Manhattan’s Retail Market Still a Mixed Bag for Most Neighborhoods: Report

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Much like dating in New York City, Manhattan’s retail market is full of mixed messages.

Asking rents throughout Manhattan’s busy retail corridors dropped in the third quarter compared to the same time last year, while there was less sublease space on the market, according to a new report from JLL.

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The report tracked seven Manhattan shopping areas — Fifth Avenue, Madison Avenue, Times Square, SoHo, Meatpacking District, Union Square and Herald Square — and found average asking rents dropped by 5.3 percent year-over-year, to $290 per square foot. Meanwhile, the proportion of available storefronts on the sublease market decreased by nearly 11 percentage points to 25.7 percent during the same time.

The report highlights how Manhattan neighborhoods are experiencing stark differences in recovering from the pandemic’s crushing impact on retail. Madison Avenue, for example, sported an availability rate of 17.6 percent in the third quarter — as low as the neighborhood saw in the third quarter of 2018. But, in Herald Square, the availability rate hit a whopping 35.2 percent in the third quarter — compared to a roughly 20 percent rate in the last quarter of 2019 — as stores like Foot Locker and Banana Republic offloaded space onto the sublease market.

Herald Square was the only neighborhood of the seven JLL tracked to see available sublease space rise in the third quarter. Its rents, however, ticked up 26.5 percentage points to $521 per square foot in the third quarter from the same period last year — a positive sign for the shopping district’s future recovery, according to the report. 

Meanwhile, Times Square saw its asking rents move in the opposite direction, declining 40 percentage points to $959 per square foot in the third quarter compared to the same period last year, even as well-known retailers like Carlo’s Bakery shelled out $1,250 per square foot for a Times Square outpost in September. 

SoHo remained one of the strongest retail markets in Manhattan into the third quarter. The posh neighborhood’s availability rate dropped more than 9.4 percentage points to 25.2 percent in the third quarter compared to the same period in 2021. At the same time, average asking rents in SoHo increased 3.7 percent to $281 per square foot. SoHo also saw its luxury retailers rush back to the neighborhood (and its lower rents) last year, grabbing space near its high-earning, big-spending residents, Commercial Observer reported.

Union Square also saw a strong recovery, and it boasted the lowest availability rate, at 17 percent, of the seven submarkets in the third quarter after a handful of new stores like Warby Parker, Pandora and Panera Bread set up shop. However, Union Square’s asking rents declined 10.6 percentage points to $288 per square foot in the third quarter compared with the same period last year, according to the report.

Celia Young can be reached at cyoung@commercialobserver.com.