Steve Spinola - Retail in the downtown area is looking up

As N.Y.C.'s retail market continues its recovery from the global recession, some of the city's primary shopping corridors are seeing increases in asking rents for available retail space, while others are seeing rent declines. According to the Real Estate Board of New York's (REBNY's) Spring Retail Report, Lower Manhattan has attracted interest from retailers. The Broadway corridor from Battery Park to Chambers St. in the Financial District saw a 23% increase in asking rents to $184 per s/f, compared to fall 2010 numbers, and a 36% surge compared to spring 2010. The surge is attributed to the visible progress of office construction at the WTC site and the planned opening of the 9/11 memorial later this year. Retail areas below 14th St. saw an increase of 4% overall with asking rents per s/f for all space (ground floor and other) averaging $103 per s/f. Lower Manhattan has been receiving national and international attention as a result of the progress at the WTC site. The rise in asking rents for retail space shows that retailers are looking to capitalize on the increase in pedestrian traffic expected there in the years to come. Increased tourism has also had an impact on the city's retail market according to our advisory group as the high-end shopping corridors, such as Fifth Ave. and Madison have limited available space. On Fifth Ave. between 42nd and 49th Sts., asking rents increased 3% compared to fall 2010 and 21% compared to spring 2010 to $515 per s/f. Uptown on East 86th St. between Lexington and Second Ave., average asking rents for ground floor space increased 14% compared to fall 2010 and 2% compared to spring 2010 to $333 per s/f. On the Westside, Columbus Ave. between 66th and 79th Sts., asking rents jumped 11% compared to fall 2010, and 5% compared to spring 2010 to $255 per s/f. The steady growth in tourism as a result of the depreciating value of the dollar has also been a boon to N.Y.C.'s major retail corridors. Visitors from around the world have been a vital aspect of our improving economy. Some retail corridors did not fare as well. Asking rents on the Madison Ave. corridor decreased to $919 per s/f for ground floor space, 12% off from last fall and 4% off from spring 2010. On Fifth Ave. between 49th and 59th Sts., asking rents were down 5% compared to fall 2010 and 2% compared to spring 2010 to $2,250 per s/f. A lack of availability in these high-end retail corridors led to rents leveling off in these areas. The retail industry in the city has been one of the bright spots during the economic recovery though growth in employment in the sector has slowed in 2011. During 2010, year-on-year retail employment growth surged as the recovery gained pace in the spring. Retail employment in N.Y.C. grew 5.16% year-on-year in April 2010 while overall private employment 0.61% during the same period. This April though, with the recovery leveling off, retail employment grew 1.45% year-on-year compared to 1.41% growth in overall private employment in the city. Despite the slowdown, the retail sector can count on support from a continuing weakness in the dollar, and an expanding national economy. As a result, N.Y.C. retail rents should remain stable through the end of the year as well by benefiting from the limited availability of prime corridor space and a lack of newly developed retail space. Steven Spinola is the president of REBNY, New York, N.Y.