Manhattan retail rents surging in prime shopping corridors

Asking rents for retail space in Manhattan increased substantially in the last six months compared to the same period last year, as retailers continued to seek space in the primary shopping corridors, according to a report released today by The Real Estate Board of New York (REBNY). Retailer interest in prime shopping areas, combined with the city's population growth, a continuing surge in tourism, all contributed to the trend of rising rents. On major shopping corridors, the sharpest increases were found on Third Ave. between 60th and 72nd Sts., where asking rents for ground floor space were up 51% to $329 per s/f, and in the Flatiron District on Fifth Ave. between 14th and 23rd Sts., where rents were up 50% to $401 per s/f. REBNY's report, one of the most comprehensive assessments of retail asking rents in the borough, also found substantial increases in asking rents for retail space in Herald Sq. on West 34th St. between 5th Ave. and 7th Ave., which rose 32% to $656 per s/f. Retail rents in SoHo's Broadway shopping area between Houston and Broome Sts. also increased 32% to $424 per s/f. "Building owners remain optimistic that the favorable market for retail leasing will continue despite the softening economy," said Steven Spinola, REBNY president. "We are still seeing high asking rents in the selected retail corridors. Further, we've now added new primary retail corridors to correspond with interest by high-profile retailers in locating to these areas, including 86th St. on the Upper East Side and Columbus Ave. on the Upper West Side." Five new corridors have been added to the list of "selected major retail corridors" in the report. These include: 86th St. on the Upper East Side; Columbus Ave. on the Upper West Side; Fifth Ave. south of 49th St. in Midtown; Bleecker St. in the West Village and 14th St. in the Meatpacking District both in Midtown South.   The Fifth Ave. (49th-59th) corridor had the highest average asking rent of $1,958 per s/f of all corridors surveyed, and had virtually no prime locations immediately available. The Madison Ave. corridor had the next highest average asking rent of $1,066 per s/f, with some stores asking more than $1,500 per s/f for ground floor space. "While the volume of retail leasing activity is strong, we are seeing that tenants appear to be taking a longer time to make decisions and to complete deals. In addition, prime areas like the Fifth Ave. corridor, the most famed shopping area in the borough, has virtually no retail space available, meaning all the prime locations are already spoken for," said Spinola. "Overall, the rising rents indicate a strong market and that retailers continue to have interest in coming to New York City." The average asking rent per s/f for all area retail space (ground floor and other) was up 3% to $111 compared to a year ago. Other highlights from the spring 2008 report include the following: Neighborhoods: * In Midtown, the average asking rent was up 9% to $145 per s/f; in Midtown South, the average asking rent was up 8% to $96 per s/f, compared to last year.   *  The East Side had the highest average asking rent of the major areas at $164 per s/f, a 6% increase since last spring. This includes all available retail space (ground floor and other). Selected Retail Corridors: * Average asking rents continue to rise on Harlem's 125th St., one of the largest retail corridors in the report. Asking rents on 125th St. rose 4% to $107 per s/f. This major commercial street extends from East Harlem through Central Harlem to West Harlem, generally from the East River to the Hudson. One strong pocket of activity is the stretch west of Lenox Ave. where the highest asking rents are clustered. The West Side's Broadway corridor between 72nd to 86th Sts. saw rents increase 23% to $384 per s/f. In the Financial District, asking rents for ground floor space in the Broadway corridor between Battery Park and Chambers St. rose 12% to $198 per s/f. The REBNY Retail Report is issued twice a year in the spring and fall. Findings are reviewed by an advisory group that distills and analyzes the data. The report provides comprehensive information about available retail space and asking rents in the borough from a broad cross section of the city's top real estate firms. The report presents all available data on retail space by geographic area and focuses on the ground floor space on the major retail streets. It provides an objective and reliable source for discerning market trends. The Real Estate Board of New York is the city's leading real estate trade association with more than 12,000 members. REBNY represents major commercial and residential property owners and builders, brokers and managers, banks, financial service companies, utilities, attorneys, architects, contractors and other individuals and institutions professionally interested in the City's real estate.   REBNY is involved in crucial municipal matters including tax policy, city planning and zoning, rental conditions, land use policy, building codes and legislation.  In addition, REBNY publishes reports providing indicators of market prices for both the residential and commercial sectors.