It’s that time of year again for retail professionals to gather together at International Council of Shopping Center’s annual RECon event in Las Vegas. But following several years of the retail real estate market hitting the jackpot, New York City retail began 2016 with some mixed reviews.
The first-quarter results for the retail leasing and investment markets had its highs and lows, and the retail employment sector was the only industry in New York City to post job losses over the last 12 months. After six consecutive years of New York City retail employment gains through March, retailers rolled snake eyes and cut jobs. Year-over-year, New York City retailers shed 4,600 jobs, but employment is still up by 54,400 jobs since market bottom in November 2009.
In addition to decreased employment numbers, retail leasing trends are at a cold table, as availabilities are up in Manhattan’s 11 major submarket corridors year-over-year. Despite availabilities up in all areas, asking rents are both up and down with five submarkets posting year-over-year increases and six submarkets posting declines. The Herald Square/West 34th Street corridor had the largest availability increase to 22.4 percent from 12.5 percent one year ago. Soho had the second largest year-over-year increases with its availability reaching 25 percent from 16.4 percent. In spite of the highest availability rate of the major retail submarkets, Soho had the largest asking rent increase year-over-year, up 7.1 percent to $556 per square foot.
The retail investment market had similar results, as the number of New York City retail properties and condos sold in the first quarter of 2016 was up 28.8 percent from fourth-quarter 2015 but down 17.5 percent compared to one year ago. Of the 94 retail sites traded in the first quarter, Brooklyn and Queens hit lucky sevens as these markets accounted for 77.7 percent of the transactions. With strong starts to the year, both markets are on pace to surpass last year’s totals on an annualized basis by 12.1 percent and 8.3 percent, respectively. The total sales volume for New York City retail properties exceeded $846 million in the first quarter, which is up 4.1 percent from the quarterly average in 2015. So whether you are an owner, a tenant or an investor, it is time to know when to hold the cards and when to fold them.