2017S-2018F-2018 F-2015 S-2016 F-2016 S-2017F-2017 S-2018 F-2018 14th St Broadway (9th Ave - 10th Ave) (Battery Park - Chambers St) $390 $390 $372 $374 $369 $368 $370 $370 $362 $348 $345 $350 $350 $338 $334 $326 $330 $323 $330 $313 $308 $310 $303 $310 $290 $290 $270 $270 $250 $250 F-2015 S-2016F-2016S-2017 F-2017 S-2018 F-2018 F-2015 S-2016F-2016S-2017