It may be too early to pop the champagne corks, but Manhattan’s big-picture retail leasing scene shows strong signs of putting the pandemic carnage behind it.
Even before anyone heard of COVID-19, online shopping reduced demand for brick-and-mortar stores by perhaps 10%. Lockdown made the situation worse.
Readers of this column know that we have been skeptical about surveys claiming major changes. It is difficult to get reliable data for retail compared to offices. As JLL power-broker Richard Hodos bluntly put it, “It’s not an exact science.”
But there seem to be many reasons to justify landlords’ and brokers’ growing confidence in a healthy market.
Third-quarter Manhattan surveys from JLL and Cushman & Wakefield found storefront availability significantly lower — 14.7% and 13.9%, respectively, compared to peaks in the middle and upper 20% in 2021.
JLL claimed that the amount of available store space in the city “fell to its lowest level on record”, which is hard to swallow for anyone walking through the Flatiron District, which has been reeling from the closure of many big-box stores. Had gone.
It all depends on how and what you count. CBRE said retail leasing was actually down 25% in 2023 compared to 3Q.
But recent transactions lend more credence to the idea that the worst is over.
“Activity is really strong across most trading sectors,” said Cushman superbroker Joan Poudell. The interesting thing is that I think we are in balance. I don’t think you can define what we are experiencing as a landlord or tenant market.
“It’s been a good year in general for most retail corridors,” Hodos said. Rents are lower than before the pandemic and occupancy costs are more in line with operating costs.
He said some areas in particular are “strong and thriving.” In Soho, it’s very hard to find a place on the Green or Prince Street.
We’re the first to report on recent major deals bonhams auction house (40,000 square feet in the former Steinway Piano Hall at 111 W. 57th St.); Italian fashion brand Moncler (24,000 SF subleased to UnderArmour, which never moved into the GM building); five iron golf (15,300 square feet at Vornado’s 1291 Sixth Avenue); Socceroof (indoor soccer, 20,000 sf at Fosun’s 28 Liberty St.); and the Carnegie Diner and an unnamed Greek café in the former NHL store at 1185 Sixth Avenue at SL Green.)
Now, according to other reports, sources and direct observations this includes:
• London-based clothing giant Primark will launch its first Manhattan store with 54,000 square feet at 150 W. 34th St. near Penn Station, replacing Old Navy.
• Popular eatery Rosa Mexicano is taking over the former Ed Chowder House space in the Empire Hotel on Broadway at West 63rd Street — 12,000 square feet, mostly on the second floor, which had been dark for six years. Fast-growing Italian chain La Pecora Bianca will replace Rosa’s in its former home on nearby Columbus Avenue.
• Venerable menswear purveyor Brooks Brothers signed on for a 9,500-square-foot store at L&L’s 195 Broadway — a vote of confidence that FiDi office workers and residents still want to dress up in.
• In perhaps the most surprising move, Joseph Abboud’s spectacular former home at 424 Madison Avenue will soon be home to Bagizza! – A bagel/pizza restaurant concept spanning over 4,000 square feet.
CBRE identified two 3Q trends.
“New-to-market retailers leasing their first brick and mortar outpost in Manhattan” accounted for 21% of quarterly leasing volume, CBRE said, while “large fine arts and experiential tenants” were the key drivers of activity.
Among the new arrivals cited by CBRE will be Chinese “fast-fashion” brand Urban Revivo’s first U.S. store launching with 30,000 sf at 513-5155 Broadway. In the latter category: Arte Museum, an immersive arts experience with 51,000 SF at Chelsea Piers, and the 50,000-square-foot Monopoly experience at 11 Times Square, which developer SJP Properties has long struggled to fill.
Hodos said rents have improved, though not to pre-pandemic levels. “And that’s a good thing,” he said. “For example, asking rents on Madison Avenue were stratospheric and have not declined even after the pandemic hit.
“Now, the difference between the bid and the ask is very small.”
