Manhattan Retail Rents Notch First Uptick Since 2016

Co-ops and condos with commercial space got hit hard by the COVID-19 pandemic, with businesses folding and stores standing vacant. Bottom lines for those co-ops and condos suffered accordingly. Now, Crain's reports, there's a ray of good news. Rents for retail spaces in Manhattan, one of the hardest-hit sectors in the city, have seen their first uptick in six years, reaching $607 per square foot, according to data from brokerage firm CBRE.

Though small, the 2.2% increase in prices across the borough during the third quarter of 2022 represents a turning point for these properties. The number of ground-floor spaces on the market also shrunk from 241 to 229, which is an 18% decline in availability since a year ago, CBRE data shows. The quarter also saw 2.7 million square feet of new lease signings, the best quarterly total since the third quarter of 2020, as office occupancy begins to rebound.

But there's a very fat caveat lurking inside this welcome development. “This good news was tempered, however, by rising interest rates and the prospect of a recession, as job losses and reduced consumer spending could put Manhattan’s retail recovery at risk,” CBRE researchers reported.

Soho’s Prince Street between Broadway and West Broadway, a prime high-end retail corridor, had the strongest price rebound in Manhattan. Rents grew nearly 29% during the third quarter and 36% over the last year thanks to strong demand for space there while rent prices were down during the pandemic. There were only five available spaces there during the third quarter — the lowest number of all the retail corridors.

Consistent with the past two years, Madison Avenue on the Upper East Side had the highest number of retail vacancies, with 36 available spaces. During the quarter rents declined 2.6%, but are 4.6% higher than year-ago levels.

Broadway between 72nd and 86th streets on the Upper West Side also had a high number of available spaces, with 21. Rents are down nearly 3% since the second quarter and are nearly 1.3% lower than they were one year ago.

Lower Manhattan reported the largest decrease in rent prices over the year. Prices fell 29% but ticked up 2.7% over the quarter.