REBNY Says Falling Rents Will Fill Empty Storefronts

The Real Estate Board of New York (REBNY) has released a report claiming that retail asking rents have fallen across much of Manhattan, suggesting that the shifting market will alleviate a wave of store closings – and obviate the need for commercial rent control, Crain’s reports. 

"The ongoing shifts in retail asking rents and lease structures in Manhattan have been a by-product of a natural fluctuation in the market as well as a changing retail industry," John Banks, REBNY's president, said in a statement. "These changes will resolve hurdles faced by brick-and-mortar retailers. When markets are allowed to correct naturally without overbearing intervention, they will be more resilient and adaptable in the long run." 

The “overbearing intervention” in this case is the Small Business Jobs Survival Act now under consideration by the city council. The bill, with strong support from business owners and community groups, would give commercial tenants the right to a lease renewal, and, if a tenant and landlord can't agree on a price, arbitration would be used to set the rent. The bill has 20 co-sponsors in the city council, and Speaker Corey Johnson has said he supports the legislation, which backers say will help fill vacant stores and protect the city’s beleaguered mom-and-pops. 

REBNY is joined in opposing the measure by the 32BJ local of the Service Employees International Union, numerous real-estate brokerages, business improvement districts, and a trade group representing affordable-housing developers. 

In its study, REBNY claims that asking rents have declined since last fall in 15 of the 17 retail corridors it tracks. The only increases were on the Upper West Side and Harlem’s 125th Street. The REBNY report remained conspicuously mum on how much vacant space exists along Manhattan's prime shopping corridors. Recent data from CBRE, the real estate services and investment giant, appears to show that several shopping districts in the city are either close to having a 20 percent vacancy rate, or already exceed it.