Availability Rates Dropped or Were Flat During 1Q 2018
As the annual ICSC (International Council of Shopping Centers) RECon rolls into Las Vegas once again, retail real estate professionals are apt to have just as much luck placing a bet on the roulette table as they are to predict where the New York City retail market is heading. I always seem to succeed betting on lucky black 13, which also was the number I wore on my hockey jersey back in the day.
Although Manhattan availability rate increases appear to have leveled off, ground-floor asking rents continue to dip. Availability rates dropped or were flat during the first quarter of 2018 compared with year-end 2017, in nine of the 11 statistical retail submarkets tracked by Cushman & Wakefield. Herald Square/West 34th Street posted the largest first-quarter decline, down 350 basis points to 31 percent, while Madison Avenue recorded the highest increase in availability, up 380 basis points to 26.7 percent.
Asking rents dropped year-over-year in 10 of the 11 submarkets, with the Meatpacking District posting the only increase, $18 per square foot to $371. The coveted Soho submarket had the largest year-over-year decline, dropping 12.7 percent to $426 per square foot. The Upper Fifth Avenue (49th to 60th Streets) submarket was a close second, as asking rents decreased by 10.8 percent to $2,786 per square foot—still the highest average in New York City.
Asking rents in these 11 submarkets reached market peak in the fourth quarter of 2014 through the second quarter of 2016, and are down an average of 13.4 percent—unlucky 13 in this instance. Soho lost the most on its wager, as asking rents declined 23.4 percent since reaching a market peak of $556 per square foot in the first quarter of 2016 and has descended since then. Lower Manhattan ground-floor asking rents depreciated the least at $404 per square foot, and are only down 4.5 percent from $423 in the fourth quarter of 2015 yet still a good value for the lucky lady that is Manhattan.