Retail Condos North of Canal Command Whopping $3,019 Per Square Foot
By Richard Persichetti December 10, 2013 7:00 am
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Ahhh, December in New York City!
The ringing of the Salvation Army bells, the decorated storefronts up and down the avenues, the Christmas tree at Rockefeller Center and the International Council of Shopping Centers conference at the Hilton on Avenue of the Americas. So with the ICSC’s last hurrah on Avenue of the Americas before it moves to the Javitz Center next year, is there a better topic to focus on other than Manhattan retail?
Everyone knows that retail in Manhattan is red hot—Downtown continues to lure luxury brands to the neighborhood, upper Fifth Avenue asking rents are north of $3,000 per square foot, and retail condo sales are at historical highs in Midtown South and Midtown.
Over the last seven quarters, the average price paid for a retail condo north of Canal Street was $3,019 per square foot, up 82 percent from the 2010/2011 average. Yes, this average is slightly inflated due to the $4,769-per-square-foot average in the fourth quarter of 2012, as investors rushed to lock in a lower capital gains tax as the year came to a close. This led to $1.6 billion traded in the fourth quarter alone and was propelled by four transactions on both Fifth and Madison Avenues at escalated prices.
Despite the strong fourth quarter in 2012, retail condo sales remained on fire through 2013. Through the first half of this year, retail condo sales averaged more than $1,500 per square foot and spiked up to $2,300 per square foot in the third quarter. The solid third quarter was led by investments in Midtown South, accounting for 17 of the 18 retail condos sold. With retail rents continuing to get more expensive, retailers opt to purchase their space. This helps retailers maintain predictable occupancy costs instead of facing a potential 500 percent increase in rent after their 15-year lease expires in the pricier Manhattan retail corridors.
